MYKROLIS CORPORATION
and
EQUISERVE TRUST COMPANY, N.A.
as Rights Agent
Common Stock Rights Agreement
Dated as of November 29, 2001
COMMON STOCK RIGHTS AGREEMENT
INDEX
SECTION 1. CERTAIN DEFINITIONS............................................. 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT..................................... 5
SECTION 3. ISSUE OF RIGHT CERTIFICATES..................................... 6
SECTION 4. FORM OF RIGHT CERTIFICATES...................................... 7
SECTION 5. COUNTERSIGNATURE AND REGISTRATION............................... 8
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.. 9
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS... 10
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.............. 11
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK; OTHER
COVENANTS.............................................................. 12
SECTION 10. COMMON STOCK RECORD DATE; ETC................................... 13
SECTION 11. ANTI-DILUTION ADJUSTMENTS....................................... 14
SECTION 12. CERTIFICATE OF ADJUSTMENTS...................................... 22
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.......................................................... 23
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES......................... 24
SECTION 15. RIGHTS OF ACTION................................................ 25
SECTION 16. AGREEMENT OF RIGHT HOLDERS...................................... 25
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER............... 26
SECTION 18. CONCERNING THE RIGHTS AGENT..................................... 26
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT....... 27
SECTION 20. DUTIES OF RIGHTS AGENT.......................................... 27
SECTION 21. CHANGE OF RIGHTS AGENT.......................................... 30
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.............................. 30
SECTION 23. REDEMPTION AND TERMINATION...................................... 31
SECTION 24. EXCHANGE........................................................ 31
SECTION 25. NOTICE OF PROPOSED ACTIONS...................................... 32
SECTION 26. NOTICES......................................................... 33
SECTION 27. SUPPLEMENTS AND AMENDMENTS...................................... 34
SECTION 28. SUCCESSORS...................................................... 34
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS; ETC....... 34
SECTION 30. BENEFITS OF THIS AGREEMENT...................................... 34
SECTION 31. GOVERNING LAW................................................... 35
SECTION 32. COUNTERPARTS.................................................... 35
SECTION 33. DESCRIPTIVE HEADINGS............................................ 35
SECTION 34. SEVERABILITY.................................................... 35
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COMMON STOCK RIGHTS AGREEMENT
This Common Stock Rights Agreement is between Mykrolis Corporation, a Delaware
corporation (the "Company"), and Equiserve Trust Company, N.A., a national
banking association (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on March 26, 2001 and November 29, 2001, the Board of Directors of
the Company has authorized and approved the Agreement;
WHEREAS, on November 29, 2001, the Board of Directors of the Company
authorized the issuance of rights (collectively, the "Rights", and individually
a "Right") to purchase, on the terms and subject to the provisions of the
Agreement, one share of the Company's Common Stock; and
WHEREAS, on November 29, 2001 ("Declaration Date") the Board of Directors
of the Company authorized and declared a dividend distribution of one Right for
every share of Common Stock of the Company outstanding at the close of business
on December 31, 2001 (the "Dividend Record Date") and authorized the issuance
of, and agreed to issue, one Right (as such number may be adjusted in accordance
with Sections 11(i) or 11(n) of the Agreement) for every share of Common Stock
of the Company (i) issued between the Dividend Record Date and the Distribution
Date and (ii) reserved for issuance as of the Distribution Date and issued on or
after the Distribution Date and prior to the earliest of the occurrence of a
Common Stock Event, redemption of the Rights or the Expiration Date;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have the meanings
indicated:
(a) The term "Acquiring Person" shall mean any Person who or which,
together with all Affiliates of such Person, shall be the Beneficial Owner of
15% or more of the outstanding shares of Common Stock of the Company; provided,
however, that (i) none of the Company, any Wholly Owned Subsidiary of the
Company, or any employee benefit plan of the Company or of any Wholly Owned
Subsidiary of the Company, or any trustee in respect thereof acting in such
capacity, or any Person organized, appointed or established by the Company or a
Wholly Owned Subsidiary of the Company pursuant to the terms of any such
employee benefit plan shall be an "Acquiring Person" for any purpose of this
Agreement, and (ii) if the Company, upon the affirmative vote of two-thirds of
the Directors then in office, 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
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that he, she or it was the Beneficial Owner of a percentage of Common Stock of
the Company that would otherwise cause such Person to be an "Acquiring Person"
or (b) such Person was aware of the extent of his, her or its Beneficial
Ownership but had no actual knowledge of the consequences of such Beneficial
Ownership under this Agreement) and without any intention of changing or
influencing the control, management or policies of the Company or of engaging in
any of the actions specified in Item 4 of Schedule 13D under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and within 10 Business
Days of being requested by the Company to advise it regarding the same,
certifies to the Company with respect to the foregoing (provided that if the
Person requested to so certify fails to do so within 10 Business Days, then such
Person shall become an Acquiring Person on the day immediately following the
last day of such 10 Business Day period), and if such Person as promptly as
practicable divested or divests himself, herself or itself of Beneficial
Ownership of a sufficient number of shares of Common Stock of the Company 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
purpose of this Agreement.
