_______________________________________
RIGHTS AGREEMENT
SPARTECH CORPORATION
and
Mellon Investor Services LLC,
as Rights Agent
Dated as of April 2, 2001
_________________________________
TABLE OF CONTENTS
Page
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . 6
Section 3. Issue of Right Certificates . . . . . . . . . . . . . . . . . 6
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . . 9
Section 5. Countersignature and Registration . . . . . . . . . . . . . . 10
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates . . . . . . . . . . . . . . . 11
Section 7. Exercise of Rights, Purchase Price; Expiration Date
of Rights . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8. Cancellation and Destruction of Right Certificates . . . . . . 14
Section 9. Availability of Shares of Preferred Stock. . . . . . . . . . . 15
Section 10. Preferred Stock Record Date . . . . . . . . . . . . . . . . . 17
Section 11. Adjustment of Purchase Price, Number of Shares and
Number of Rights . . . . . . . . . . . . . . . . . . . . . 17
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earnings Power . . . . . . . . . . . . . . . . . . . . 30
Section 14. Fractional Rights and Fractional Shares. . . . . . . . . . . . 35
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . 37
Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . 38
Section 17. Right Certificate Holder Not Deemed a Stockholder . . . . . . 39
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . 39
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Section 19. Merger or Consolidation or Change of Name of Rights
Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . 41
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . 45
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . . 46
Section 23. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . 49
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . . 51
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 29. Benefits of this Agreement . . . . . . . . . . . . . . . . . . 52
Section 30. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 33. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . 53
Section 34. Administration . . . . . . . . . . . . . . . . . . . . . . . . 53
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RIGHTS AGREEMENT
Agreement, dated as of April 2, 2001, between Spartech
Corporation, a Delaware corporation (the "Company"), and Mellon Investor
Services LLC, a New Jersey limited liability company, as Rights Agent (the
"Rights Agent").
The Board of Directors of the Company, acting by a duly
authorized committee thereof, has authorized and declared a dividend of one
preferred share purchase right (a "Right") for each share of Common Stock (as
hereinafter defined) of the Company outstanding as of the close of business
(as defined below) on April 13, 2001 (the "Record Date"), each Right
representing the right to purchase one one-thousandth (subject to adjustment)
of a share of Preferred Stock (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right (subject to adjustment as provided herein)
with respect to each share of Common Stock that shall become outstanding
between the Record Date and the earliest of the Distribution Date, the
Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined); provided, however, that Rights may be issued with respect to shares
of Common Stock that shall become outstanding after the Distribution Date and
prior to the Redemption Date and the Final Expiration Date in accordance with
Section 22.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For
purposes of this Agreement, the following terms have the meaning
indicated:
(a) "Acquiring Person" shall mean any Person
(as such term is hereinafter defined) who or which shall be
the Beneficial Owner (as such term is hereinafter defined)
of 15% or more of the shares of Common Stock then
outstanding, but shall not include an Exempt Person (as such
term is hereinafter defined); provided, however, that (i) if
the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring
Person" has become such inadvertently (including, without
limitation, because (A) such Person was unaware that it
beneficially owned a percentage of Common Stock that would
otherwise cause such Person to be a "Acquiring Person" or
(B) such Person was aware of the extent of its Beneficial
Ownership of Common Stock but had no actual knowledge of the
consequences of such Beneficial Ownership under this Rights
Agreement) and without any intention of changing or
influencing control of the Company, and such Person, as
promptly as practicable divested or divests himself or
itself of Beneficial Ownership of 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 or to have become an "Acquiring Person" for any
purposes of this Agreement; and (ii) if, as of the date
hereof or prior to the first public announcement of the
adoption of this Agreement, any Person is or becomes the
Beneficial Owner of 15% or more of the shares of Common
Stock outstanding, such Person shall not be deemed to be or
to become an "Acquiring Person" unless and until such time
as such Person shall, after the first public announcement of
the adoption of this Agreement, become the Beneficial Owner
of additional shares of Common Stock representing 1% or more
of the outstanding shares of Common Stock as of the date of
the first public announcement of the adoption of this
Agreement (other than pursuant to a dividend or distribution
paid or made by the Company on the outstanding Common Stock
or pursuant to a split or subdivision of the outstanding
Common Stock), unless, upon becoming the Beneficial Owner of
such additional shares of Common Stock, such Person is not
then the Beneficial Owner of 15% or more of the shares of
Common Stock then outstanding. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of shares 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
shares of Common Stock then outstanding; provided, however,
that if a Person shall become the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding by
reason of such share acquisitions by the Company and
thereafter become the Beneficial Owner of any additional
shares of Common Stock, then such Person shall be deemed to
be an "Acquiring Person" unless upon the consummation of the
acquisition of such additional shares of Common Stock such
Person does not own 15% or more of the shares of Common
Stock then outstanding. 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.
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(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial
Owner" of, shall be deemed to have "Beneficial Ownership" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such
Person's Affiliates or Associates is deemed to
beneficially own, directly or indirectly within the
meaning of Rule 13d-3 of the General Rules and
Regulations under the Exchange Act as in effect on
the date of this Agreement;
(ii) which such Person or any of such
Person's Affiliates or Associates has (A) the right
to acquire (whether such right is exercisable
immediately or only after the passage of time)
pursuant to any agreement, arrangement or
understanding (other than customary agreements with
and between underwriters and selling group members
with respect to a bona fide public offering of
securities), written or otherwise, or upon the
exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options,
or otherwise; provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to
beneficially own, (x) securities tendered pursuant
to a tender or exchange offer made pursuant to, and
in accordance with, the applicable rules and
regulations promulgated under the Exchange Act by or
on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered
securities are accepted for purchase, (y) securities
which such Person has a right to acquire on the
exercise of Rights at any time prior to the time a
Person becomes an Acquiring Person or (z) securities
issuable upon exercise of Rights from and after the
time a Person becomes an Acquiring Person if such
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
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Section 22 hereof ("original Rights") or pursuant to
Section 11(i) or Section 11(n) with respect to an
adjustment to original Rights; or (B) the right to
vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to
beneficially own, any security by reason of such
agreement, arrangement or understanding if the
agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and
(2) is not also then reportable on Schedule 13D
under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person and with
respect to which such Person or any of such Person's
Affiliates or Associates has any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling
group members with respect to a bona fide public
offering of securities) for the purpose of
acquiring, holding, voting (except to the extent
contemplated by the proviso to Section 1(c)(ii)(B))
or disposing of such securities.
(d) "Business Day" shall mean any day other
than a Saturday, a Sunday, or a day on which banking
institutions in the State of New York or the State of New
Jersey are authorized or obligated by law or executive order
to close.
(e) "close of business" on any given date shall
mean 5:00 P.M., New York City time, on such date; provided,
however, that if such date is not a Business Day it shall
mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(f) "Common Stock" when used with reference to
the Company shall mean the Common Stock, par value $.75 per
share of the Company. "Common Stock" when used with
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reference to any Person other than the Company shall mean
the capital stock (or, in the case of an unincorporated
entity, the equivalent equity interest) with the greatest
voting power of such other Person or, if such other Person
is a subsidiary of another Person, the Person or Persons
which ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning
set forth in Section 3 hereof.
(h) "Exempt Person" shall mean the Company, any
Subsidiary (as such term is hereinafter defined) of the
Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any entity or trustee holding
Common Stock for or pursuant to the terms of any such plan
or for the purpose of funding any such plan or funding other
employee benefits for employees of the Company or of any
Subsidiary of the Company.
(i) "Final Expiration Date" shall have the
meaning set forth in Section 7 hereof.
(j) "New York Stock Exchange" shall mean the
New York Stock Exchange, Inc.
(k) "Person" shall mean any individual, firm,
corporation, partnership, limited partnership, business
trust, limited liability company, unincorporated
association, joint venture, group or other entity, and shall
include any successor (by merger or otherwise) of such
entity.
(l) "Preferred Stock" shall mean the Series Z
Preferred Stock, par value $1.00 per share, of the Company
having the rights and preferences upon adoption as and set
forth in the Form of Certificate of Designations attached to
this Agreement as Exhibit A.
(m) "Redemption Date" shall have the meaning
set forth in Section 7 hereof.
(n) "Securities Act" shall mean the Securities
Act of 1933, as amended.
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(o) "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 or such earlier date as a majority of the Board
of Directors shall become aware of the existence of an
Acquiring Person.
(p) "Subsidiary" of any Person shall mean any
corporation or other entity of which securities or other
ownership interests having ordinary voting power sufficient
to elect a majority of the board of directors or other
persons performing similar functions are beneficially owned,
directly or indirectly, by such Person, and any corporation
or other entity that is otherwise controlled by such Person.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as
agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable. The
Rights Agent shall have no duty to supervise, and in no
event shall be liable for, the acts or omissions of any such
co-Rights Agent.
Section 3. Issue of Right
Certificates.
(a) Until the earlier of (i) the tenth day after the
Stock Acquisition Date or (ii) the tenth Business Day (or
such later date as may be determined by action of the Board
of Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any
Person (other than an Exempt Person) of, or of the first
public announcement of the intention of such Person (other
than an Exempt Person) to commence, a tender or exchange
offer the consummation of which would result in any Person
becoming the Beneficial Owner of shares of Common Stock
aggregating 15% or more of the Common Stock then outstanding
(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"); provided, however, that if either of
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such dates occurs after the date of this Agreement and on or
prior to the Record Date, then the Distribution Date shall
be the Record 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, or by a current ownership statement issued
with respect to uncertificated shares of Common Stock in
lieu of such a certificate (an "Ownership Statement") and
not by separate Right Certificates and (y) the Rights will
be transferable only in connection with the transfer of
Common Stock. As soon as practicable after the Distribution
Date, the Company shall promptly notify the Rights Agent of
the occurrence thereof and, if the Rights Agent is not then
also the transfer agent and registrar for the Common Stock,
provide the Rights Agent with the names and addresses of all
record holders of Common Stock (together with all other
necessary information), and 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 (other than any
Acquiring Person or any Associate or Affiliate of an
Acquiring Person), 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 (subject to adjustment
as provided herein) for each share of Common Stock so held.
