EXHIBIT 4
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AMENDED AND RESTATED RIGHTS AGREEMENT
between
ALLETE, INC.
and
THE CORPORATE SECRETARY OF
ALLETE, INC.,
RIGHTS AGENT
DATED AS OF JULY 12, 2006
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TABLE OF CONTENTS
PAGE
Section 1. Certain Definitions.........................................1
Section 2. Appointment of Rights Agent.................................7
Section 3. Issue of Right Certificates.................................7
Section 4. Form of Right Certificates..................................11
Section 5. Countersignature and Registration...........................12
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates..........................................13
Section 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights...................................................15
Section 8. Cancellation and Destruction of Right Certificates..........19
Section 9. Availability of Preferred Stock.............................20
Section 10. Preferred Stock Record Date.................................21
Section 11. Adjustment of Purchase Price, Number of Shares or Number
of Rights...................................................22
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares......................................................37
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power...............................................37
Section 14. Fractional Rights and Fractional Shares.....................42
Section 15. Rights of Action............................................45
Section 16. Agreement of Right Holders..................................45
Section 17. Right Certificate Holder Not Deemed a Shareholder...........46
Section 18. Concerning the Rights Agent.................................47
Section 19. Merger or Consolidation or Change of Name of Rights Agent...48
Section 20. Duties of Rights Agent......................................49
Section 21. Change of Rights Agent......................................54
Section 22. Issuance of New Right Certificates..........................56
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Section 23. Redemption..................................................56
Section 24. Exchange....................................................59
Section 25. Notice of Certain Events....................................61
Section 26. Notices.....................................................62
Section 27. Supplements and Amendments..................................63
Section 28. Successors..................................................64
Section 29. Benefits of this Agreement..................................64
Section 30. Severability................................................64
Section 31. Governing Law...............................................65
Section 32. Counterparts................................................65
Section 33. Descriptive Headings........................................65
Section 34. Determinations and Actions by the Board of Directors........65
Exhibit A - Form of Certificate of Resolution Fixing Terms of Junior
Serial Preferred Stock A
Exhibit B - Form of Right Certificate
Exhibit C - Summary of Amended and Restated Rights Agreement
ii
AMENDED AND RESTATED RIGHTS AGREEMENT
Amended and Restated Rights Agreement (hereinafter the "Amended
Rights Agreement"), dated as of July 12, 2006, between ALLETE, INC., a
Minnesota corporation (the "Company"), and the Corporate Secretary of the
Company (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, the Company and the Rights Agent entered into the Rights
Agreement, dated as of July 24, 1996 (the "Original Rights Agreement");
WHEREAS, the Board of Directors of the Company has adopted, in
accordance with Section 27 of the Original Rights Agreement, a resolution
approving, and directing the appropriate officers of the Company to take all
appropriate steps to execute and put into effect, this Amended Rights Agreement,
and an appropriate officer of the Company has provided a certificate to the
Rights Agent as provided for in such Section 27.
NOW, THEREFORE, in consideration of the premises and covenants set
forth in the Original Rights Agreement and this Amended Rights Agreement, the
parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
indicated:
"Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the Common Stock
of the Company then outstanding, but shall not include the Company, any
Affiliate of the Company, any employee benefit plan of the Company or of any
Affiliate of the Company, or any Person holding Common Stock for or pursuant to
the terms of
any such plan to the extent, and only to the extent, of the Common Stock so
held. Notwithstanding the foregoing,
(i) no Person shall become an "Acquiring Person" as the
result of (a) an acquisition of Common Stock by the Company
which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially
owned by such Person to 15% or more of the Common Stock of
the Company then outstanding or (b) the acquisition by such
Person of newly-issued Common Stock directly from the Company
(it being understood that a purchase from an underwriter or
other intermediary is not directly from the Company);
provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Stock of the
Company then outstanding by reason of share purchases by the
Company or the receipt of newly-issued Common Stock directly
from the Company and shall, after such share purchases or
direct issuance by the Company, become the Beneficial Owner
of any additional Common Stock of the Company (other than
pursuant to a dividend or distribution paid or made by the
Company on the Common Stock or as a result of a split or
subdivision of the Common Stock or similar event), then such
Person shall be deemed to be an "Acquiring Person"; provided
further, however, that any transferee from such Person who
becomes the Beneficial Owner of 15% or more of the Common
Stock of the Company then outstanding shall nevertheless be
deemed to be an "Acquiring Person."
(ii) if the Board of Directors determines that a Person
who would otherwise be an "Acquiring Person," as defined
pursuant to the foregoing
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provisions of this Section 1, has become such inadvertently,
and such Person divests as promptly as practicable (and in
any event within ten business days after notification by the
Company) a sufficient number of shares of Common Stock so
that such Person would no longer be an "Acquiring Person,"
then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement unless and until
such Person again becomes an "Acquiring Person."
"Affiliate" and "Associate" shall the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement.
A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(a) which such Person or any of such Person's Affiliates
or Associates beneficially owns, directly or indirectly;
(b) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, 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, whether written or oral (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon
the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, (1) 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
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are accepted for purchase or exchange, (2) securities issuable upon
exercise of Rights at any time prior to the occurrence of a
Triggering Event, or (3) securities issuable upon exercise of Rights
from and after the occurrence of a Triggering Event which Rights were
acquired by such Person or any of such Person's Affiliates or
Associates prior to the Distribution Date or pursuant to Section 3(a)
or Section 22 hereof (the "Original Rights") or pursuant to Section
11(i) hereof in connection with an adjustment made with respect to
any Original Rights; (B) the sole or shared right to vote or dispose
(including any such right pursuant to any agreement, arrangement or
understanding, whether written or oral); provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or (C) "beneficial ownership" (as determined pursuant to
Rule 13d-3 (or any successor rule) of the General Rules and
Regulations under the Exchange Act); or
(c) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with
which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding, whether written or
oral (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 clause (B) of
subparagraph (b) of this definition) or disposing of any securities
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of the Company; provided, however, that no Person who is an
officer, director or employee of the Company or any Subsidiary of
the Company shall be deemed, solely by reason of such Person's
status or authority as such, to be the "Beneficial Owner" of, or
to "beneficially own," any securities that are "beneficially
owned" (as defined in this Section 1), including, without
limitation, in a fiduciary capacity, by the Company or any
Subsidiary of the Company, or by any other such officer, director
or employee of the Company or any Subsidiary of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking or trust institutions in Minnesota are authorized or
obligated by law or executive order to close.
"Close of business" on any given date shall mean 5:00 P.M.,
Duluth, Minnesota time, on such date; provided, however, that if such date is
not a Business Day it shall mean 5:00 P.M., Duluth time, on the next succeeding
Business Day.
"Common Stock" when used with reference to the Company shall mean
the shares of common stock, without par value, of the Company. "Common Stock"
when used with reference to any Person other than the Company shall mean the
capital stock (or equity interest)
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with the greatest voting power of such other Person or the equity securities or
other equity interest having power to control or direct the management of such
other Person.
"Distribution Date" shall have the meaning set forth in Section 3
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expiration Date" shall have the meaning set forth in Section 7
hereof.
"Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
"Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.
"Preferred Stock" shall mean shares of Serial Preferred Stock A,
without par value, of the Company, designated "Junior Serial Preferred Stock A"
and having the rights and preferences set forth in the Form of Certificate of
Resolution Fixing Terms of Junior Serial Preferred Stock A attached to this
Agreement as Exhibit A.
"Principal Party" shall have the meaning set forth in Section 13
hereof.
"Purchase Price" shall have the meaning set forth in Section 4
hereof.
"Redemption Date" shall have the meaning set forth in Section 7
hereof.
"Redemption Period" shall have the meaning set forth in Section 23
hereof.
"Redemption Price" shall have the meaning set forth in Section 23
hereof.
"Right Certificate" shall have the meaning set forth in Section 3
hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
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"Subsidiary" shall mean, with reference to any Person, 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 is otherwise controlled by such person.
"Triggering Event" shall mean any event described in Section
11(a)(ii) or Section 13(a) hereof.
Any determination or interpretation required in connection with any
of the definitions contained in this Section 1 shall be made by the Board of
Directors, which determination shall be final and binding on the Rights Agent.