(b) The term "Affiliate", with respect to any Person, shall mean any other
Person who is, or would be deemed to be, an "affiliate" or an "associate" of
such Person within the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as such Rule is in
effect on the Declaration Date.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed
to "beneficially own", any securities:
(i) which such Person or any of such Person's Affiliates has
"beneficial ownership" of within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act (or any successor
rule);
(ii) which such Person or any of such Person's Affiliates has,
directly or indirectly, (A) the right to acquire (whether such right
is exercisable immediately or after the passage of time) pursuant to
any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion, exchange or other rights
(other than the Rights), warrants or options, or otherwise; or (B) the
right to vote or dispose of, including pursuant to any agreement,
arrangement or understanding (whether or not in writing); provided,
however, that for purposes of this Section 1(c) a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own", any
security if such agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy given in response to
a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable proxy solicitation rules and
regulations promulgated under the Exchange Act, or is made in
connection with, or is to otherwise participate in, a proxy or consent
solicitation made, or to be made, pursuant to, and in accordance with,
the applicable proxy solicitation rules and regulations promulgated
under the
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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 or any Affiliate of such Person with which such
Person or any of such Person's Affiliates has any agreement,
arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable
proxy or in connection with a proxy or consent solicitation described
in the proviso to Section 1(c)(ii)(B) hereof) or disposing of any
securities of the Company;
provided, however, that for purposes of this Section 1(c) a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Persons' Affiliates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Common Stock Event, or (C) securities issuable
upon exercise of Rights which were held by a Person or its Affiliates prior to
the Distribution Date as long as such Person is not responsible for the
occurrence of the Common Stock Event giving rise to the Distribution Date: and
provided, further, however, that nothing in this Section l(c) shall cause a
Person engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
person's participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
(d) The term "Business Day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in The Commonwealth of
Massachusetts are authorized or obliged by law or executive order to close.
(e) The term "close of business" on any day shall mean 5:00 P.M., Boston
time, on such day; provided, however, that if such day is not a Business Day it
shall mean 5:00 P.M., Boston time, on the next succeeding Business Day.
(f) The term "Common Stock" shall mean the Common Stock, $.01 par value, of
the Company, except that the term "Common Stock" when used with respect to any
Person other than the Company shall mean the common stock (or other capital
stock or shares of beneficial interest of such Person) with the greatest voting
power or the equity securities or other equity interests having the power to
control or direct the management and affairs of such Person, or if such Person
is a Subsidiary of another Person, the Person who ultimately controls such first
mentioned Person and which has outstanding such Common Stock (or such other
capital stock, equity securities or interests).
(g) The term "Common Stock Event" shall mean the occurrence of any event
described in (i) Section 11(a)(ii) hereof or (ii) clauses (a), (b) or (c) of the
first sentence of Section 13 hereof.
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(h) The term "Director" shall mean any member of the Board of Directors of
the Company.
(i) The term "Disqualified Transferee" shall mean any Person who is a
direct or indirect transferee of any Rights from an Acquiring Person or an
Affiliate of an Acquiring Person and became such a transferee (x) after the
occurrence of a Common Stock Event or (y) prior to or concurrently with the
Acquiring Person becoming such and received such Rights pursuant to a transfer
(whether or not for value) (A) from the Acquiring Person to holders of its
Common Stock or other equity securities or to any Person with whom the Acquiring
Person has any continuing agreement, arrangement or understanding (whether or
not in writing) regarding the transferred Rights or (B) which a majority of the
Directors determine is part of a plan, arrangement or understanding (whether or
not in writing) which has as a primary purpose or effect, the avoidance of
Section 7(e) hereof.
(j) The term "Distribution Date" shall mean the date which is the later of
(A) the earlier of (x) the 10th Business Day following the Stock Acquisition
Date or (y) the 10th Business Day following the Offer Commencement Date;
provided, however, that if such earlier date occurs prior to the 10th Business
Day preceding the Dividend Record Date, the "Distribution Date" shall be the
Dividend Record Date or (B) such specified or unspecified date thereafter which
is on or after the Dividend Record Date, as may be determined by two-thirds of
the Directors then in office.
(k) The term "Offer Commencement Date" shall mean the date of the
commencement of, or the first public announcement of the intent of any Person,
other than the Company, a Wholly Owned Subsidiary of the Company or any employee
benefit plan of the Company or of any Wholly Owned Subsidiary of the Company or
any Person organized, appointed or established by the Company or a Wholly Owned
Subsidiary pursuant to the terms of any such plan, (including any statement of
such intention appearing in any publicly available document filed with any
governmental authority, other than documents made publicly available as a result
of subpoena or other legal process) to commence a tender or exchange offer if
upon consummation thereof the Person and Affiliates thereof would be the
Beneficial Owner of 15% or more of the then outstanding shares of Common Stock
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights).