As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) (i) On the Record Date, or as soon as
practicable thereafter, the Company will send a copy of a
Summary of Rights to Purchase Shares of Preferred Stock, in
substantially the form of Exhibit C hereto (the "Summary of
Rights"), 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.
(ii) With respect to shares of Common
Stock represented by certificates for Common Stock or
Ownership Statements outstanding as of the Record Date,
until the earliest of the Distribution Date, the Redemption
7
Date or the Final Expiration Date, the Rights associated
with such shares of Common Stock will be evidenced by such
certificates or Ownership Statements. Until the earlier of
the Distribution Date and the Expiration Date (as defined
below), the surrender for transfer of any certificate for
shares of Common Stock outstanding on the Record Date, or
the transfer of any Common Stock represented by an Ownership
Statement outstanding on the Record Date, in either case
with or without a copy of the Summary of Rights, shall also,
except as otherwise provided herein, constitute the transfer
of the Rights associated with the Common Stock represented
thereby.
(c) (i) Certificates or Ownership Statements
issued for Common Stock (including, without limitation, upon
transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of
Common Stock out of authorized but unissued shares) after
the Record Date but prior to the earlier of the Distribution
Date and the Expiration Date (as defined below), shall have
impressed on, printed on, written on or otherwise affixed to
them substantially in the form of the following legend:
This [certificate] [statement] also
evidences and entitles the holder hereof to
certain rights as set forth in a Rights
Agreement between Spartech Corporation and
Mellon Investor Services LLC , as Rights
Agent, dated as of April 2, 2001, as the
same may be amended from time to time (the
"Rights Agreement"), the terms of which are
hereby incorporated herein by reference and
a copy of which is on file at the principal
executive offices of Spartech Corporation.
Under certain circumstances, as set forth
in the Rights Agreement, such Rights will
be evidenced by separate certificates and
will no longer be evidenced by this
[certificate] [statement]. Spartech
Corporation will mail to the holder of this
[certificate] [statement] a copy of the
Rights Agreement without charge after
receipt of a written request therefor.
Under certain circumstances, as set forth
in the Rights Agreement, Rights owned by or
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transferred to any Person who becomes an
Acquiring Person (as defined in the Rights
Agreement) and certain transferees thereof
will become null and void and will no
longer be transferable.
With respect to such certificates or Ownership Statements containing the
foregoing legend, until the Distribution Date, the Rights associated with the
Common Stock represented by such certificates or Ownership Statements shall
be evidenced by such certificates or Ownership Statements alone, and the
surrender for transfer of any such certificate or the transfer of any shares
of Common Stock represented by such Ownership Statements, except as otherwise
provided herein, shall also constitute the transfer of the Rights associated
with the Common Stock represented thereby.
(ii) In the event that the Company
purchases or otherwise 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 paragraph (c), the omission of a 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.
The Right Certificates (and the forms of election to purchase shares
and of assignment to be printed on the reverse thereof) shall 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, provided that such marks, legends, summaries and
endorsements do not affect the rights, duties or responsibilities of
the Rights Agent 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 the New York Stock Exchange or of any other
stock exchange or automated quotation system on which the Rights may
from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11, 13 and 22 hereof, the Right Certificates
shall entitle the holders thereof to purchase such number of one one-
thousandths of a share of Preferred Stock as shall be set forth
therein at the price per one one-thousandth of a share of Preferred
9
Stock set forth therein (the "Purchase Price"), but the number of
such one one-thousandths of a share of Preferred Stock and the
Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and
Registration.
(a) The Right Certificates shall be executed on
behalf of the Company by the Chairman of the Board of
Directors, the President, any of the Vice Presidents, the
Treasurer or the Comptroller of the Company, either manually
or by facsimile signature, shall have affixed thereto the
Company's seal or a facsimile thereof, and shall be attested
by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right
Certificates shall be countersigned by the Rights Agent,
either manually or by facsimile signature, and shall not be
valid for any purpose unless countersigned. In case any
officer of the Company who shall have signed any of the
Right Certificates, or shall have attested the Company's
seal thereon, 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, or who attested the Company's seal thereon,
had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company,
and the Company's seal may be attested, 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.
(b) Following the Distribution Date, and the
receipt by the Rights Agent of written notice to that effect
and all required information the Rights Agent will keep or
cause to be kept, at an 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
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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 7(e),
11(a)(ii) and 14 hereof, at any time after the close of
business on the Distribution Date, and prior to the close of
business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates
may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling
the registered holder to purchase a like number of one
one-thousandths of a share of Preferred Stock 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 Rights Certificate until the registered
holder shall have properly completed and signed the
certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company or the Rights Agent
shall request. Thereupon the Rights Agent shall countersign
and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up,
combination or exchange of Right Certificates. The Rights
Agent shall have no duty or obligation under this Section 6
unless and until it is satisfied that all such taxes and/or
charges have been paid in full.
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(b) Subject to the provisions of Section
11(a)(ii) hereof, at any time after the Distribution Date
and prior to the close of business on the earlier of the
Redemption Date or the Final Expiration Date, upon receipt
by the Company and the Rights Agent of evidence 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 satisfactory to them,
and reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver
a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights, Purchase Price;
Expiration Date of Rights.
(a) Except as otherwise provided herein, the
Rights shall become exercisable on the Distribution Date,
and thereafter the registered holder of any Right
Certificate may, subject to Section 11(a)(ii) hereof and
except as otherwise provided herein, exercise the Rights
evidenced thereby in whole or in part upon surrender of the
Right Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent
at the office of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for
each one one-thousandth of a share of Preferred Stock as to
which the Rights are exercised, at any time which is both
after the Distribution Date and prior to the earliest (the
"Expiration Date") of (i) the close of business on April 2,
2011 (the "Final Expiration Date"), (ii) the time at which
the Rights are redeemed as provided in Section 23 hereof
(the "Redemption Date"), or (iii) the time at which such
Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price shall be initially $70
for each one one-thousandth of a share of Preferred Stock
purchasable upon the exercise of a Right. The Purchase
Price and the number of one one-thousandths of a share of
Preferred Stock or other securities or property to be
acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 11 and
12
13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) of this
Section 7.
(c) Except as otherwise provided herein, upon
receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed,
accompanied by payment of the aggregate Purchase Price for
the shares of Preferred Stock to be purchased and an amount
equal to any applicable tax or governmental charge required
to be paid by the holder of such Right Certificate in
accordance with Section 9 hereof, in cash or 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 for the Preferred Stock certificates for the number of
shares of Preferred Stock to be purchased (and the Company
hereby irrevocably authorizes its transfer agent to comply
with all such requests), or (B) requisition from the
depositary agent depositary receipts representing interests
in such number of one one-thousandths of a share of
Preferred Stock as are to be purchased (in which case
certificates for the Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the
depositary agent) (and the Company hereby directs the
depositary agent to comply with such request), (ii) when
necessary to comply with this Agreement, 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) promptly 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 necessary to comply
with this Agreement, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such
Right Certificate.
(d) Except as otherwise provided herein, 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
exercisable Rights remaining unexercised shall be issued by
the Rights Agent to the registered holder of such Right
13
Certificate or to his duly authorized assigns, subject to
the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement
to the contrary, neither the Rights Agent nor the Company
shall be obligated to undertake any action with respect to a
registered holder of Rights upon the occurrence of any
purported transfer or exercise of Rights pursuant to Section
6 hereof or this Section 7 unless such registered holder
shall have (i) properly completed and signed the certificate
contained in the form of assignment or election to purchase
set forth on the reverse side of the Right Certificate
surrendered for such transfer or exercise and (ii) provided
such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) thereof as the Company or
the Rights Agent shall reasonably request.
(f) Neither the Company nor the Rights Agent
shall have any liability to any holder of Rights or any
other Person as a result of the Company's failure to make
any determination under this Section 7 or any other section
with respect to the Acquiring Person or an Affiliate or
Associate of an Acquiring Person or transferees hereunder.
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 Rights Agent
shall deliver all cancelled Right Certificates to the Company, or
shall, at the written request of the Company, destroy, or cause to be
destroyed, such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
14
Section 9. Availability of Shares of
Preferred Stock.
(a) The Company covenants and agrees that it
will cause to be reserved and kept available out of its
authorized and unissued shares of Preferred Stock or any
shares of Preferred Stock held in its treasury, the number
of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock
(and, following the time that a Person becomes an Acquiring
Person, shares of Common Stock and other securities)
issuable upon the exercise of Rights may be listed or
admitted to trading on the New York Stock Exchange or listed
on any other national securities exchange or quotation
system, 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 or
admitted to trading on the New York Stock Exchange or listed
on any other exchange or quotation system upon official
notice of issuance upon such exercise.