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 Stock) 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. The Rights Agent shall have no duty to supervise, and
shall in no event be liable for, the acts or omissions of any such co-Rights
Agents.
Section 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the earlier of (i) the close of business on the
tenth day after the Stock Acquisition Date (or, if the tenth day
after the Stock Acquisition Date occurs before the Record Date, the
close of business on the Record Date), or (ii) the close of business
on the fifteenth business day (or such later date as may be
determined by action of the Board of Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than the Company, any Affiliate of
the Company, any employee benefit plan of the Company or of any
Affiliate
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of the Company or any entity holding Common Stock for or pursuant to
the terms of any such plan) of, or of the first public announcement
of the intention of any Person (other than the Company, any Affiliate
of the Company, any employee benefit plan of the Company or of any
Affiliate of the Company or any entity holding Common Stock for or
pursuant to the terms of any such plan) to commence, a tender or
exchange offer the consummation of which would result in any Person
becoming the Beneficial Owner of Common Stock aggregating 15% or more
of the then outstanding Common Stock (including any such date which
is after the date of this Agreement and prior to the issuance of the
Rights; the earlier of such dates being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to
the provisions of Section 3(b) hereof) by the certificates for Common
Stock registered in the names of the holders thereof (which
certificates shall also be deemed to be certificates for Rights) and
not by separate certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying Common Stock
(including a transfer to the Company). 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 Stock as of the close of business on the Distribution Date, at
the address of such holder shown on the records of the Company, a
right certificate, in substantially the form of Exhibit B hereto (a
"Right Certificate"), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock
has been made pursuant to Section 11 hereof, at the time of
distribution of the Rights Certificates,
8
the Company shall make necessary and appropriate rounding adjustments
(in accordance with Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed and cash is
paid in lieu of any fractional Rights. As of 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 Amended and
Restated Rights Agreement, in substantially the form of Exhibit C
hereto (the "Summary of Amended Rights Agreement"), by first class,
postage-prepaid mail, to each record holder of Common Stock as of the
close of business on the Record Date (other than any Acquiring Person
or any Associate or Affiliate of any Acquiring Person), at the
address of such holder shown on the records of the Company. With
respect to certificates for Common Stock outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof
together with the Summary of Amended Rights Agreement, and registered
holders of Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or the earlier
Expiration Date), the transfer of any certificate for Common Stock
outstanding on the Record Date, with or without a copy of the Summary
of Amended Rights Agreement, shall also constitute the transfer of
the Rights associated with the Common Stock represented thereby.
(c) Rights shall be issued in respect of all shares of
Common Stock which are issued (whether originally issued or delivered
from the Company's treasury) after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date; provided,
however, Rights shall also be issued to the extent provided in
Section 22
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hereof in respect of all shares of Common Stock which are issued
after the Distribution Date and prior to the Expiration Date.
Certificates representing such Common Stock shall also be deemed to
be certificates for Rights. Certificates representing both Common
Stock and Rights in accordance with this Section 3 which are executed
and delivered (whether the Common Stock represented thereby are
originally issued, delivered from the Company's treasury or are
presented for transfer) by the Company (including, without
limitation, certificates representing reacquired Common Stock
referred to in the last sentence of this paragraph (c)) after the
Record Date but prior to the earlier of the Distribution Date or the
Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them a legend substantially equivalent to the
following:
This certificate also evidences and entitles the
holder hereof to certain rights as set forth in the
Amended and Restated Rights Agreement between
ALLETE, Inc. (the "Company") and the Secretary of
the Company, dated as of July 12, 2006 (the
"Amended Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy
of which is on file at the principal offices of the
Company. Under certain circumstances, as set forth
in the Amended 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 Amended Rights Agreement, as in
effect on the date of mailing, without charge
promptly after receipt of a written request
therefor. Under certain circumstances set forth in
the Amended Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an
Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf
of such Person or by any subsequent holder, shall
become null and void.
Until the earlier of the Distribution Date and the Expiration Date, the Rights
associated with the Common Stock shall be evidenced by the certificates
representing the associated Common Stock alone, and the transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company
10
purchases or acquires any Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Stock shall be deemed
cancelled and retired so that the Company shall not be entitled to exercise any
Rights associated with the Common Stock which are no longer outstanding.
Notwithstanding this Section 3(c), the omission of the foregoing legend shall
not affect the enforceability of any part of this Agreement or the rights of any
holder of the Rights.
Section 4. FORM OF RIGHT CERTIFICATES.
(a) The Right Certificates (and the forms of election to
purchase Preferred Stock and of assignment to be printed on the
reverse thereof) shall each be substantially in the form set forth in
Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed
thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Section
11 and Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one-hundredths of a share
of Preferred Stock as shall be set forth therein at the price per
one-hundredths of a share of Preferred Stock set forth therein (the
"Purchase Price"), but the amount and type of securities purchasable
upon the exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a)
or Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any
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Associate or Affiliate of an Acquiring Person, (ii) a transferee of
an Acquiring Person (or such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes an Acquiring Person, or
(iii) a transferee of an Acquiring Person (or such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding, whether written
or oral, regarding the transferred Rights or (B) a transfer which the
Board of Directors has determined is part of a plan, arrangement or
understanding, whether written or oral, which has as a primary
purpose or effect avoidance of Section 7(e) hereof, and any Right
Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the
extent feasible and otherwise reasonably identifiable as such) the
following legend:
The Rights represented by this Right Certificate
are or were beneficially owned by a Person who was
or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms
are defined in the Amended and Restated Rights
Agreement). Accordingly, this Right Certificate
and the Rights represented hereby may become void
in the circumstances specified in Section 7(e) of
such Agreement.
The provisions of Section 7(e) shall apply whether or not any Right Certificate
actually contains the foregoing legend.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, any Vice Chairman, its President, any of its Vice
Presidents, or its Treasurer, either manually or
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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 so 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 Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its office designated for such purpose, books for registration
and transfer of the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(e), 14
and 24 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the
Expiration Date, any Right Certificate or Right Certificates may be
13
transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock (or, following a
Triggering Event, Common Stock, other securities or property, as the
case may be) 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. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer
of any such surrendered Right Certificate until the registered holder
shall have completed and signed the certificate contained in the form
of assignment on the reverse side of such Right Certificate
accompanied by such documents as the Rights Agent may deem
appropriate 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. Thereupon the Rights Agent shall,
subject to Sections 4 and 7 hereof, 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 by
the holder of Rights of a sum sufficient to cover any tax or charge
that may be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates. The Rights Agent shall
have no duty or obligation to take any action under any Section of
this Agreement which requires the payment by a Rights
14
holder of applicable taxes and/or charges unless and until it is
satisfied that all such taxes and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a 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 countersignature and delivery to the registered holder in
lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder
of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time
after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Purchase
Price with respect to each surrendered Right for the total number of
shares of Preferred Stock (or other securities or property, as the
case may be) as to which the Rights are exercised, at or prior to the
earliest of (i) the close of business on July 11, 2009 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), (the
15
earliest of (i) or (ii) being herein referred to as the "Expiration
Date") or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
(b) The Purchase Price for each one-hundredth of a share
of Preferred Stock pursuant to the exercise of a Right shall
initially be $90, 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 and the
certificate on the reverse side of the Right Certificate duly
executed, accompanied by such documents as the Rights Agent may deem
appropriate, payment of the Purchase Price for the shares (or other
securities or property, as the case may be) to be purchased and an
amount equal to any applicable transfer tax required to be paid by
the holder of such Right Certificate in accordance with Section 9
hereof by certified check, cashier's check or money order payable to
the order of the Company, the Rights Agent shall thereupon promptly
(i) (A) requisition from any transfer agent of the Preferred Stock
(or make available, if the Rights Agent is the transfer agent of the
Preferred Stock) certificates for the number of one-hundredths of a
share of Preferred Stock to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests, or (B) if the Company shall have elected to deposit the
Preferred Stock issuable upon exercise of the Rights with a
depositary agent, requisition from the depositary agent depositary
receipts representing such number of one-hundredths of a share of
Preferred Stock as are to be purchased (in which case certificates
for the shares of Preferred Stock represented by such receipts shall
16
be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary agent to comply with such request,
(ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary 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. In the event that the Company is obligated to issue
other securities (including Common Stock) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof,
the Company will make all arrangements necessary so that such other
securities, cash and/or property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right
Certificate shall exercise less 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 and
delivered 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, from and after the occurrence of a Triggering Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes
a transferee after the Acquiring Person becomes an Acquiring Person,
or (iii) a transferee of an Acquiring Person (or such Associate or
Affiliate) who becomes a transferee prior to or
17
concurrently with the Acquiring Person becoming an Acquiring Person
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, whether written or oral, regarding the transferred
Rights or (B) a transfer which the Board of Directors otherwise
concludes is part of a plan, arrangement or understanding (whether
written or oral) which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without
any further action, and any holder of such Rights shall thereupon
have no rights whatsoever with respect to such Rights, whether under
any provision of this Agreement or otherwise, from and after the
occurrence of a Triggering Event. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e)
hereof are complied with, but shall have no liability to any holder
of Rights or other Person as a result of its failure or inability to
make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless the certificate contained in the form of election to purchase
set forth on the reverse side of the Right Certificate surrendered
for such exercise shall have been completed and signed by the
registered holder thereof and the Company shall have been provided
with such additional evidence of the identity of the Beneficial Owner
(or
18
former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.