(l) The term "Person" shall mean a company, corporation, association,
partnership, joint venture, trust, organization, business, individual or
government or any governmental agency or political subdivision thereof.
(m) The term "Stock Acquisition Date" shall mean the date of the first
public announcement by the Company or an Acquiring Person (or an Affiliate
thereof) that an Acquiring Person has become such (including the first date on
which any filing with any governmental authority disclosing that an Acquiring
Person has become such becomes available to the public).
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(n) The term "Subsidiary" shall mean any Person of which the Company (or
other specified parent) now or hereafter shall at the time own directly, or
indirectly through a Subsidiary or Subsidiaries, at least a majority of the
outstanding capital stock (or other shares of beneficial interest) entitled to
vote generally, or holds directly, or indirectly through a Subsidiary or
Subsidiaries, at least a majority of partnership or similar interests, or is a
general partner. The term "Wholly Owned Subsidiary" shall mean any Subsidiary of
which all of the outstanding capital stock (or other shares of beneficial
interest) entitled to vote generally other than directors' qualifying shares, is
owned by the Company (or other specified Person) directly, or indirectly through
one or more Wholly Owned Subsidiaries.
(o) The following terms defined elsewhere in this Agreement in the Sections
set forth below shall have the respective meanings therein defined:
Term Definition
---- ----------
"Act" Section 9(e)
"Closing Price" Section 11(d)
"Common Stock Equivalents" Section 11(a)(iii)
"Company" Preamble
"current market price" Section 11(d)
"Current Value" Section 11(a)(iii)
"Declaration Date" Recitals
"Dividend Record Date" Recitals
"Excess Amount" Section 11(a)(iii)
"Exchange Act" Section 1(a)
"Exchange Ratio" Section 24
"Expiration Date" Section 7
"Officers' Certificate" Section 20(b)
"Other Consideration" Section 6(a)
"Principal Office" Section 5
"Purchase Price" Section 7(b)
"Redemption Price" Section 23
"Right Certificate" Section 3(a)
"Rights" Recitals
"Rights Agent" Preamble; Section 21
"Substitution Period" Section 11(a)(iii)
"Summary of Rights" Section 3(b)
"Trading Day" Section 11(d)
SECTION 2. APPOINTMENT OF RIGHTS AGENT.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the
6
Distribution Date also be the holders of the Common Stock), and the Rights Agent
hereby accepts such appointment upon the terms and conditions hereof. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable, upon ten (10) days ' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and in no event be
liable for, the acts or omissions of any such co-Rights Agent.
SECTION 3. ISSUE OF RIGHT CERTIFICATES.
(a) Until the Distribution Date, (i) the Rights will be evidenced (subject
to the provisions of Section 3(b) hereof) by the certificates representing
shares of the Common Stock registered in the names of the holders of the Common
Stock (which certificates shall be deemed also to be certificates for the
associated Rights) and not by separate Right Certificates and (ii) the Rights
will be transferable only in connection with the transfer of the associated
shares of Common Stock. As soon as practicable after the Distribution Date, the
Rights Agent will send, by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the stock transfer
records of the Company, a right certificate, in substantially the form of Annex
I hereto (a "Right Certificate"), evidencing that number of Rights to which such
holder is entitled in accordance with the provisions of this Agreement. In the
event that an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Sections 11(i) or 11(p) hereof, at the time of
distribution of the Right Certificates, the Company shall make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Right Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates. The Rights are exercisable only in accordance with the provisions
of Section 7 hereof and are redeemable only in accordance with Section 23
hereof.
(b) As soon as practicable after the date hereof the Company will cause a
copy of a Summary of Common Stock Purchase Rights, in substantially the form
attached hereto as Annex II (the "Summary of Rights"), to be sent by first-
class, postage prepaid mail, to each record holder of the Common Stock as of the
close of business on the Dividend Record Date, at the address of such holder
shown on the stock transfer records of the Company. With respect to certificates
for the Common Stock outstanding as of the date hereof, until the Distribution
Date, the Rights will be evidenced by such certificates for the Common Stock and
the registered holders of the Common Stock shall also be the registered holders
of the associated Rights. Until the Distribution Date (or the earlier
redemption, expiration or termination of the Rights), the surrender for transfer
of any of the certificates representing shares of the Common Stock outstanding
on the Dividend Record Date, with or without a copy of the Summary of Rights,
shall also constitute the transfer of the Rights associated with the Common
Stock represented by such certificate.