(c) From and after such time as the Rights
become exercisable, the Company shall use its best efforts,
if then necessary to permit the issuance of shares of
Preferred Stock (and following the time that a Person first
becomes an Acquiring Person, shares of Common Stock and
other securities) upon the exercise of Rights, to register
and qualify such shares of Preferred Stock (and following
the time that a Person first becomes an Acquiring Person,
shares of Common Stock and other securities) under the
Securities Act and any applicable state securities or "Blue
Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and
qualifications to become effective as soon as possible after
such filing and keep such registration and qualifications
effective until the earlier of the date as of which the
Rights are no longer exercisable for such securities and the
Final Expiration Date. The Company may temporarily suspend,
for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a
registration statement under the Securities Act and permit
it to become effective. Upon any such suspension, the
Company shall promptly notify the Rights Agent thereof and
15
issue a public announcement (with prompt notice thereof to
the Rights Agent) 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 (with prompt written notice thereof to the Rights
Agent). Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if
required) shall have been declared effective.
(d) The Company covenants and agrees that it
will take all such action as may be necessary to ensure that
all shares of Preferred Stock (and, following the time that
a Person becomes an Acquiring Person, shares of Common Stock
and other securities) delivered upon exercise of Rights
shall, at the time of delivery of the certificates therefor
(subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and
nonassessable shares.
(e) The Company further covenants and agrees
that it will pay when due and payable any and all taxes and
charges which may be payable in respect of the issuance or
delivery of the Right Certificates or of any shares of
Preferred Stock (or shares of Common Stock or other
securities) upon the exercise of Rights. The Company shall
not, however, be required to pay any 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 shares of Common Stock or other
securities) in a name other than that of, the registered
holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or deliver any
certificates or depositary receipts for Preferred Stock (or
shares of Common Stock or other securities) upon the
exercise of any Rights until any such tax or charge shall
have been paid (any such tax or charge being payable by that
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.
16
Section 10. Preferred Stock Record
Date. Each Person in whose name any certificate for Preferred Stock
is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares of Preferred
Stock 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 taxes or charges) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred
Stock transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which
the Preferred Stock 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 for which the Rights shall be exercisable, including,
without limitation, the right to vote or 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 and Number of Rights. The Purchase Price,
the number of shares of Preferred Stock or other securities or
property purchasable upon exercise of each Right and the number of
Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at
any time after the date of this Agreement (A) declare a
dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a
smaller number 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), the Purchase Price in effect
at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive the
17
aggregate number and kind of shares of capital stock which,
if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books
of the Company were open, the holder would have owned upon
such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification;
provided, however, that in no event 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.
(ii) Subject to Section 24 of this
Agreement and except as otherwise provided in this
Section 11(a)(ii), in the event any Person becomes
an Acquiring Person, each holder of a Right shall
thereafter have the right to receive, upon exercise
thereof at a price equal to the then current
Purchase Price immediately prior to the Person
becoming an Acquiring Person multiplied by the
number of one one-thousandths 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 shares of Common Stock (or at the
option of the Company, such number of one one-
thousandths of shares of Preferred Stock) as shall
equal the result obtained by (x) multiplying the
then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for
which a Right is then exercisable and dividing that
product by (y) 50% of the then current per share
market price of the Company's Common Stock
(determined pursuant to Section 11(d) hereof) on the
date of the occurrence of such event; provided,
however, that the Purchase Price and the number of
shares of Common Stock so receivable upon exercise
of a Right shall thereafter be subject to further
adjustment as appropriate in accordance with Section
11(f) hereof. Notwithstanding anything in this
Agreement to the contrary, however, from and after
the time (the "invalidation time") when any Person
first becomes an Acquiring Person, any Rights that
are beneficially owned by (x) any Acquiring Person
(or any Affiliate or Associate of any Acquiring
Person), (y) a transferee of any Acquiring Person
18
(or any such Affiliate or Associate) who becomes a
transferee after the invalidation time or (z) a
transferee of any Acquiring Person (or any such
Affiliate or Associate) who became a transferee
prior to or concurrently with the invalidation time
pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any
Person with whom it has any continuing agreement,
arrangement or understanding regarding the
transferred Rights or (II) a transfer which the
Board of Directors has determined is part of a plan,
arrangement or understanding which has the purpose
or effect of avoiding the provisions of this
paragraph, and subsequent transferees of such
Persons, shall be null and void without any further
action and any holder of such Rights shall
thereafter have no rights whatsoever with respect to
such Rights under any provision of this Agreement.
The Company shall use all reasonable efforts to
ensure that the provisions of this Section 11(a)(ii)
are complied with, but neither the Company nor the
Rights Agent shall have any liability to any holder
of Right Certificates or other Person as a result of
the Company's failure to make any determinations
with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
From and after the invalidation time, no Right
Certificate shall be issued pursuant to Section 3 or
Section 6 hereof that represents Rights that are or
have become null and void pursuant to the provisions
of this paragraph, and any Right Certificate
delivered to the Rights Agent that represents Rights
that are or have become null and void pursuant to
the provisions of this paragraph shall be cancelled.
From and after the occurrence of an event specified
in Section 13(a) hereof, any Rights that theretofore
have not been exercised pursuant to this Section
11(a)(ii) shall thereafter be exercisable only in
accordance with Section 13 and not pursuant to this
Section 11(a)(ii).
(iii) The Company may at its option
substitute for a share of Common Stock issuable upon
the exercise of Rights in accordance with the
foregoing subparagraph (ii) such number or fractions
19
of shares of Preferred Stock having an aggregate
current market value equal to the current per share
market price of a share of Common Stock. In the
event that there shall not be sufficient shares of
Common Stock issued but not outstanding or
authorized but unissued to permit the exercise in
full of the Rights in accordance with the foregoing
subparagraph (ii), the Board of Directors shall, to
the extent permitted by applicable law and any
material agreements then in effect to which the
Company is a party (A) determine the excess of (1)
the value of the shares of Common Stock issuable
upon the exercise of a Right in accordance with the
foregoing subparagraph (ii) (the "Current Value")
over (2) the then current Purchase Price multiplied
by the number of one one-thousandths of shares of
Preferred Stock for which a Right was exercisable
immediately prior to the time that the Acquiring
Person became such (such excess, the "Spread"), and
(B) with respect to each Right (other than Rights
which have become null and void pursuant to Section
11(a)(ii)), make adequate provision to substitute
for the shares of Common Stock issuable in
accordance with subparagraph (ii) upon exercise of
the Right and payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase
Price, (3) shares of Preferred Stock or other equity
securities of the Company (including, without
limitation, shares or fractions of shares of
preferred stock which, by virtue of having dividend
and liquidation rights substantially comparable to
those of the shares of Common Stock, are deemed in
good faith by the Board of Directors to have
substantially the same value as the shares of Common
Stock (such shares of Preferred Stock and shares or
fractions of shares of preferred stock are
hereinafter referred to as "Common Stock
equivalents")), (4) debt securities of the Company,
(5) other assets or (6) any combination of the
foregoing, having a value which, when added to the
value of the shares of Common Stock actually issued
upon exercise of such Right, shall have an aggregate
value equal to the Current Value (less the amount of
any reduction in the Purchase Price), where such
aggregate value has been determined by the Board of
20
Directors upon the advice of a nationally recognized
investment banking firm selected in good faith by
the Board of Directors; provided, however, if the
Company shall not make adequate provision to deliver
value pursuant to clause (B) above within thirty
(30) days following the date that the Acquiring
Person became such (the "Section 11(a)(ii) Trigger
Date"), then the Company shall be obligated to
deliver, to the extent permitted by applicable law
and any material agreements then in effect to which
the Company is a party, upon the surrender for
exercise of a Right and without requiring payment of
the Purchase Price, shares of Common Stock (to the
extent available), and then, if necessary, such
number or fractions of shares of Preferred Stock (to
the extent available) and then, if necessary, cash,
which shares and/or cash have an aggregate value
equal to the Spread. If, upon the date any Person
becomes an Acquiring Person, the Board of Directors
shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could
be authorized for issuance upon exercise in full of
the Rights, then, if the Board of Directors so
elects, the thirty (30) day period set forth above
may be extended to the extent necessary, but not
more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company
may seek stockholder approval for the authorization
of such additional shares (such thirty (30) day
period, as it may be extended, is herein called the
"Substitution Period"). To the extent that the
Company determines that some action need be taken
pursuant to the second and/or third sentence of this
Section 11(a)(iii), the Company (x) shall provide,
subject to Section 11(a)(ii) hereof and the last
sentence of this Section 11(a)(iii) hereof, that
such action shall apply uniformly to all outstanding
Rights and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution
Period in order to seek any authorization of
additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such
second sentence and to determine the value thereof.
In the event of any such suspension, the Company
shall issue a public announcement stating that the
21
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, in
each case with prompt written notice thereof to the
Rights Agent. For purposes of this Section
11(a)(iii), the value of the shares of Common Stock
shall be the current per share market price (as
determined pursuant to Section 11(d)(i)) on the
Section 11(a)(ii) Trigger Date and the per share or
fractional value of any "Common Stock equivalent"
shall be deemed to equal the current per share
market price of the Common Stock. The Board of
Directors of the Company may, but shall not be
required to, establish procedures to allocate the
right to receive shares of Common Stock upon the
exercise of the Rights among holders of Rights
pursuant to this Section 11(a)(iii).