(g) The Company covenants and agrees that it will cause
to be reserved and kept available out of its authorized and unissued
Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) or any Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or
other securities) held in its treasury, the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) that will be sufficient to
permit the exercise in full of all outstanding Rights.
(h) Notwithstanding any statement to the contrary
contained in this Agreement or in any Right Certificate, if the
Distribution Date or the Stock Acquisition Date shall occur prior to
the Record Date, the provisions of this Agreement, including (without
limitation) Sections 3 and 11(a)(ii), shall be applicable to the
Rights upon their issuance to the same extent such provisions would
have been applicable if the Record Date were the date of this
Agreement.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this 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
19
Rights Agent shall deliver all cancelled Right Certificates to the Company, or
shall, at the written request of the Company, cause such cancelled Right
Certificates to be destroyed, and in such case cause a certificate of
destruction to be delivered to the Company.
Section 9. AVAILABILITY OF PREFERRED STOCK. The Company covenants and
agrees that it will take all such action as may be necessary to ensure that all
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities),
subject to payment of the Purchase Price, be duly and validly authorized and
issued and fully paid and nonassessable shares.
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable pursuant to Section 7 or pursuant to the
provisions contemplated by Section 11(a)(ii) hereof (a) unless and until any
regulatory approvals required for the issuance and/or sale of Preferred Stock or
Common Stock upon such exercise have been obtained, (b) in any jurisdiction if
the requisite qualification in such jurisdiction shall not have been obtained or
(c) if the exercise thereof, or the issuance and/or sale of the Preferred Stock
or Common Stock to be purchased upon such exercise, shall not be permitted under
the Company's Restated Articles of Incorporation, as amended, or any applicable
law or administrative or judicial regulation or order.
The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any Preferred Stock (or Common Stock and/or other securities, as the case may
be) upon the exercise of Rights. The Company shall not,
20
however, be required to pay any transfer tax or charge which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or the issuance or delivery of certificates or depositary receipts for the
Preferred Stock (or Common Stock and/or other securities, as the case may be) in
a name other than that of the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Stock (or Common Stock and/or
other securities, as the case may be) upon the exercise of any Rights until any
such tax or charge shall have been paid (any such tax or charge being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's reasonable satisfaction that no such tax or
charge is due.
Section 10. PREFERRED STOCK RECORD DATE. Each person in whose name
any certificate for Preferred Stock (or Common Stock and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares or 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 and charges) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or Common Stock and/or other securities, as the case
may be) transfer books of the Company are closed, such person shall be deemed to
have become the record holder of such shares or securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a holder of Preferred Stock (or Common
21
Stock and/or other securities, as the case may be) 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 of Preferred Stock covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred
Stock payable in Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares of Preferred Stock or (D) issue any shares
of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof, the Purchase Price in effect at the
time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and
kind of shares of Preferred Stock or 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, upon
payment of the aggregate adjusted Purchase Price then in effect
necessary to exercise a Right in full, the aggregate number and kind
of shares of Preferred Stock or capital stock which, if such Right
had been exercised immediately prior to such date and at a time when
the Preferred Stock
22
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) Subject to Section 23 and 24 of this Agreement, in
the event any Person, alone or together with its Affiliates
and Associates, becomes an Acquiring Person, unless the
event causing such Person to become an Acquiring Person is a
transaction set forth in Section 13(a) hereof, proper
provision shall be made so that promptly following the
Redemption Period (as defined in Section 23(a) hereof), each
holder of a Right, except as provided below and in Section
7(e) hereof, shall thereafter have a right to receive, upon
exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one-hundredths of
a share of Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Agreement
and in lieu of a share of Preferred Stock, such number of
shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying the then-current Purchase
Price by the number of one-hundredths of a share of
Preferred Stock for which a Right was or would have been
exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) event, whether or not such Right was then
exercisable and dividing that
23
product by (y) [50%] of the then current per share market
price of the Company's Common Stock (determined pursuant to
Section 11(d) hereof) on the date of the occurrence of such
event. In the event that any Person shall become an
Acquiring Person and the Rights shall then be outstanding,
the Company shall not take any action which would eliminate
or diminish the benefits intended to be afforded by the
Rights.
(iii) In lieu of issuing Common Stock of the Company in
accordance with Section 11(a)(ii) hereof, the Company may,
in the sole discretion of the Board of Directors, elect to
(and, in the event that the Board of Directors has not
exercised the exchange right contained in Section 24 hereof
and there are not sufficient issued but not outstanding and
authorized but unissued shares of Common Stock to permit the
exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Company shall) take all
such action as may be necessary to authorize, issue or pay,
upon the exercise of the Rights, cash (including by way of a
reduction of the Purchase Price), property, other securities
or any combination thereof having an aggregate value equal
to the value of the Common Stock of the Company which
otherwise would have been issuable pursuant to Section
11(a)(ii), which aggregate value shall be determined by the
Board of Directors. For purposes of the preceding sentence,
the value of the Common Stock shall be determined pursuant
to Section 11(d) hereof and the value of any equity
securities which the Board of Directors determines to be a
"common stock equivalent" (including the Preferred Stock, in
such ratio as the Board of Directors shall determine) shall
be deemed to have the same value as the
24
Common Stock. Any such election by the Board of Directors
must be made and publicly announced within 60 days following
the date on which the event described in Section 11(a)(ii)
shall have occurred. Following the occurrence of the event
described in Section 11(a)(ii), the Board of Directors then
in office may 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 to
the extent that such directors have not determined whether
to exercise the Company's right of election under this
Section 11(a)(iii). 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 Preferred
Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Stock
(or shares having the same rights, privileges and preferences as the
Preferred Stock ("equivalent preferred shares")) or securities
convertible into Preferred Stock or equivalent preferred shares at a
price per share of Preferred Stock or equivalent preferred share (or
having a conversion price per share, if a security convertible into
Preferred Stock or equivalent preferred shares) less than the then
current per share market price of the Preferred Stock (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 shares of
Preferred Stock outstanding on such record date plus the number of
shares of Preferred Stock which the aggregate offering
25
price of the total number of shares of Preferred Stock and/or
equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be
offered) would purchase at such current market price and the
denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date plus the number of additional shares
of Preferred Stock and/or equivalent preferred shares to be offered
for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of one
Right. In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of
such consideration shall be as determined by the Board of Directors,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. Preferred
Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is
fixed; and in the event that such rights, options or warrants are not
so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Preferred Stock
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets (other
than a regular quarterly cash dividend or a dividend payable in
Preferred Stock) or subscription rights or
26
warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the then current per share market price of the Preferred Stock on
such record date, less the fair market value (as determined by the
Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets
or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of Preferred
Stock and the denominator of which shall be such current per share
market price of the Preferred Stock; provided, however, that in no
event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital
stock of the Company to be issued upon exercise of one Right. Such
adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder,
other than under Section 11(a)(iii) hereof, the "current per share
market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the 30
consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for the purpose of any
computation under Section 11(a)(iii) hereof, the "current per share
market price" of a Security on any date shall be deemed to be the
average of the daily closing prices per share of such security for
thirty (30) consecutive Trading Days
27
immediately following such date; provided, however, that in the event
that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable
in shares of such Security or securities convertible into such shares
(other than the Rights), or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "current per share
market price" shall be appropriately adjusted to reflect the current
market price per share equivalent (ex-dividend) of such Security. The
closing price for each day shall be the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York
Stock Exchange ("NYSE") or, if the Security is not listed or admitted
to trading on the NYSE, 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
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
28
market in the Security, the fair value of such Security on such date
(as determined by the Board of Directors) shall be used. The term
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the Security
is not listed or admitted to trading on any national securities
exchange, a Business Day. If the Common Stock is not publicly held or
not listed or traded, "current market price" shall mean the fair
value per share as determined by the Board of Directors, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Stock
shall be determined in accordance with the method set forth
in Section 11(d)(i). If the shares of Preferred Stock are
not publicly traded, the "current per share market price" of
the Preferred Stock shall be conclusively deemed to be the
current per share market price of the Common Stock of the
Company as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof), multiplied by [one hundred]. If neither the shares
of Common Stock of the Company nor the shares of Preferred
Stock are publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share as
determined by the Board of Directors, whose determination
shall be described in a statement filed with 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
29
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-millionth]
of a share of Preferred Stock or [one ten-thousandth] of any other
share or security, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years
from the date of the transaction which requires such adjustment or
(ii) the date of the expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock of the Company other than Preferred Stock, thereafter
the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock
contained in this Section 11, and the provisions of Sections 7, 9,
10, 13 and 14 with respect to the Preferred Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price,
the number of one-hundredths of a share of Preferred Stock
purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
30
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and (c),
each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one-hundredths of a share of
Preferred Stock (calculated to the nearest [one-millionth] of a share
of Preferred Stock) obtained by (i) multiplying (x) the number of
one-hundredths of a share covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior
to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one-hundredths of a
share of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one-hundredths of a
share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior
to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest [one ten-thousandth]) obtained
by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record
date may be the date on which the
31
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause
to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof,
if required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued, executed and
countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one-hundredths of a share of
Preferred Stock issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to
express the Purchase Price and the number of one-hundredths of a
share of Preferred Stock which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one-hundredth of the
then par value, if any, of the Preferred Stock 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
32
validly and legally issue fully paid and nonassessable Preferred
Stock 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 issuing to the holder of any
Right exercised after such record date of the Preferred Stock and
other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Preferred Stock 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 Preferred Stock, issuance
wholly for cash of any shares of Preferred Stock at less than the
current market price, issuance wholly for cash of shares of Preferred
Stock or securities which by their terms are convertible into or
exchangeable for Preferred Stock, dividends on Preferred Stock
payable in Preferred Stock or issuance of rights, options or warrants
referred to hereinabove in Section 11(b), hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to
such shareholders.
33
(n) The Company shall not, at any time after the
Distribution Date, (i) consolidate with any other Person (other than
a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), (ii) merge with or into any other Person
(other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or a
series of related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if
(x) at the time of or immediately after such consolidation, merger or
sale there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the
shareholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates.
(o) Except as permitted by Section 23, Section 24 or
Section 27 hereof, the Company shall not take (or permit any
Subsidiary to take) after the Distribution Date any action if at the
time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
34
(p) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i)
declare or pay any dividend on the Common Stock payable in Common
Stock or (ii) effect a subdivision, combination or consolidation of
the Common Stock (by reclassification or otherwise than by payment of
dividends in Common Stock) into a greater or lesser number of Common
Stock, then in any such case (i) the number of one-hundredths of a
share of Preferred Stock purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number
of one-hundredths of a share of Preferred Stock so purchasable
immediately prior to such event by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately
before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and
(ii) each share of Common Stock outstanding immediately after such
event shall have issued with respect to it that number of Rights
which each share of Common Stock outstanding immediately prior to
such event had issued with respect to it. The adjustments provided
for in this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or
consolidation is effected.
(q) So long as the shares issuable upon the exercise of
the Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause, from and after such time
as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
35
(r) The Company shall use its best efforts to (i) file,
as soon as practicable following the first occurrence of a Triggering
Event, a registration statement under the Securities 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 Securities Act) until the
date of the expiration of the Rights. The Company will also take such
action as may be appropriate under the blue sky laws of the various
states. The Company may temporarily suspend, for a period of time not
to exceed 90 days following the first occurrence of a Triggering
Event, the exercisability of the Rights in order to prepare and file
such registration statement or in order to comply with such blue sky
laws. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such
time as a registration statement has been declared effective. Upon
any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the
suspension is no longer in effect. Notwithstanding any provision of
this Agreement to the contrary, the Rights shall not be exercisable
and shall be null and void so long as held by a holder in any
jurisdiction where the requisite qualification to the issuance to
such holder, or the exercise by such holder, of the Rights in such
jurisdiction shall not have been obtained or be obtainable, or the
exercise thereof shall not be permitted under applicable law or a
registration statement shall not have been declared effective.
36
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made or any event affecting Rights or their
exercisability (including, without limitation, an event which causes Rights to
become null and void) occurs as provided in Section 11 or 13 hereof, the Company
shall promptly (a) prepare a certificate setting forth such adjustment, and a
brief statement of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Stock or the Preferred
Stock 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 may assume that no adjustment has been made
unless and until it shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) If after the Stock 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 consolidation or merger and, in connection with such
consolidation or merger, all or part of the Common Stock shall be changed into
or exchanged for stock or other securities of any other Person (or the Company)
or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one or more transactions, assets or earning power aggregating 50% or more of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person or Persons other than the Company or one or more of its
wholly-owned Subsidiaries, then, and in each such case, proper provision shall
be made so that (i) each holder of a Right (except as otherwise provided herein)
shall thereafter have the right to receive, upon the exercise
37
thereof at a price equal to the then current Purchase Price multiplied by the
number of one-hundredths of a share of Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
shares of Preferred Stock, such number of validly authorized and issued, fully
paid, non-assessable and freely tradable shares of Common Stock of the Principal
Party (as hereinafter defined), free and clear of all liens, rights of call or
first refusal, encumbrances or other adverse claims, as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of
one-hundredths of a share of Preferred Stock for which a Right is then
exercisable (or, if such Right is not then exercisable for a number of
one-hundredths of a share of Preferred Stock, the number of such fractional
shares for which it was exercisable immediately prior to an event described
under Section 11(a)(ii) hereof) and dividing that product by (B) [50%] of the
then current per share market price of the Common Stock 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, or otherwise, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such Principal Party; (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its shares of Common Stock 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 shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any consolidation, merger,
sale, or transfer.
(b) "Principal Party" shall mean:
38
(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 shares of Common
Stock of the Company are converted in such merger or
consolidation, or, if there is more than one such issuer,
the issuer of Common Stock that has the highest aggregate
current market price (as determined pursuant to Section
11(d) hereof) and if no securities or other equity interests
are so issued, the Person that is the surviving entity of
such merger or consolidation (including the Company if
applicable); 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 described in clauses (b)(i) and
(b)(ii): (1) if the Common Stock of such Person is not at such time and has not
been continuously registered under Section 12 of the Exchange Act over the
preceding 12-month period, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered,
"Principal Party" shall refer to such other Person; (2) if the Common Stock of
such Person is not and has not been so registered and such Person is a
Subsidiary, directly or indirectly, or more than one Person, the Common Stock of
two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value; and (3) if the Common Stock of such Person is
not and has not been so registered and such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not owned,
directly or
39
indirectly, by the same Person, the rules set forth in (1) and (2) 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 sufficient number of authorized shares of Common Stock
which have not been issued or reserved for issuance to permit the
full exercise of the Rights and prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent
a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that,
as soon as practicable after the date of any consolidation, merger or
sale of assets mentioned in paragraph (a) of this Section 13, the
Principal Party will:
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause
such registration statement to (A) become effective as soon
as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date;
(ii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act; and
40
(iii) use its best efforts to obtain any necessary
regulatory approvals in respect of the securities
purchasable upon exercise of outstanding Rights; and
(iv) use its best efforts, if such Common Stock of the
Principal Party shall be listed or admitted to trading on
the NYSE or on another national securities exchange or (for
so long as it is not a national securities exchange) on the
NASDAQ, to list or admit to trading (or continue the listing
of) the Rights and the securities purchasable upon exercise
of the Rights on the NYSE or on such securities exchange or
(for so long as it is not a national securities exchange) on
the NASDAQ, or if the securities of the Principal Party
purchasable upon exercise of the Rights shall not be listed
or admitted to trading on the NYSE or a national securities
exchange or (for so long as it is not a national securities
exchange) on the NASDAQ, to cause the Rights and the
securities purchasable upon exercise of the Rights to be
reported by such other system then in use.