(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 shares (or having a conversion price per share, if
a security convertible into shares of Preferred Stock or
equivalent preferred shares) less than the then current per
share market price of the Preferred Stock (determined
pursuant to Section 11(d) hereof) 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 and equivalent preferred shares outstanding
on such record date plus the number of shares of Preferred
Stock and equivalent preferred shares which the aggregate
offering 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 and
22
equivalent preferred shares 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 in good faith
by the Board of Directors of the Company, whose
determination shall be described in a reasonably detailed
statement filed with the Rights Agent and which should be
conclusive for all purposes. Shares of Preferred Stock and
equivalent preferred shares owned by or held for the account
of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not
so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In case the Company shall fix a record date
for the making of a distribution to all holders of the
Preferred 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 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 (determined pursuant to Section 11(d)
hereof) on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the
Company whose determination shall be described in a
reasonably detailed statement filed with the Rights Agent
and which shall be conclusive for all purposes) of the
portion of the assets or evidences of indebtedness so to be
23
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 (determined pursuant to Section 11(d) hereof) 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) Except as otherwise provided herein,
for the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for
the purpose of this Section 11(d)(i)) on any date shall be
deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to
but not including such date; provided, however, that in the
event that the current per share market price of the
Security is determined during a period following the
announcement by the issuer of such Security of (A) a
dividend or distribution on such Security payable in shares
of such Security or securities convertible into such shares,
or (B) any subdivision, combination or reclassification of
such Security, and prior to the expiration of 30 Trading
Days after but not including the ex-dividend date for such
dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price
per share equivalent of such Security. The closing price
for each day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either
case as reported by the principal consolidated transaction
reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if
the Security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities
24
exchange on which the Security is listed or admitted to
trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported
by the National Association of Securities Dealers, Inc.
Automated Quotations System "NASDAQ" or such other system
then in use, or, if on any such date the Security is not
quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market
maker making a market in the Security selected by the Board
of Directors of the Company. The term "Trading Day" shall
mean a day on which the principal national securities
exchange on which the Security is listed or admitted to
trading is open for the transaction of business or, if the
Security is not listed or admitted to trading on any
national securities exchange, a Business Day.
(ii) For the purpose of any computation
hereunder, if the Preferred Stock is publicly
traded, 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 Preferred Stock is not publicly traded but the
Common Stock is 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 as determined
pursuant to Section 11(d)(i) multiplied by one
thousand (appropriately adjusted to reflect any
stock split, stock dividend or similar transaction
occurring after the date hereof). If neither the
Common Stock nor the Preferred Stock is publicly
traded, "current per share market price" shall mean
the fair value per share as determined in good faith
by the Board of Directors of the Company, whose
determination shall be described in a reasonably
detailed statement filed with the Rights Agent and
which shall be conclusive for all purposes.
(e) No adjustment in the Purchase Price shall
be required unless such adjustment would require an increase
or decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this
Section 11(e) are not required to be made shall be carried
25
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 ten-thousandth of a share
of Preferred Stock or share of Common Stock or other share
or security as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by
this Section 11 shall be made no later than the earlier of
(i) three years from the date of the transaction which
requires such adjustment or (ii) the date of the expiration
of the right to exercise any Rights.
(f) If as a result of an adjustment made
pursuant to Section 11(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than the
Preferred Stock, thereafter the Purchase Price and the
number of such other shares so receivable upon exercise of a
Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Preferred Stock contained
in Sections 11(a), 11(b), 11(c), 11(e), 11(h), 11(i) and
11(m), and the provisions of Sections 7, 9, 10, 13 and 14
hereof 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 one-thousandths
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.
(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 one-thousandths of a
share of Preferred Stock (calculated to the nearest one ten-
thousandth of a share of Preferred Stock) obtained by (i)
multiplying (x) the number of one one-thousandths of a share
covered by a Right immediately prior to such adjustment by
(y) the Purchase Price in effect immediately prior to such
26
adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date
of any adjustment of the Purchase Price to adjust the number
of Rights, in substitution for any adjustment in the number
of one one-thousandths 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
one-thousandths 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 (with prompt
written notice thereof to the Rights Agent) of its election
to adjust the number of Rights, indicating the record date
for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued,
shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this
Section 11(i), the Company may, 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
27
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in
the Purchase Price or the number of one one-thousandths 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 one-thousandths 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 the then par
value, if any, of the Preferred Stock or other shares of
capital 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 validly and legally issue fully paid and
nonassessable shares of Preferred Stock or other such shares
at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the
Company may elect to defer, with prompt written notice
thereof to the Rights Agent, 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
28
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 or Preferred Stock or
securities which by their terms are convertible into or
exchangeable for Preferred Stock, dividends on Preferred
Stock payable in shares of 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
stockholders.
(n) Anything in this Agreement to the contrary
notwithstanding, 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 other than by
payment of a dividend payable in Common Stock) into a
greater or lesser number of Common Stock, then in any such
case, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered
thereafter, shall be proportionately adjusted so that the
number of Rights thereafter associated with each share of
Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with
each share of Common Stock immediately prior to such event
by a fraction the numerator of which shall be the total
number of shares of Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of
which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such
event. The adjustments provided for in this Section 11(n)
shall be made successively (but without duplication)
whenever such a dividend is declared or paid or such
subdivision, combination or consolidation is effected.
(o) The Company agrees that, after the earlier
of the Distribution Date or the Stock Acquisition Date, it
will not, except as permitted by Sections 23, 24 or 27
hereof, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or
eliminate the benefits intended to be afforded by the
Rights.
29
Section 12. Certificate of Adjusted
Purchase Price or Number of Shares. Whenever an adjustment is made
as provided in Section 11 or 13 hereof, the Company shall promptly
(a) prepare a certificate setting forth such adjustment, and a brief,
reasonably detailed statement of the facts, methodology and
computations 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 (if so required under Section 25 hereof). The
Rights Agent shall be fully protected and authorized in relying on
any such certificate and on any adjustment therein contained, and
shall have no duty or liability with respect to, and shall not be
deemed to have knowledge of, any such adjustment unless and until it
shall have received such a certificate.
Section 13. Consolidation, Merger or
Sale or Transfer of Assets or Earnings Power
(a) In the event, directly or indirectly, at
any time after any Person has become an Acquiring Person,
(i) the Company shall consolidate with or merge with and
into any other Person, (ii) any Person shall merge with and
into the Company and the Company shall be the surviving
corporation of such merger and, in connection with such
merger, all or part of the Common Stock shall be changed
into or exchanged for stock or other securities of any other
Person (or of the Company) or cash or any other property, or
(iii) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise
transfer), in one or more transactions, assets or earning
power aggregating 50% or more of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to
any other Person (other than the Company or one or more of
its wholly-owned Subsidiaries), then upon the first
occurrence of such event, proper provision shall be made so
that: (A) each holder of record of a Right (other than
Rights which have become null and void pursuant to Section
11(a)(ii)) shall thereafter have the right to receive, upon
the exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one
thousandths of a share of Preferred Stock for which a Right
was exercisable (whether or not such Right was then
exercisable) immediately prior to the time that any Person
first became an Acquiring Person (each as subsequently
30
adjusted pursuant to Sections 11(a)(i), 11(b), 11(c), 11(f),
11(h), 11(i) and 11(m)), in accordance with the terms of
this Agreement and in lieu of shares of Preferred Stock or
Common Stock of the Company, such number of validly issued,
fully paid and non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as defined herein) not
subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price
by the number of one one thousandths of a share of Preferred
Stock for which a Right was exercisable immediately prior to
the time that any Person first became an Acquiring Person
(as subsequently adjusted thereafter pursuant to Sections
11(a)(i), 11(b), 11(c), 11(f), 11(h), 11(i) and 11(m)) and
(2) dividing that product by 50% of the then current per
share market price of the Common Stock of such Principal
Party (determined pursuant to Section 11(d)(i) hereof) on
the date of consummation of such consolidation, merger, sale
or transfer; provided, that the Purchase Price (as
theretofore adjusted pursuant to Sections 11(a)(i), 11(b),
11(c), 11(f), 11(h), 11(i) and 11(m)) and the number of
shares of Common Stock of such Principal Party issuable upon
exercise of each Right shall be further adjusted as provided
in Section 11(f) of this Agreement to reflect any events
occurring in respect of such Principal Party after the date
of such consolidation, merger, sale or transfer; (B) such
Principal Party shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company
pursuant to this Agreement; (C) the term "Company" shall
thereafter be deemed to refer to such Principal Party; and
(D) 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 of any such
transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to the shares of its
Common Stock thereafter deliverable upon the exercise of the
Rights; provided, that, upon the subsequent occurrence of
any consolidation, merger, sale or transfer of assets or
other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to
receive, upon exercise of a Right and payment of the
Purchase Price as provided in this Section 13(a), such cash,
31
shares, rights, warrants and other property which such
holder would have been entitled to receive had such holder,
at the time of such transaction, owned the Common Stock of
the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party
shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to
permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights,
warrants and other property.
(b) "Principal Party" shall mean
(i) in the case of any transaction
described in clauses (i) or (ii) of the first
sentence of Section 13(a) hereof: (A) the Person
that is the issuer of the securities into which the
shares of Common Stock are converted in such merger
or consolidation, or, if there is more than one such
issuer, the issuer the shares of Common Stock of
which have the greatest aggregate market value of
shares outstanding, or (B) if no securities are so
issued, (x) the Person that is the other party to
the merger, if such Person survives said merger, or,
if there is more than one such Person, the Person
the shares of Common Stock of which have the
greatest aggregate market value of shares
outstanding or (y) if the Person that is the other
party to the merger does not survive the merger, the
Person that does survive the merger (including the
Company if it survives) or (z) the Person resulting
from the consolidation; and
(ii) in the case of any transaction
described in clause (iii) of the first sentence in
Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or
earning power transferred pursuant to such
transaction or transactions, or, if each Person that
is a party to such transaction or transactions
receives the same portion of the assets or earning
power so transferred or if the Person receiving the
greatest portion of the assets or earning power
cannot be determined, whichever of such Persons as
32
is the issuer of Common Stock having the greatest
aggregate market value of shares outstanding;
provided, however, that in any such case described in the foregoing clause
(b)(i) or (b)(ii), if the Common Stock of such Person is not at such time or
has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which is and has
been so registered, the term "Principal Party" shall refer to such other
Person, or (2) if such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stock of all of which is and has been so
registered, the term "Principal Party" shall refer to whichever of such
Persons is the issuer of Common Stock having the greatest aggregate market
value of shares outstanding, or (3) if such Person is owned, directly or
indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in
clauses (1) and (2) above shall apply to each of the owners having an
interest in the venture as if the Person owned by the joint venture was a
Subsidiary of both or all of such joint venturers, and the Principal Party in
each such case shall bear the obligations set forth in this Section 13 in the
same ratio as its interest in such Person bears to the total of such
interests.