(d) In case the Principal Party that is to be a party to
a transaction referred to in this Section 13 has at the time of such
transaction, or immediately following such transaction shall have, a
provision in any of its authorized securities or in its certificate
or articles of incorporation or by-laws or other instrument governing
its affairs, or any other agreements or arrangements, which provision
would have the effect of (i) causing such Principal Party to issue,
in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, shares of Common Stock of
such Principal Party at less than the then current market price per
share (as determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into,
41
Common Stock of such Principal Party at less than such then current
market price (other than to holders of Rights pursuant to this
Section 13), (ii) providing for any special payment, tax, charge or
similar provisions in connection with the issuance of the Common
Stock of such Principal Party pursuant to the provisions of this
Section 13 or (iii) otherwise eliminating or substantially
diminishing the benefits intended to be afforded by the Rights in
connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, then, in such event, the
Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that
the provision in question of such Principal Party shall have been
cancelled, waived or amended, or that the authorized securities shall
be redeemed, so that the applicable provision shall have no effect in
connection with, or as a consequence of, the consummation of such
transaction.
(e) The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other
transfers. In the event that one of the transactions described in
Section 13(a) shall occur at any time after the occurrence of a
transaction described in Section 11(a)(ii) hereof, the Rights which
have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there may be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount
42
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 NYSE or, if the Rights are not listed or
admitted to trading on the NYSE, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors. 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 by the Board of Directors shall be used.
(b) The Company shall not be required to issue fractions
of a share of Preferred Stock (other than fractions which are
integral multiples of one-hundredth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Preferred Stock (other than fractions
which are integral multiples of one-hundredth of a share of Preferred
Stock). Fractions of a share of Preferred Stock in integral multiples
of one-hundredth of a share of Preferred Stock may,
43
at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall
provide that the holders of such depositary receipts shall have all
the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock
that are not integral multiples of one-hundredth of a share of
Preferred Stock, 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-hundredth of a share of Preferred Stock. For the
purposes of this Section 14(b), the current market value of
one-hundredth of a share of Preferred Stock shall be [one-hundredth]
of the closing price of a share of Preferred Stock (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of a share of Common
Stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of fractional
shares of Common Stock, 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 share of Common Stock. For purposes of this
Section 14(c), the current market value of one share of Common Stock
shall be the closing price of one share of Common Stock (as
determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such
exercise.
44
(d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right (except as provided
above).
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), 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. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
45
(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
purposes, duly endorsed or accompanied by a proper instrument of
transfer and with appropriate forms and certificates fully executed;
(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 Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated Common Stock Certificate made by
anyone other than 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; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or any other Person as a result of
its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise
restraining performance of such obligation.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. 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 number of
one-hundredths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented
46
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 shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (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, if other than the Secretary of the Company, 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 (including any taxes other than income taxes) incurred in
the administration and execution of this Agreement and the exercise and
performance of his, her or its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold him, her or it harmless against, any
loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct (which gross negligence, bad faith, or willful misconduct
must be determined by a final, non-appealable order, judgment, decree or ruling
of a court of competent jurisdiction) on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising, directly or indirectly,
therefrom. The indemnity provided for hereunder shall survive the expiration of
the Rights and the termination of this Agreement.
47
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by him, her or it in
connection with its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Preferred Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. For the purposes of this section, if the Rights Agent is not the
Company's Secretary, any Person into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person 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 party of any of
the parties hereto; provided, that such Person 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
48
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 the Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes only
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
satisfactory to it (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 and the Rights Agent shall incur
no liability or responsibility to the Company or to any holder of any
Right Certificate in respect of any action taken or omitted by it in
accordance with such opinion.
(b) Whenever in the performance of his, her or 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 or omitting 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
49
certificate signed by any one of the Chairman of the Board, the Chief
Executive Officer, any Vice Chairman, the President, any Vice
President, the Treasurer or the Secretary (unless the Secretary is
the Rights Agent) 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 by it under the provisions of this
Agreement in reliance upon such certificate.
(c) For the purposes of this subsection, if the Rights
Agent is not the Company's Secretary, the Rights Agent shall be
liable hereunder to the Company and any other Person only for its own
gross negligence, bad faith or willful misconduct (which gross
negligence, bad faith or willful misconduct must be determined by a
final, non-appealable order, judgment, decree or ruling of a court of
competent jurisdiction). Anything to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, punitive,
indirect, consequential or incidental loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or
damage. Any liability of the Rights Agent under this Agreement will
be limited to the amount of annual fees paid by the Company to the
Rights Agent.
(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 any provision of this
Agreement or the execution and delivery hereof
50
(except the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate (except the
Rights Agent's countersignature thereof); nor shall the Rights Agent
be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate;
nor shall the Rights Agent be responsible for any change in the
exercisability of the Rights (including the Rights becoming void
pursuant to Section 7(e) hereof) or any adjustment 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 receipt of a certificate furnished pursuant to
Section 12 describing a change or adjustment); nor shall the Rights
Agent by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of
Preferred Stock or Common Stock to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of
Preferred Stock or Common Stock will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent
of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of the Rights
Agent's duties hereunder from
51
any one of the Chairman of the Board, the Chief Executive Officer,
any Vice Chairman, the President, any Vice President, the Secretary
(unless the Secretary is the Rights Agent) or the Treasurer of the
Company, and to apply to such officers for advice or instructions in
connection with its duties, and the Rights Agent shall not be liable
for any action taken or suffered by the Rights Agent 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 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 such application is given, 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 its Subsidiaries
or become pecuniarily interested in any transaction in which the
Company or its Subsidiaries may be interested, or contract with or
lend money to the Company or its Subsidiaries or otherwise act as
fully and freely as though the Rights Agent were not Rights Agent
under this Agreement. Nothing herein
52
shall preclude the Rights Agent from acting in any other capacity for
the Company or its Subsidiaries or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in the Rights Agent or perform any
duty hereunder either individually or by or through the Rights
Agent's 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) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise, transfer, split-up,
combination or exchange, 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, transfer,
split-up, combination or exchange without first consulting with the
Company.
(k) The Rights Agent shall not be under any duty or
responsibility to ensure compliance with any applicable federal or
state securities laws in connection with the issuance, transfer or
exchange of Right Certificates.
(l) The Rights Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other
action likely to involve expense unless the Company or one or more
holders of Right Certificates shall furnish the Rights Agent with
security and indemnity to Rights Agent's satisfaction for any costs
and expenses which may be incurred.
53
(m) In addition to the foregoing, the Rights Agent shall
be protected and shall incur no liability for, or in respect of, any
action taken or omitted by it in connection with its administration
of this Agreement if such acts or omissions are in reliance upon (i)
the proper execution of the certification concerning beneficial
ownership appended to the form of assignment and the form of election
to purchase attached to the Rights Certificate unless the Rights
Agent shall have actual knowledge that, as executed, such
certification is untrue, or (ii) the non-execution of such
certification including, without limitation, any refusal to honor any
otherwise permissible assignment or election by reason of such
non-execution.