(c) The Company shall not consummate any
consolidation, merger, sale or transfer referred to in
Section 13(a) hereof unless prior thereto the Company and
the Principal Party involved therein shall have executed and
delivered to the Rights Agent an agreement confirming that
the requirements of Sections 13(a) and (b) hereof shall
promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets
shall not result in a default by the Principal Party under
this Agreement as the same shall have been assumed by the
Principal Party pursuant to Sections 13(a) and (b) hereof
and providing that, as soon as practicable after executing
such agreement pursuant to this Section 13, the Principal
Party will:
(i) prepare and file a registration
statement under the Securities Act, if necessary,
with respect to the Rights and the securities
purchasable upon exercise of the Rights on an
appropriate form, use its best efforts to cause such
registration statement to become effective as soon
as practicable after such filing and use its best
33
efforts to cause such registration statement to
remain effective (with a prospectus at all times
meeting the requirements of the Securities Act)
until the Final Expiration Date, and similarly
comply with applicable state securities laws;
(ii) use its best efforts, if the Common
Stock of the Principal Party shall be listed or
admitted to trading on the New York Stock Exchange
or on another national securities exchange, to list
or admit to trading (or continue the listing of) the
Rights and the securities purchasable upon exercise
of the Rights on the New York Stock Exchange or such
securities exchange, or, if the Common Stock of the
Principal Party shall not be listed or admitted to
trading on the New York Stock Exchange or a national
securities exchange, to cause the Rights and the
securities receivable upon exercise of the Rights to
be reported by such other system then in use;
(iii) deliver to holders of the Rights
historical financial statements for the Principal
Party which comply in all respects with the
requirements for registration on Form 10 (or any
successor form) under the Exchange Act; and
(iv) obtain waivers of any rights of
first refusal or preemptive rights in respect of the
Common Stock of the Principal Party subject to
purchase upon exercise of outstanding Rights.
(d) In case the Principal Party has provision
in any of its authorized securities or in its certificate of
incorporation or by-laws or other instrument governing its
corporate affairs, which provision would have the effect of
(i) causing such Principal Party to issue (other than to
holders of Rights pursuant to this Section 13), 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 thereof (determined pursuant
to Section 11(d) hereof) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at
less than such then current market price, or (ii) providing
for any special payment, tax or similar provision in
34
connection with the issuance of the Common Stock of such
Principal Party pursuant to the provisions of Section 13,
then, in such event, the Company hereby agrees with each
holder of Rights that it 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 will have no effect in connection with, or as a
consequence of, the consummation of the proposed
transaction.
(e) The Company covenants and agrees that it
shall not, at any time after a Person first becomes an
Acquiring Person, enter into any transaction of the type
contemplated by clauses (i), (ii) or (iii) of Section 13(a)
hereof if (x) at the time of or immediately after such
consolidation, merger, sale, transfer or other transaction
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, (y) prior to,
simultaneously with or immediately after such consolidation,
merger, sale, transfer of other transaction, the
stockholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section
13(a) hereof shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or
Associates or (z) the form or nature of organization of the
Principal Party would preclude or limit the exercisability
of the Rights.
Section 14. Fractional Rights and
Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered
holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value
of a whole Right. For the purposes of this Section 14(a),
35
the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price for any day
shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Rights are
not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if
the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors of the
Company shall be used.
(b) The Company shall not be required to issue
fractions of Preferred Stock (other than fractions which are
integral multiples of one one-thousandth 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 one-thousandth of a share of Preferred
Stock). Interests in fractions of Preferred Stock in
integral multiples of one one-thousandth of a share of
Preferred Stock may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by
it; provided, that such agreement shall provide that the
holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock
36
represented by such depositary receipts. In lieu of
fractional shares of Preferred Stock that are not integral
multiples of one one-thousandth of a share of Preferred
Stock, the Company shall pay to the registered holders of
Right Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction
of the current market value of one share of Preferred Stock.
For the purposes of this Section 14(b), the current market
value of a share of Preferred Stock shall be the closing
price of a share of Preferred Stock (as determined pursuant
to Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right by the acceptance of
the Right expressly waives his right to receive any
fractional Rights or any fractional shares upon exercise of
a Right (except as provided above).
(d) Whenever a payment for fractional Rights or
fractional shares is to be made by the Rights Agent, the
Company shall (i) promptly prepare and deliver to the Rights
Agent a certificate setting forth in reasonable detail the
facts related to such payment and the prices and/or formulas
utilized in calculating such payments, and (ii) provide
sufficient monies to the Rights Agents in the form of fully
collected funds to make such payments. The Rights Agent
shall be fully protected in relying upon such a certificate
and shall have no duty with respect to, and shall not be
deemed to have knowledge of any payment for fractional
Rights or fractional shares under any Section of this
Agreement relating to the payment of fractional Rights or
fractional shares unless and until the Rights agent have
received such a certificate and sufficient monies.
Section 15. Rights of Action.
All rights of action in respect of this Agreement, excepting the
rights of action expressly given to the Rights Agent hereunder, 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), on his own behalf and for his own benefit, may enforce, and
may institute and maintain any suit, action or proceeding against the
37
Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate (or, prior to
the Distribution Date, such Common Stock) in the manner provided in
such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement and will
be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the
obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders.
Every holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other holder of
a Right that:
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of
the Common Stock;
(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the office of the Rights
Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) 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 Common Stock
certificate or Ownership Statement) 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 Common Stock certificate or
Ownership Statement 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 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
judgment or ruling (whether interlocutory or final) issued
38
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;
provided, however, that the Company must use its best
efforts to have any such order, decree, judgment or ruling
lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder
Not Deemed a Stockholder. No holder, as such, of any Right
Certificate shall be entitled to vote, receive dividends or be deemed
for any purpose the holder of the Preferred Stock or any other
securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer
upon the holder of any Right Certificate, as such, any of the rights
of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in this Agreement), or to receive
dividends or subscription rights, or otherwise, until the Rights
evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights
Agent.
(a) The Company agrees to pay to the Rights
Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the preparation, delivery,
amendment, administration or execution of this Agreement and
the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability, damage,
judgment, fine, penalty, claim, demand, settlement, cost or
expense, incurred without gross negligence, bad faith or
willful misconduct (as finally determined by a court of
competent jurisdiction) on the part of the Rights Agent, for
any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including, without limitation, the costs and
39
expenses of defending against any claim of liability arising
therefrom, directly or indirectly. The indemnity provided
herein shall survive the termination of this Agreement, the
resignation or removal of the Rights Agent, and the
termination and the expiration of the Rights. The costs and
expenses incurred in enforcing this right of indemnification
shall be paid by the Company. 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 shall
be limited to the amount of fees paid by the Company to the
Rights Agent.
(b) The Rights Agent shall be authorized to
rely on, shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted
by it in connection with its acceptance and 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 or opinion of counsel as set forth in
Section 20 hereof. The Rights Agent shall not be deemed to
have any duty or notice unless and until the Company has
provided the rights Agent with actual written notice.
Section 19. Merger or Consolidation or Change
of Name of Rights Agent.
(a) 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 shareholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or filing
of any paper or any further act on the part of any of the
40
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 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.
(b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the Right
Certificates shall have been countersigned but not delivered
the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name
or in its changed name and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
The Rights Agent undertakes only the specific duties and obligations
expressly set forth in this Agreement (and no implied duties or
obligations) upon the following terms and conditions, by all of which
the Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the
advice or opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted by it in good faith
and in accordance with such advice or opinion.
41
(b) Whenever in the performance of its duties
under this Agreement the Rights Agent shall deem it
necessary or desirable that any fact or matter be proved or
established by the Company prior to taking, suffering or
omitting to take any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of
the Chairman of the Board of Directors, the Vice President-
Finance or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full and
complete authorization and protection to the Rights Agent
and the Rights Agent shall incur no liability for or in
respect of any action taken, suffered or omitted in good
faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder
to the Company and any other Person only for its own gross
negligence, bad faith or willful misconduct each as finally
determined by a court of competent jurisdiction.
(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
liability or responsibility in respect of the validity of
this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect
of the validity or execution of any Right Certificate
(except its countersignature thereof); nor shall it be
liable or responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any
Right Certificate; nor shall it be liable or responsible for
any change in the exercisability of the Rights (including
the Rights becoming null and void pursuant to Section
11(a)(ii) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof)
provided for in Sections 3, 11, 13, 23 and 24, or the
ascertaining of the existence of facts that would require
any such change or adjustment (except with respect to the
42
exercise of Rights evidenced by Right Certificates after
receipt of a certificate furnished pursuant to Section 12,
describing such change or adjustment); nor shall it by any
act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any
shares of Preferred Stock or other securities to be issued
pursuant to this Agreement or any Right Certificate or as to
whether any shares of Preferred Stock or other securities
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 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 advice or instructions with respect to
the performance of its duties hereunder from any person
believed by the Rights Agent to be one of the Chairman of
the Board of Directors, the Vice President-Finance or the
Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and
such advice or instructions shall be full and complete
authorization and protection to the Rights Agent and the
Rights Agent shall incur no liability for or in respect of
any action taken, suffered or omitted by it in good faith in
accordance with such advice or instructions of any such
officer or for any delay in acting while waiting for such
advice or 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, suffered or omitted by the Rights
Agent under this Agreement and the date on and/or after
which such action shall be taken or suffered or such
omission shall be effective. The Rights Agent shall not
have any liability for or in respect of any action taken, or
suffered by or omission of, the Rights Agent in accordance
with a proposal included in any such application on or after
the date specified in such application (which date shall not
be less than five Business Days after the date any officer
of the Company actually receives such application, unless
any such officer shall have consented in writing to an
43
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,
suffered or omitted.