(n) The Rights Agent shall not be liable for failure to
perform any duties except as specifically set forth herein and no
implied covenants or obligations shall be read into this Agreement
against the Rights Agent whose duties and obligations are ministerial
and shall be determined solely by the express provisions hereof.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from his, her or its duties under this
Agreement upon 30 days' notice in writing mailed to the Company [and to each
transfer agent of the Common Stock or Preferred Stock by registered or certified
mail, and to the holders of the Right Certificates by first-class mail]. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock or Preferred Stock
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
54
within a period of 30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or, if the Rights Agent is an individual, the Company
has obtained actual knowledge of such resignation or incapacity, 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, at the expense of the Company, 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, may either be
the Corporate Secretary, an Assistant Secretary, or other appropriate officer of
the Company, or shall be a corporation or bank organized and doing business
under the laws of the United States or of any other state of the United States,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the
55
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. In addition, in connection
with the issuance or sale of shares of Common Stock following the Distribution
Date (other than upon exercise of a Right) and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors, issue
Rights Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificates would be issued, and (ii) no such Rights Certificates shall
be issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
Section 23. REDEMPTION.
(a) The Board of Directors may, at its option, at any
time during the period commencing on the Rights Dividend Declaration
Date and ending on the earlier of
56
(i) the Close of Business on the tenth day following the Stock
Acquisition Date (or, if the Stock Acquisition Date shall have
occurred prior to the Record Date, the Close of Business on the tenth
day following the Record Date), or (ii) the Close of Business on the
Final Expiration Date (the "Redemption Period"), cause the Company to
redeem all but not less than all the then outstanding Rights at a
redemption price of $0.005 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). Notwithstanding
anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a Triggering
Event until such time as the Company's right of redemption hereunder
has expired. The redemption of the Rights by the Board of Directors
may be made effective at such time on such basis and with such
conditions as the Board of Directors in its sole discretion may
establish. If redemption of the Rights is to be effective as of a
future date, the Rights shall continue to be exercisable, subject to
Section 7 hereof, until the effective date of the redemption,
provided that nothing contained herein shall preclude the Board of
Directors from subsequently causing the Rights to be redeemed at a
date earlier than the previously scheduled effective date of the
redemption. The Company may, at its option, pay the Redemption Price
in cash, Common Stock (based on the current per share market price of
the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights (or at the effective time of
such redemption established by the Board of Directors pursuant to
paragraph (a) of this Section 23), and without any further
57
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 or, if later, the effectiveness of the redemption of the
Rights pursuant to the last sentence of paragraph (a), 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
Stock. 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. 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, (ii) depositing with a bank or trust company having a capital
and surplus of at least $100 million funds necessary for such
redemption, in trust, to be applied to the redemption of the Rights
so called for redemption and (iii) arranging for the mailing of the
Redemption Price to the registered holders of the Rights; then, and
upon such action, all outstanding Rights Certificates shall be null
and void without further action by the Company. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 23, in Section
58
24 hereof, or in connection with the purchase of Common Stock prior
to the Distribution Date.
Section 24. EXCHANGE. (a) The Board of Directors may, at its option,
at any time after a Triggering Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for Common Stock
at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Affiliate of the Company, any employee
benefit plan of the Company or any such Affiliate, or any entity holding Common
Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number
of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail
a notice of any such exchange to all of the holders of such Rights at
their last addresses as
59
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
Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Preferred Stock (or equivalent
preferred shares, as such term is defined in Section 11(b) hereof)
for Common Stock exchangeable for Rights, at the initial rate of
one-hundredth of a share of Preferred Stock (or equivalent preferred
share) for each share of Common Stock, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Stock
pursuant to the terms thereof, so that the fraction of a share of
Preferred Stock delivered in lieu of each share of Common Stock shall
have the same voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient
shares of Common Stock or Preferred Shares issued but not outstanding
or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional
shares of Common Stock or Preferred Stock for issuance upon exchange
of the Rights.
(e) The Company shall not be required to issue fractions
of shares of Common Stock or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay to the
60
registered holders of the Right Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value
of a whole share of Common Stock. For the purposes of this paragraph
(e), the current market value of a whole share of Common Stock shall
be the closing price of a share of Common Stock (as determined
pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to
this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose at any time after
the Distribution Date (i) to pay any dividend payable in stock of any
class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a
regular quarterly cash dividend), (ii) to offer to the holders of its
Preferred Stock rights or warrants to subscribe for or to purchase
any additional Preferred Stock or shares of stock of any class or any
other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding
Preferred Stock), (iv) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or
more of its Subsidiaries to effect any sale or other transfer), in
one or more transactions, of 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or winding
up of the Company, or (vi) to declare or pay any dividend on the
Common Stock payable in Common Stock or to effect a subdivision,
combination or consolidation of the Common Stock (by reclassification
or otherwise than by payment of dividends in Common Stock),
61
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 Stock and/or Preferred Stock, if any such date is to be
fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 20 days prior to the
record date for determining holders of the Preferred Stock 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
Stock and/or Preferred Stock, whichever shall be the earlier.
(b) In case any of the events set forth in Section
11(a)(ii) hereof shall occur, then the Company shall as soon as
practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such
event, which notice shall describe such event and the consequences of
such event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
ALLETE, Inc.
30 West Superior Street
Duluth, Minnesota 55802
Attention: Corporate Secretary
62
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
ALLETE, Inc.
30 West Superior Street
Duluth, Minnesota 55802
Attention: Corporate Secretary
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. Notices or demands sent by mail shall be deemed given or
made three business days after the date they are sent.
Section 27. SUPPLEMENTS AND AMENDMENTS. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of the Rights. At
any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights; provided, however, that no such supplement or
amendment may (a) adversely affect the interests of the holders of Rights as
such (other than an Acquiring Person or any Affiliate or Associate of an
Acquiring Person), or (b) cause the Rights again to become redeemable.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. Upon
the
63
delivery of a certificate from an appropriate officer of the Company which
states that the supplement or amendment is in compliance with the terms of this
Section 27, and if requested by the Rights Agent, an opinion of counsel, that
states that the proposed supplement or amendment complied with this Section 27,
the Rights Agent shall execute such supplement or amendment. Notwithstanding
anything herein to the contrary, the Rights Agent may, but shall not be
obligated to, enter into any supplement or amendment that affects the Rights
Agent's own rights, duties, obligations or immunities under this Agreement.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. 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 registered holders of the Common Stock) any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock).
Section 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
64
Section 31. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Minnesota and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
Section 34. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. (a)
The Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or the 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, interpretations
and determinations (including, for purposes of clause (ii) below, all omissions
with respect to the foregoing) which are done or made by the Board of Directors,
shall (i) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Right Certificates and all other parties, and (ii) not subject
the Board of Directors to any liability to the holders of the Right
Certificates. Unless otherwise notified, the Rights Agent shall always be
65
entitled to assume that the Board of Directors acted in good faith and the
Rights Agent shall be fully protected and shall incur no liability in reliance
thereon.
(b) Notwithstanding any other provision of this
Agreement, it is understood that the IDE Committee (as hereinafter
defined) of the Board of Directors shall meet not less than once
every year to review the terms and conditions of this Agreement,
including whether the termination or modification of this Agreement
is in the best interest of the Company and its shareholders, and to
make a recommendation based on such review to the Board of Directors.
The first meeting of the IDE Committee shall take place no later than
July 12, 2007. The IDE Committee, when reviewing the terms and
conditions of this Agreement, shall have the power to set its own
agenda and to retain at the expense of the Company such legal
counsel, investment bankers and other advisors as such Committee
deems appropriate in carrying out its foregoing responsibilities
under this Agreement. The IDE Committee, when reviewing the terms and
conditions of this Agreement, shall have the authority to review all
information of the Company and to consider any and all factors it
deems relevant to any such review. The "IDE Committee" shall be
comprised of all members of the Board of Directors who are
"Independent Directors" as that term is defined in the NYSE Listed
Company Manual.
66
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: ALLETE, INC.
By: /s/ Claudia R. Scott Welty By: /s/ Donald J. Shippar
------------------------------- ----------------------------------
Title: Chairman, President and Chief
Executive Officer
[RIGHTS AGENT]
Witness: Corporate Secretary
ALLETE, INC.