(h) The Rights Agent and any stockholder,
affiliate, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested
in any transaction in which the Company may be interested,
or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the
Company or for any other Person or legal entity.
(i) The Rights Agent may execute and exercise
any of the rights or powers hereby vested in it or perform
any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect
or misconduct, absent gross negligence or willful misconduct
(each as finally determined by a court of competent
jurisdiction)in the selection and continued employment
thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance
of any of its duties hereunder or in the exercise of its
rights if it believes that repayment of such funds or
adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer,
the certificate contained in the form of assignment or the
form of election to purchase set forth on the reverse
thereof, as the case may be, has not been properly completed
to certify the holder is not an Acquiring Person (or an
Affiliate or Associate thereof), a Rights Agent shall not
take any further action with respect to such requested
44
exercise or transfer without first consulting with the
Company.
Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice
in writing mailed to the Company and to each transfer agent of the
Common Stock or Preferred Stock by registered or certified mail, and,
following the Distribution Date, 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, following the Distribution
Date, to the holders of the Right Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the
holder of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a Person organized and doing business
under the laws of the United States or any State thereof, which is
authorized under such laws to perform shareholder services and is
subject to supervision or examination by federal or state authority,
and (b) which at the time of its appointment as Rights Agent has, or
is an affiliate of such a Person that has, a combined capital and
surplus of at least $50 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, following the Distribution Date, 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
45
defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right
Certificates. Notwithstanding any of the provisions of this
Agreement or of the Rights to the contrary, the Company may, at its
option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the
Right Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of
Common Stock following the Distribution Date and prior to the earlier
of the Redemption Date and the Final Expiration Date, the Company may
with respect to shares of Common Stock so issued or sold pursuant to
(i) the exercise of stock options, (ii) under any employee plan or
arrangement, (iii) upon the exercise, conversion or exchange of
securities notes or debentures issued by the Company or (iv) a
contractual obligation of the Company in each case existing prior to
the Distribution Date, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or
sale.
Section 23. Redemption.
(a) The Board of Directors of the Company may,
at any time prior to such time as any Person becomes an
Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof (the redemption price being hereinafter referred to
as the "Redemption Price"). The redemption of the Rights
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. The Redemption Price shall be
payable at the option of the Company, in cash, shares of
Common Stock, or such other form of consideration as the
Board of Directors shall determine.
(b) Immediately upon the action of the Board of
Directors ordering the redemption of the Rights pursuant to
paragraph (a) of this Section 23 (or at such later time as
the Board of Directors may establish for the effectiveness
46
of such redemption), and without any further action and
without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. The
Company shall promptly give public notice of any such
redemption and prompt written notice thereof to the Rights
Agent; 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
such later time as the Board of Directors may establish for
the effectiveness of such redemption), the Company shall
mail a notice of redemption to the Rights Agent and 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 shall state the
method by which the payment of the Redemption Price will be
made.
Section 24. Exchange
(a) The Board of Directors of the Company may,
at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then
outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the
provisions of Section 11(a)(ii) hereof) for shares of Common
Stock at an exchange ratio of one share of Common Stock per
Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring in respect
of the Common Stock 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 an Acquiring Person shall have become the
Beneficial Owner of shares of Common Stock aggregating 50%
or more of the shares of Common Stock then outstanding.
From and after the occurrence of an event specified in
Section 13(a) hereof, any Rights that theretofore have not
been exchanged pursuant to this Section 24(a) shall
thereafter be exercisable only in accordance with Section 13
47
and may not be exchanged pursuant to this Section 24(a).
The exchange of the Rights by the Board of Directors may be
made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion
may establish.
(b) Immediately upon the effectiveness of the
action of the Board of Directors of the Company 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, with
prompt written notice thereof to the Rights Agent; provided,
however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The
Company shall promptly mail a notice of any such exchange to
all of the holders of the Rights so exchanged at their last
addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange
will state the method by which the exchange of the shares of
Common Stock for Rights will be effected and, in the event
of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have
become null and void pursuant to the provisions of Section
11(a)(ii) hereof) held by each holder of Rights.
(c) The Company may at its option substitute,
and, in the event that there shall not be sufficient shares
of Common Stock 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
substitute, to the extent of such insufficiency, for each
share of Common Stock that would otherwise be issuable upon
exchange of a Right, a number of shares of Preferred Stock
or fractions thereof (or equivalent preferred shares as such
term is defined in Section 11(b)) having an aggregate
current per share market price (determined pursuant to
Section 11(d) hereof) equal to the current per share market
48
price of one share of Common Stock (determined pursuant to
Section 11(d) hereof) as of the date of issuance of such
shares of Preferred Stock or fractions thereof (or
equivalent preferred shares).
(d) The Company shall not, in connection with
any exchange pursuant to this Section 24, be required to
issue fractions of shares of Common Stock or to distribute
certificates which evidence fractional shares of Common
Stock. In lieu of such fractional shares of Common Stock,
the Company shall pay to the registered holders of 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 (d), the current market value of a whole share of
Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to the second sentence of
Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall at any time after
the earlier of the Distribution Date or the Stock
Acquisition Date propose (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 shares of 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 the
liquidation, dissolution or winding up of the Company, (v)
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 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
49
Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock), then, in each such
case, the Company shall give to each holder of a Right
Certificate and to the Rights Agent, each 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 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 10 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 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the
holders of the Common Stock and/or Preferred Stock,
whichever shall be the earlier.
(b) In case any event described in Section
11(a)(ii) or Section 13 shall occur then the Company shall
as soon as practicable thereafter give to each holder of a
Right Certificate (or if occurring prior to the Distribution
Date, the holders of the Common Stock) 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)
and Section 13 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:
Spartech Corporation
120 South Central Avenue
Suite 1700
Clayton, Missouri 63105
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
50
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:
Mellon Investor Services LLC,
One Memorial Drive
Suite 900
St. Louis, Missouri 63102
Attention: Relationship Manager
with a copy to:
Mellon Investor Services LLC
85 Challenger Road
Ridgefield Park, NJ 07660
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the
registry books of the Company.
Section 27. Supplements and Amendments.
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, 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 an Affiliate or Associate of an
Acquiring Person), (b) cause the Rights again to become redeemable or
(c) cause the Agreement again to become amendable other than in
accordance with this sentence. Notwithstanding anything contained in
this Agreement to the contrary, no supplement or amendment shall be
made which changes the Redemption Price. Upon the 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, the Rights Agent shall execute such supplement or
51
amendment, provided such supplement or amendment does not adversely
change or increase the Rights Agent's rights, duties, liabilities or
obligations hereunder, however any supplement or amendment that does
not change or affect the rights, duties, liabilities or obligations
of the Rights Agent shall become effective immediately upon execution
by the Company, whether or not also executed by the Rights Agent.
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
other than the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date, 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 Common Stock).
Section 30. Severability. If any term,
provision, covenant or restriction of this Agreement or applicable to
this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.
Section 31. Governing Law. This
Agreement and each Right Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Delaware and for
all purposes shall be governed by and construed in accordance with
the laws of such State applicable to contracts to be made and
performed entirely within such State; provided, however, that all
provisions regarding the rights, duties and obligations of the Rights
Agent shall be governed by and construed in accordance with the laws
of the State of New York applicable to contracts made and to be
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,
52
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. Administration. The Board
of Directors of the Company shall have the exclusive power and
authority to administer and interpret the provisions of 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,
without limitation, a determination to redeem or not redeem the
Rights or to amend or not amend this Agreement). All such actions,
calculations, determinations and interpretations which are done or
made by the Board of Directors in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders
of the Rights and all other parties. The Rights Agent is entitled to
always assume the Board of Directors acted in good faith and shall be
fully protected and incur no liability in reliance thereon.
[The remainder of this page intentionally left blank.]
53
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: SPARTECH CORPORATION
By: /s/ Jeffrey D. Fisher By: /s/ Randy C. Martin
----------------------- ----------------------
Name: Jeffrey D. Fisher Name: Ramdy C. Martin
Title: Secretary Title: Executive Vice President-Acrylics
and Chief Financial Officer
MELLON INVESTOR SERVICES LLC
By: /s/ Jane A. Marten
-----------------------
Name: Jane A. Marten
Title: Asst. Vice President
Exhibit A
FORM
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES Z PREFERRED STOCK
OF
SPARTECH CORPORATION
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
___________________
Spartech Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware (hereinafter
called the "Company"), hereby certifies that the following resolution was
duly adopted by a duly authorized committee of the Board of Directors of the
Company as required by Section 151 of the General Corporation Law of the
State of Delaware at a meeting duly called and held on April 2, 2001:
RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of the Company (hereinafter called the
"Board of Directors" or the "Board") in accordance with the provisions of the
Company's Restated Certificate of Incorporation, as amended to date
(hereinafter called the "Certificate of Incorporation"), the Board of
Directors hereby creates a series of Preferred Stock, par value $1 per share
(the "Preferred Stock"), of the Company and hereby states the designation and
number of shares, and fixes the relative rights, powers and preferences
thereof, and the limitations thereof, as follows:
(A) Designation and Amount. The shares
of such series shall be designated as "Series Z
Preferred Stock" (the "Series Z Preferred Stock") and
the number of shares constituting the Series Z Preferred
Stock shall be 75,000. Such number of shares may be
increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the
number of shares of Series Z Preferred Stock to a number
less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the
Company convertible into Series Z Preferred Stock.