By: /s/ Dawn LaPointe Garbo By: /s/ Deborah A. Amberg
------------------------------- -----------------------------------
Senior Vice President, General
Counsel and Secretary
67
EXHIBIT A
FORM OF CERTIFICATE OF RESOLUTION
FIXING TERMS OF JUNIOR SERIAL PREFERRED STOCK A
of
MINNESOTA POWER & LIGHT COMPANY
We, Edwin L. Russell, Chairman, President and Chief Executive Officer,
and Philip R. Halverson, Corporate Secretary of Minnesota Power & Light Company,
a corporation organized and existing under the Minnesota Business Corporation
Act (the "Company"), in accordance with the provisions of Chapter 302A thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Restated Articles of Incorporation of the Company, the Board of Directors on
July 24, 1996 adopted the following resolution creating a series of 1,000,000
shares of Serial Preferred Stock A designated as Junior Serial Preferred Stock
A:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of the Company's
Restated Articles of Incorporation, a series of Serial Preferred Stock A,
without par value, of the Company, consisting of 1,000,000 shares is hereby
created, and the voting rights, preferences and relative rights, and the
qualifications, limitations or restrictions thereof, are as follows:
Section 1. DESIGNATION AND AMOUNT. There shall be a series of Serial
Preferred Stock A, without par value, of the Company which shall be designated
as "Junior Serial Preferred Stock A," (hereinafter called "Junior Serial
Preferred Stock A"), and the number of shares constituting such series shall be
1,000,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors and by the filing of a certificate pursuant to the
provisions of the Minnesota Business Corporation Act stating that such increase
or reduction has been so authorized; provided, however, that no decrease shall
reduce the number of shares of Junior Serial Preferred Stock A to a number less
than that of the shares then outstanding plus the number of shares of Junior
Serial Preferred Stock A issuable upon exercise of outstanding rights, options
or warrants or upon conversion of outstanding securities issued by the Company.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) The holders of shares of Junior Serial Preferred Stock A shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable in cash to
holders of record on the first business day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Junior Serial
Preferred Stock A, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $51 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind)
A-1
of all non-cash dividends or other distributions other than a dividend payable
in shares of Common Stock (hereinafter defined) or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock, without par value, of the Company (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Junior Serial Preferred Stock A. In the
event the Company shall at any time following July 24, 1996 (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Junior Serial Preferred Stock A were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying each such amount by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Junior
Serial Preferred Stock A as provided in paragraph (A) above at the time it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock).
(C) No dividend or distribution (other than a dividend payable in
shares of Common Stock) shall be paid or payable to the holders of shares of
Common Stock unless, at the same time as such payment is made with respect to
the Common Stock or prior thereto, all accrued but unpaid dividends to the date
of such dividend or distribution shall have been paid to the holders of shares
of Junior Serial Preferred Stock A.
(D) Dividends shall begin to accrue and be cumulative on outstanding
shares of Junior Serial Preferred Stock A from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares of Junior Serial Preferred
Stock A, unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Junior Serial
Preferred Stock A entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Junior Serial Preferred Stock A in an amount less than the total
amount of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Junior Serial Preferred Stock A entitled to receive
payment of a dividend or distribution declared thereon, which record date shall
be no more than 30 days prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Junior Serial
Preferred Stock A shall have the voting rights provided for in the Restated
Articles of Incorporation of the Company.
A-2
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Junior Serial Preferred Stock A as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Serial Preferred
Stock A outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends on, make any other distributions on,
or redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Junior Serial Preferred Stock A;
(ii) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Serial Preferred Stock
A, except dividends paid ratably on the Junior Serial Preferred Stock A and all
such parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Junior Serial Preferred Stock
A, provided that the Company may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Company ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Junior Serial Preferred Stock A; or
(iv) purchase or otherwise acquire for consideration any shares
of Junior Serial Preferred Stock A, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section, purchase
or otherwise acquire such shares at such time and in such manner.
Section 5. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Junior Serial Preferred Stock A unless, prior
thereto, the holders of whole shares of Junior Serial Preferred Stock A shall
have received $100.00 per share, plus an amount equal to accrued and unpaid
A-3
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Junior Serial A Liquidation Preference").
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Junior Serial A Liquidation
Preference and the liquidation preferences of all other series of preferred
stock, if any, which rank on a parity with the Junior Serial Preferred Stock A,
then such remaining assets shall be distributed ratably to the holders of such
parity shares in proportion to their respective liquidation preferences.
Section 6. CONSOLIDATION, MERGER, ETC. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or converted into other stock or
securities, cash and/or any other property, then in any such case the shares of
Junior Serial Preferred Stock A shall at the same time be similarly exchanged or
converted in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is converted or
exchanged. In the event the Company shall at any time (i) declare any dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or conversion of shares of
Junior Serial Preferred Stock A shall be adjusted by multiplying such amount by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. REDEMPTION. The shares of a Junior Serial Preferred Stock A
shall not be redeemable by the Company. The preceding sentence shall not limit
the ability of the Company to purchase or otherwise deal in such shares of stock
to the extent permitted by law.
Section 8. FRACTIONAL SHARES. Junior Serial Preferred Stock A may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Junior Serial Preferred Stock A.
IN WITNESS WHEREOF, Minnesota Power & Light Company has caused its
corporate seal to be hereunto affixed and this Certificate to be signed by Edwin
L. Russell, its Chairman, President and Chief Executive Officer, and the same to
be attested by Philip R. Halverson, its Corporate Secretary, this 24th day of
July, 1996.
MINNESOTA POWER & LIGHT COMPANY
By:
----------------------------------------
Edwin L. Russell
Chairman, President and Chief
Executive Officer
A-4
(SEAL)
Attest:
By:
----------------------------
Philip R. Halverson
Corporate Secretary
A-5
EXHIBIT B
[Form of Right Certificate]
CERTIFICATE NO. R- RIGHTS
-------------
NOT EXERCISABLE AFTER [_____, 200_] OR EARLIER IF THE RIGHTS EXPIRE
UNDER CERTAIN CIRCUMSTANCES OR ARE REDEEMED BY THE COMPANY. THE RIGHTS
ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.005 PER
RIGHT ON THE TERMS SET FORTH IN THE AMENDED AND RESTATED RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE AMENDED AND RESTATED
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID
SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE
QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH
HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED
OR BE OBTAINABLE. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE AMENDED AND RESTATED RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH
AGREEMENT.]*
Right Certificate
ALLETE, Inc.
This certifies that _______________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Amended and Restated Rights Agreement, dated as of July 12,
2006 (the "Amended Rights Agreement"), between ALLETE, Inc., a Minnesota
corporation (the "Company"), and the Corporate Secretary of the Company (the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Amended Rights Agreement) and prior to 5:00
p.m. (Duluth time) on [___________], or notice of redemption or exchange at the
office of the Rights Agent (or its successors as Rights Agent) designated for
such purpose, one and one-half one-hundredths (three two-hundredths) of a fully
paid non-assessable share of Junior Serial Preferred Stock A, without par value
(the "Preferred Stock") of the Company at a purchase price of $90.00 per
one-hundredth of a share (the "Purchase Price") upon presentation and surrender
of this Right Certificate with the appropriate Form of Election to Purchase and
related Certificate duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share
- ---------------------
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
B-1
set forth above, are
the number and Purchase Price as of [___________], based on the Preferred Stock
as constituted at such date. Capitalized terms not defined in this Right
Certificate that are defined in the Amended Rights Agreement shall have the
meanings ascribed to them in the Amended Rights Agreement.
Upon the occurrence of a Triggering Event, if the Rights evidenced by
this Right Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Amended Rights Agreement), (ii) under certain circumstances specified in
the Amended Rights Agreement, a transferee of any such Acquiring Person,
Associate or Affiliate, or (iii) under certain circumstances specified in the
Amended Rights Agreement, a transferee of a person who, after such transfer,
became an Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
such Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of any such Triggering
Event.
As provided in the Amended Rights Agreement, the Purchase Price and the
number and kind of Preferred Stock or other securities, 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.
The Rights evidenced by this Rights Certificate shall not be
exercisable, and shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification to the issuance to such holder, or the
exercise by such holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Amended Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Amended 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, which limitations of rights include the temporary suspension
of the exercisability of such Rights under certain circumstances specified in
such Amended Rights Agreement. Copies of the Amended Rights Agreement are on
file at the above-mentioned office of the Rights Agent and are also available
upon written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of shares of Preferred Stock as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Amended Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.005 per Right at any time prior to such time as any
Person becomes an Acquiring Person.
B-2
No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one-hundredth of a share of Preferred Stock, which may at
the election of the Company be evidenced by depository receipts), but in lieu
thereof a cash payment will be made, as provided in the Amended Rights
Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Amended
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or, to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Amended 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 Amended 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 ____________ __, 2006
ATTEST: (SEAL) ALLETE, INC.
By:
- ---------------------------------- ----------------------------------
Name: Name:
Title: Title
Countersigned:
- ----------------------------------
By:
-------------------------------
Authorized Signature
B-3
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise Rights represented by the Right
Certificate.)
TO: ALLETE, INC.
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of:
Please insert social security
or other identifying number:
---------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
Please insert social security
or other identifying number:
---------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated: , 20
--------------- ---- -------------------------------------
Signature
Signature Guaranteed:
B-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Amended and Restated Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: , 20
--------------- ---- -------------------------------------
Signature
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
B-5
[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: , 20
--------------- ---- -------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Right 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 Amended and Restated Rights
Agreement)
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: , 20
--------------- ---- -------------------------------------
Signature
B-6
EXHIBIT C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE AMENDED AND RESTATED
RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO IS
OR BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE AMENDED AND RESTATED
RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL AND
VOID AND WILL NO LONGER BE TRANSFERABLE
SUMMARY OF AMENDED AND RESTATED RIGHTS AGREEMENT
------------------------------------------------
On July 12, 2006, the Board of Directors of ALLETE, Inc. (the
"Company") amended the terms of the Rights Agreement dated July 24, 1996 between
the Company and the Secretary of the Company (the "Original Rights Agreement").
The Original Rights Agreement provided for a dividend distribution of one Right
for each outstanding share of common stock, without par value (the "Common
Stock"), of the Company to shareholders of record at the close of business on
July 24, 1996 (the "Record Date") and authorized the issuance of one Right with
respect to each share of Common Stock that becomes outstanding between the
Record Date and July 23, 2006, or such earlier time as the Rights are redeemed.
Except as described below, each Right, when exercisable, entitles the registered
holder to purchase from the Company one and one-half one-hundredths (three
two-hundredths) of a share of Junior Serial Preferred Stock A, without par value
(the "Preferred Stock"), at a price of $90.00 per one-hundredth of a share (the
"Purchase Price"), subject to adjustment. The terms of the Rights are set forth
in the Amended and Restated Rights Agreement (the "Amended Rights Agreement"),
dated July 12, 2006 between the Company and the Secretary of the Company,
currently Deborah A. Amberg, as Rights Agent.
The Rights initially attached to all Common Stock certificates
representing shares then outstanding, and no separate Right Certificates were
distributed. The Rights will continue to be evidenced by the Common Stock
certificates together with this copy of the Summary of Amended and Restated
Rights Agreement and not by separate certificates until the earlier to occur of
(i) 10 days following a public announcement that a person or group of affiliated
or associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding shares
of Common Stock (the "Stock Acquisition Date") or (ii) 15 business days (or such
later date as may be determined by action of the Board of Directors (the "Board
of Directors") prior to the time that any person becomes an Acquiring Person)
following the commencement of (or a public announcement of an intention to make)
a tender or exchange offer if, upon consummation thereof, such person or group
would be the beneficial owner of 15% or more of such outstanding shares of
Common Stock (the earlier of such dates being called the "Distribution Date").
Until the Distribution Date, the Rights will be transferred with and
only with the Common Stock. Until the Distribution Date (or earlier redemption,
expiration or termination of the Rights), the transfer of any certificates for
Common Stock, with or without a copy of this Summary of Amended Rights
Agreement, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates. As soon as practicable
C-1
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and, thereafter, such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date and will
expire at the earliest of (i) July 23, 2009 (the "Final Expiration Date"), (ii)
the redemption of the Rights by the Company as described below, or (iii) the
exchange of all Rights for Common Stock as described below.
In the event that any person (other than the Company, its affiliates or
any person receiving newly-issued shares of Common Stock directly from the
Company) becomes the beneficial owner of 15% or more of the then outstanding
shares of Common Stock, each holder of a Right will thereafter have a right to
receive, upon exercise at the then current exercise price of the Right, Common
Stock (or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right. The
Amended Rights Agreement contains an exemption for any issuance of Common Stock
by the Company directly to any person (for example, in a private placement or an
acquisition by the Company in which Common Stock is used as consideration), even
if that person would become the beneficial owner of 15% or more of the Common
Stock, provided that such person does not acquire any additional shares of
Common Stock.
In the event that, at any time following the Stock Acquisition Date,
the Company is acquired in a merger or other business combination transaction or
50% or more of the Company's assets or earning power are sold, proper provision
will be made so that each holder of a Right will thereafter have the right to
receive, upon exercise at the then current exercise price of the Right, common
stock of the acquiring or surviving company having a value equal to two times
the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any of the
events set forth in the preceding two paragraphs (the "Triggering Events"), any
Rights that are, or (under certain circumstances specified in the Amended Rights
Agreement) were, beneficially owned by an Acquiring Person will immediately
become null and void.
The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights, are
subject to adjustment from time to time to prevent dilution, among other
circumstances, in the event of a stock dividend on, or a subdivision, split,
combination, consolidation or reclassification of, the Preferred Stock or the
Common Stock, or a reverse split of the outstanding shares of Preferred Stock or
the Common Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. The Company will not be required to issue fractional shares
of Preferred Stock or Common Stock (other than fractions in multiples of
one-hundredth of a share of Preferred Stock) and, in lieu thereof, an adjustment
in cash may be made based on the market price of the Preferred Stock or Common
Stock on the last trading date prior to the date of exercise.
C-2
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the outstanding
Common Stock and prior to the acquisition by such person or group of 50% or more
of the outstanding Common Stock, the Board of Directors may exchange the Rights
(other than Rights owned by such person or group, which have become void), in
whole or in part, at an exchange ratio of one share of Common Stock per Right
(subject to adjustment).
At any time after the date of the Amended Rights Agreement until the
time that a person becomes an Acquiring Person, the Board of Directors may
redeem the Rights in whole, but not in part, at a price of $0.005 per Right (the
"Redemption Price"), which may (at the option of the Company) be paid in cash,
shares of Common Stock or other consideration deemed appropriate by the Board of
Directors. Upon the effectiveness of any action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
Issuance of Preferred Stock or Common Stock upon exercise of the Rights
will be subject to any necessary regulatory approvals. Until a Right is
exercised, the holder thereof, as such, will have no rights as a shareholder of
the Company, including, without limitation, the right to vote or to receive
dividends.
The provisions of the Amended Rights Agreement may be amended by the
Company, except that any amendment adopted after the time that a person becomes
an Acquiring Person may not adversely affect the interests of holders of Rights.
As of May 15, 2006, there were 30,273,848 shares of ALLETE, Inc. Common
Stock outstanding. Each share of Common Stock outstanding on and after July 24,
1996 received one Right. One million shares of Preferred Stock have been
reserved for issuance in the event of exercise of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be subject to federal taxation to shareholders or to the Company, shareholders
may, depending upon the circumstances, recognize taxable income in the event
that the Rights become exercisable for Common Stock (or other consideration) of
the Company or for common stock of the acquiring company as set forth above.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired, and under certain circumstances the Rights
beneficially owned by such a person or group may become void. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors because, if the Rights would become exercisable as a result
of such merger or business combination, the Board of Directors may, at its
option, at any time prior to the time that any Person becomes an Acquiring
Person, redeem all (but not less than all) of the then outstanding Rights at the
Redemption Price.
C-3
A special committee of the Board of Directors known as the IDE
Committee, comprising all of the independent directors of the Company, will
conduct an annual review of the terms and conditions of the Amended Rights
Agreement, including whether termination or modification of such Plan is in the
best interests of the Company and its shareholders. The IDE Committee will make
recommendations to the Board of Directors based on such review.
A copy of the Amended Rights Agreement is being filed with the
Securities and Exchange Commission as an exhibit to an amended Registration
Statement on Form 8-A/A. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Amended
Rights Agreement.
C-4