(B) Dividends and Distributions.
(1) Subject to the rights of the
holders of any shares of any stock of the Company
ranking prior and superior to the Series Z Preferred
Stock with respect to dividends, the holders of
shares of Series Z Preferred Stock, in preference to
the holders of Common Stock, par value $.75 per
share (the "Common Stock") and of any other stock of
the Company ranking junior to the Series Z Preferred
Stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds
legally available for such purpose, quarterly
dividends payable in cash on the last day of March,
June, September and December in each year (each such
date being referred to herein as a "Dividend Payment
Date"), commencing on the first Dividend Payment
Date after the first issuance of a share or fraction
of a share of Series Z Preferred Stock, in an amount
per share (rounded to the nearest cent) equal to the
greater of (a) $1 or (b) subject to the provision
for adjustment hereinafter set forth, 1,000 times
the aggregate per share amount of all cash
dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable
in shares of Common Stock, declared on the Common
Stock since the immediately preceding Dividend
Payment Date or, with respect to the first Dividend
Payment Date, since the first issuance of any share
or fraction of a share of Series Z Preferred Stock.
In the event the Company shall at any time after
April 2, 2001, declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in
each such case the amount to which holders of shares
of Series Z Preferred Stock were entitled
2
immediately prior to such event under clause (b) of
the preceding sentence 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.
(2) The Company shall declare a
dividend or distribution on the Series Z Preferred
Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or
distribution on the Common Stock (other than a
dividend payable in shares of Common Stock);
provided, that, in the event no dividend or
distribution shall have been declared on the Common
Stock during the period between any Dividend Payment
Date and the next subsequent Dividend Payment Date,
a dividend of $1 per share on the Series Z Preferred
Stock shall nevertheless be payable, when, as and if
declared, on such subsequent Dividend Payment Date.
(3) Dividends shall begin to accrue
and be cumulative, whether or not earned or
declared, on outstanding shares of Series Z
Preferred Stock from the Dividend Payment Date next
preceding the date of issue of such shares, unless
the date of issue of such shares is prior to the
record date for the first 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 Dividend Payment Date
or is a date after the record date for the
determination of holders of shares of Series Z
Preferred Stock entitled to receive a quarterly
dividend and before such Dividend Payment Date, in
either of which events such dividends shall begin to
accrue and be cumulative from such Dividend Payment
Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series Z
Preferred Stock 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
3
the time outstanding. The Board of Directors may
fix a record date for the determination of holders
of shares of Series Z Preferred Stock entitled to
receive payment of a dividend or distribution
declared thereon, which record date shall be not
more than 60 days prior to the date fixed for the
payment thereof.
(C) Voting Rights. The holders of
shares of Series Z Preferred Stock shall have the
following voting rights;
(1) Each whole share of Series Z
Preferred Stock shall entitle the holder thereof to
1000 votes on all matters upon which the holders of
the Common Stock of the Company are entitled to
vote.
(2) Except as otherwise provided
herein, in the Certificate of Incorporation or in
any other Certificate of Designations creating a
series of Preferred Stock or any similar stock, and
except as otherwise required by law, the holders of
shares of Series Z Preferred Stock and the holders
of shares of Common Stock and any other capital
stock of the Company having general voting rights
shall vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(3) Except as set forth herein, or
as otherwise provided by law, holders of Series Z
Preferred Stock shall have no special voting rights
and their consent shall not be required (except to
the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any
corporate action.
(D) Certain Restrictions.
(1) Whenever quarterly dividends or
other dividends or distributions payable on the
Series Z Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not
earned or declared, on shares of Series Z Preferred
4
Stock outstanding shall have been paid in full, the
Company shall not:
(i) declare or pay dividends, or make any
other distributions, on any shares of stock
ranking junior (as to dividends or upon
liquidation, dissolution or winding up) to
the Series Z Preferred Stock;
(ii) declare or pay dividends, or
make any other distributions, on any shares
of stock ranking on a parity (as to
dividends or upon liquidation, dissolution
or winding up) with the Series Z Preferred
Stock, except dividends paid ratably on the
Series Z Preferred Stock 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 junior (either as to
dividends or upon liquidation, dissolution
or winding up) to the Series Z Preferred
Stock, provided that the Company may at any
time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange
for shares of any stock of the Company
ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to
the Series Z Preferred Stock or rights,
warrants or options to acquire such junior
stock;
(iv) redeem or purchase or
otherwise acquire for consideration any
shares of Series Z Preferred Stock, or any
shares of stock ranking on a parity (either
as to dividends or upon liquidation,
dissolution or winding up) with the Series
Z Preferred Stock, except in accordance
with a purchase offer made in writing or by
publication (as determined by the Board of
5
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.
(2) 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 4, purchase or
otherwise acquire such shares at such time and in
such manner.
(E) Reacquired Shares. Any shares of
Series Z Preferred Stock purchased or otherwise acquired
by the Company in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof.
(F) Liquidation, Dissolution or Winding
Up. Upon any liquidation, dissolution or winding up of
the Company, no distribution shall be made (1) to the
holders of the Common Stock or of shares of any other
stock of the Company ranking junior, upon liquidation,
dissolution or winding up, to the Series Z Preferred
Stock unless, prior thereto, the holders of shares of
Series Z Preferred Stock shall have received an amount
equal to the greater of (i) $1,000 per share, plus an
amount equal to accrued and unpaid dividends and
distributions thereon, whether or not earned or
declared, to the date of such payment and (ii) an
aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1,000 times
the aggregate amount to be distributed per share to
holders of shares of Common Stock, or (2) to the holders
of shares of stock ranking on a parity upon liquidation,
dissolution or winding up with the Series Z Preferred
Stock, except distributions made ratably on the Series Z
Preferred Stock and all such parity stock in proportion
to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution
6
or winding up. In the event the Company shall at any
time after April 2, 2001, declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of
shares of Series Z Preferred Stock were entitled
immediately prior to such event under the proviso in
clause (A) of the preceding sentence 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.
(G) 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 converted into, exchanged for
or changed into other stock or securities, cash and/or
any other property, then in any such case each share of
Series Z Preferred Stock shall at the same time be
similarly converted into, exchanged for or changed into
an amount per share (subject to the provision for
adjustment hereinafter set forth) equal to 1,000 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, exchanged or converted. In the event the
Company shall at any time after April 2, 2001, declare
or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into
a greater or lesser number of shares of Common Stock,
then in each such case the amount set forth in the
preceding sentence with respect to the conversion,
exchange or change of shares of Series Z Preferred Stock
shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares
7
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.
(H) No Redemption. The shares of Series
Z Preferred Stock shall not be redeemable from any
holder.
(I) Rank. The Series Z Preferred Stock
shall rank, with respect to the payment of dividends and
the distribution of assets upon liquidation, dissolution
or winding up of the Company, senior to the Common
Stock.
(J) Amendment. If any proposed
amendment to the Certificate of Incorporation (including
this Certificate of Designations) would alter, change or
repeal any of the preferences, powers or special rights
given to the Series Z Preferred Stock so as to affect
the Series Z Preferred Stock adversely, then the holders
of the Series Z Preferred Stock shall be entitled to
vote separately as a class upon such amendment, and the
affirmative vote of two-thirds of the outstanding shares
of the Series Z Preferred Stock, voting separately as a
class, shall be necessary for the adoption thereof, in
addition to such other vote as may be required by the
General Corporation Law of the State of Delaware.
8
IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Company by its Chairman, President and Chief
Executive Officer and attested by its Secretary this 2nd day of April, 2001.
________________________
Name:
Title:
Attest:
__________________________
Secretary
9
Exhibit B
Form of Right Certificate
Certificate No. R- ____ ___ Rights
NOT EXERCISABLE AFTER APRIL 2, 2011 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR
TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS DEFINED IN
THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL
AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Right Certificate
SPARTECH CORPORATION
This certifies that ___________ or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, dated as of April 2, 2001, as the same may be
amended from time to time (the "Rights Agreement"), between Spartech
Corporation, a Delaware corporation (the "Company"), and Mellon Investor
Services LLC, as Rights Agent (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 P.M., New York City time, on the
earlier of April 2, 2011 or the earlier expiration of the Rights in
accordance with the terms of the Rights Agreement in accordance with its
terms, at the office or agency of the Rights Agent designated for such
purpose, or of its successor as Rights Agent, one one-thousandth of a fully
paid non-assessable share of Series Z Preferred Stock, par value $1 per share
(the "Preferred Stock"), of the Company, at a purchase price of $70 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of
Election to Purchase duly executed. The number of Rights evidenced by this
Rights Certificate (and the number of one one-thousandths of a share of
Preferred Stock which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as
of April 2, 2001, based on the Preferred Stock as constituted at such date.
As provided in the Rights Agreement, the Purchase Price, the number of one
one-thousandths of a share of Preferred Stock (or other securities or
property) which may be purchased upon the exercise of the Rights and the
number of Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
Notwithstanding anything in the Rights Agreement to the contrary,
from and after the time (the "invalidation time") when any person first
becomes an Acquiring Person (as defined in the Rights Agreement), the Rights
-1-
evidenced hereby beneficially owned by (x) any Acquiring Person (or any
Affiliate (as defined in the Rights Agreement) or Associate (as defined in
the Rights Agreement) of any Acquiring Person), (y) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a
transferee after the invalidation time or (z) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who became a transferee prior to
or concurrently with the invalidation time pursuant to either (I) a transfer
from the Acquiring Person to holders of its equity securities or to any
person with whom it has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (II) a transfer which the
Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has the purpose or effect of avoiding the
provisions of Section 11(a)(ii) of the Rights Agreement, and subsequent
transferees of such persons, shall be void without any further action and any
holder hereof shall thereafter have no rights whatsoever with respect to the
Rights evidenced hereby under any provision of the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the above-mentioned office or agency of
the Rights Agent. The Company will mail to the holder of this Right
Certificate a copy of the Rights Agreement without charge after receipt of a
written request therefor.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office or agency of the Rights Agent designated for
such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of 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 Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or in
part for shares of Preferred Stock or shares of the Company's Common Stock,
par value $1 per share.
-2-
No fractional shares of Preferred Stock or Common Stock will be
issued upon the exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
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
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement) or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by
this Right certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
-3-
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of April 2, 2001.
ATTEST: SPARTECH CORPORATION
By __________________ By __________________
Countersigned:
MELLON INVESTOR SERVICES LLC
___________________________,
as Rights Agent
By _________________________
Authorized Signature
-4-
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 transfer unto ___________________________
____________________________________________________________
(Please print name and address of transferee)
____________________________________________________________
Rights represented by this Right Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
___________________ Attorney, to transfer said Rights on the books of the
within-named Company, with full power of substitution.
Dated: _________________
________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association
of Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
- -----------------------------------------------
(To be completed)
The undersigned hereby certifies that the Rights evidenced
by this Right Certificate are not beneficially owned by, were not acquired by
the undersigned from, and are not being assigned to, an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement).
________________________
Signature
-5-
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate)
To SPARTECH CORPORATION:
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to purchase
the shares of Preferred Stock (or other securities or property) issuable upon
the exercise of such Rights and requests that certificates for such shares of
Preferred Stock (or such other securities) be issued in the name of:
______________________________________________________________
(Please print name and address)
______________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivery to:
Please insert social security
or other identifying number
______________________________________________________________
(Please print name and address)
______________________________________________________________
Dated: ____________________
________________________
Signature
(Signature must conform to holder specified on Right Certificate)
Signature Guaranteed:
Signature must be guaranteed by a member of firm of a
registered national securities exchange, a member of the National Association
of Securities Dealers, Inc. or a commercial bank or trust company having an
office or correspondent in the United States.
-6-
Form of Reverse Side of Right Certificate -- continued
_________________________________________________________________
(To be completed)
The undersigned certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement)
______________________
Signature
_________________________________________________________________
NOTICE
The signature in the Form of Assignment or Form of Election
to Purchase, as the case may be, must conform to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.
In the event the certification set forth above in the Form
of Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or
an Affiliate or Associate thereof (as defined in the Rights Agreement) and
such Assignment or Election to Purchase will not be honored.
-7-
Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL BECOME NULL
AND VOID AND WILL NO LONGER BE TRANSFERABLE.
SPARTECH CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
Shares of Series Z Preferred Stock
On April 2, 2001, a Special Committee of the Company's Board of
Directors declared a dividend of one Preferred Share Purchase Right (a
"Right") for each outstanding share of our common stock, par value $.75 per
share. The dividend is payable on April 13, 2001 to our stockholders of
record at the close of business on April 13, 2001. The Rights are subject to
the terms of a Rights Agreement dated April 2, 2001 between the Company and
Mellon Investor Services, LLC, as the Rights Agent.
The Special Committee adopted the Rights Agreement to assist the
Company in pursuing its long-term business strategies and enhancing
stockholder value, by protecting our stockholders against unsolicited
takeover efforts on unfavorable terms. In general terms, the Rights
Agreement works by imposing a significant penalty upon any person or group
which acquires 15% or more of the Company's outstanding common stock after
April 2, 2001 without the approval of the Board of Directors. Any current
stockholder which beneficially owned more than 15% of our outstanding common
stock as of April 2, 2001 may acquire up to an additional 1% of our
outstanding common stock without penalty.
For those interested in the specific terms of the Rights Agreement, we
provide the following summary of the principal features of the Rights.
However, this description is only a summary and does not purport to be a
complete description of the terms of the Rights. For more information, you
should refer to the complete Rights Agreement, which has been filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement for the Rights on Form 8-A. A copy of the Rights Agreement is
available from the Company on request, without charge.
-1-
The Rights.
- ----------
One Right will be issued for each share of the Company's common stock
outstanding on April 13, 2001. The Rights will initially trade with, and
will be inseparable from, the common stock. Identical Rights will also
accompany any new shares of common stock the Company issues from April 13,
2001 until the Distribution Date described below or the redemption of the
Rights, whichever occurs first. Until the Distribution Date, the Rights will
be evidenced only by the certificates that represent shares of common stock.
Exercise Price of the Rights.
- ----------------------------
If and when the Rights become exercisable, each Right will allow its
holder to purchase from the Company one one-thousandth of a share of Series Z
Preferred Stock for $70.00. One one-thousandth of a share of Series Z
Preferred Stock will give the holder approximately the same dividend, voting,
and liquidation rights as would one share of common stock.
Prior to exercise, a Right does not give its holder any dividend,
voting, or liquidation rights.
When the Rights Become Exercisable.
- ----------------------------------
The Rights will not be exercisable until:
- 10 days after the public announcement that a person or group has
become an "Acquiring Person" by obtaining beneficial ownership of
15% or more of our outstanding common stock, or, if earlier,
- 10 business days (or a later date determined by our Board of
Directors before any person or group becomes an Acquiring Person)
after a person or group begins, or announces an intention to make,
a tender offer or exchange offer, if the completion of the offer
would result in that person or group becoming an Acquiring Person.
Any current stockholder which beneficially owned more than 15% of our
outstanding common stock as of April 2, 2001 will not be an Acquiring Person
so long as it does not purchase or acquire beneficial ownership of additional
Spartech shares amounting to more than 1% of our outstanding common stock.
The Rights Agreement refers to the date when the Rights become
exercisable as the "Distribution Date." Until the Distribution Date, the
-2-
Company's common stock certificates will also evidence the Rights, and any
transfer of shares of common stock will also constitute a transfer of the
associated Rights. After the Distribution Date, the Rights will separate
from the common stock and be evidenced by book-entry credits or by Rights
certificates that we will mail to all eligible holders of common stock.
Any Rights held by an Acquiring Person become void and may not be
exercised.
Other Consequences Of A Person Or Group Becoming An Acquiring Person.
- --------------------------------------------------------------------
- Flip In. If a person or group becomes an Acquiring Person, all
holders of Rights except the Acquiring Person may, for $70.00 per
Right, purchase shares of the Company's common stock with a market
value of $140.00, based on the market price of the Company's
common stock prior to the acquisition.
- Flip Over. If the Company is acquired in a merger or similar
transaction after the Distribution Date, all holders of Rights
except the Acquiring Person may, for $70 per Right, purchase
shares of the acquiring corporation with a market value of $140,
based on the market price of the acquiring corporation's stock
prior to the merger.
Provisions of Series Z Preferred Stock.
- --------------------------------------
If the Rights are exercised and Series Z Preferred Stock is issued,
each one one-thousandth of a share:
- Will not be redeemable;
- Will have the same voting power as one share of the Company's
common stock;
- Will entitle its holder to quarterly dividend payments of $.001
per share, or an amount equal to the dividend paid on one share of
common stock, whichever is greater;
- Will entitle its holder, if the Company is liquidated, to receive
either $1 per share or an amount equal to the payment made on one
share of common stock, whichever is greater; and
-3-
- If shares of the Company's common stock are exchanged in a merger,
consolidation or similar transaction, will entitle the holder to a
payment equal to the payment made on one share of common stock.
Redemption.
- ----------
The Company's Board of Directors may redeem the Rights for $.01 per
Right at any time before any person or group becomes an Acquiring Person. If
the Board redeems any Rights, it must redeem all of the Rights. Once the
Rights are redeemed, the holders will have only the right to receive the
redemption price. The redemption price will be adjusted if there is a stock
split or stock dividend with respect to our common stock.
Exchange.
- --------
After a person or group becomes an Acquiring Person, but before an
Acquiring Person owns 50% or more of our outstanding common stock, the
Company's Board of Directors may extinguish the Rights by exchanging one
share of common stock or an equivalent security for each Right not held by
the Acquiring Person. Rights held by the Acquiring Person will be void and
will not be exchanged.
Expiration.
- ----------
The Rights will expire on April 2, 2011. The holders of the Rights
will not become entitled to any payment or other consideration on account of
the expiration of the Rights.
Anti-Dilution Provisions.
- ------------------------
The Board of Directors may adjust the purchase price of the Preferred
Stock, the number of shares of Preferred Stock issuable and the number of
outstanding Rights, in order to prevent dilution that may occur from a stock
dividend, a stock split or a reclassification of the Preferred Stock or
common stock. No adjustments to the purchase price of the Preferred Stock of
less than 1% will be made.
-4-
Amendments to the Rights Agreement.
- ----------------------------------
The Board of Directors may amend the terms of the Rights Agreement
without the consent of the holders of the Rights. However, after a person or
group becomes an Acquiring Person, the Board may not amend the Rights
Agreement in a way that adversely affects the holders of the Rights.
-5-