(c) Rights shall be issued in respect of all shares of Common Stock issued
(whether originally issued or delivered from the Company's treasury) after the
Dividend Record Date
7
but prior to the earliest of (i) the Distribution Date, (ii) the Expiration Date
or (iii) the redemption of the Rights. Certificates representing such shares of
Common Stock and certificates issued on transfer of such shares of Common Stock
with or without a copy of the Summary of Rights, prior to the Distribution Date
(or earlier expiration or redemption of the Rights) shall be deemed also to be
certificates for the associated Rights, and shall bear the following legend (or
a legend substantially in the form thereof):
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Common Stock Rights Agreement between
the issuer and Equiserve Trust Company, N.A., as Rights Agent (the
"Rights Agent"), dated as of November 29, 2001 (as may be amended
and/or restated from time to time, the "Rights Agreement"), the terms
of which are hereby incorporated herein by reference and a copy of
which is on file at the principal offices of the issuer and the Rights
Agent. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Rights Agent will
mail to the holder of this certificate a copy of the Rights Agreement
without charge within five days after receipt of a written request
therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by any Person who is, was or
becomes an Acquiring Person or any Affiliate thereof (as each such
term is defined in the Rights Agreement), whether currently held by or
on behalf of such Person or by certain subsequent holders, may become
null and void.
Until the Distribution Date (or the earlier redemption, expiration or
termination of the Rights), the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such certificates alone
and the registered holders of Common Stock shall also be the registered holders
of the associated Rights, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the Common Stock represented by such certificate.
(d) In addition, the Company agrees to issue one Right (as such number may
be adjusted in accordance with Sections 11(i) or 11(p) hereof) in conjunction
with the issuance of any shares of Common Stock reserved for issuance on the
Distribution Date (other than shares reserved for issuance upon exercise of the
Rights) and issued (i) on or after the Distribution Date and (ii) prior to the
earliest of (A) the occurrence of a Common Stock Event, (B) the Expiration Date
or (C) the redemption of the Rights (such Rights to be issued to the Person to
whom such shares of Common Stock are issued).
SECTION 4. FORM OF RIGHT CERTIFICATES.
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(a) The Right Certificates (and the form of assignment and the form of
exercise notice and certificate to be printed on the reverse thereof) shall each
be substantially in the form set forth in Annex I hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Sections 11
and 22 hereof, the Right Certificates, whenever distributed, shall be dated as
of the Dividend Record Date (or, if the shares pursuant to which the Rights are
attached are issued thereafter, such date of issuance), and on their face shall
entitle the holders thereof to purchase such number of shares of Common Stock as
shall be set forth therein at the Purchase Price (as hereinafter defined), but
the amount and type of securities issuable upon the exercise of each Right and
the Purchase Price shall be subject to adjustment as provided herein.
9
(b) Any Right Certificate issued pursuant to Sections 3(a) or 22 hereof
that represents Rights beneficially owned by (i) any Acquiring Person or any
Affiliate of an Acquiring Person or (ii) any Disqualified Transferee, and any
other Right Certificate issued pursuant to Section 6 or 11 hereof upon the
transfer, exchange, replacement or adjustment of any such Right Certificate
shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate of an Acquiring Person (as each such term is defined
in the Rights Agreement). Accordingly, this Right Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement. The
Rights Agent will mail to the registered holder of this certificate a
copy of the Rights Agreement, as in effect on the date of mailing,
without charge upon written request.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
The Right Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its President or any Vice President, either manually or
by facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, issued and delivered with the same force
and effect as though the person who signed such Right Certificates had not
ceased to be such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Right Certificate, shall be a proper officer of the Company to
sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at that office of the Rights Agent at which it conducts its shareholder
services affairs (its "Principal Office"), books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
countersignature thereof by the Rights Agent.
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SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any
time after the close of business on the Distribution Date, and at or prior to
the earlier of the close of business on the Expiration Date or the redemption of
the Rights, any Right Certificate or 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 shares of Common
Stock (or, following a Common Stock Event, Common Stock and/or such other
securities, cash or other assets as shall be issuable in respect of the Rights
in accordance with the terms of this Agreement (such other securities, cash or
other assets being referred to herein as "Other Consideration")) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the Principal Office of the Rights Agent, accompanied
by a medallion signature guarantee and such other documentation as the Rights
Agent may reasonably request. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Right Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Right Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) from whom
the rights evidenced by such Right Certificate are to be transferred (or the
Beneficial Owner to whom such Rights are to be transferred) or Affiliates
thereof as the Company shall reasonably request. Thereupon, subject to Sections
4(b), 7(e) and 14 hereof, the Company shall execute and 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 which the Company is not required to pay in accordance with
Section 9(d) hereof.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, the receipt 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, accompanied by a medallion signature guarantee and such other
documentation as the Rights Agent may reasonably request the Company will
execute and deliver a new Right Certificate of like tenor to the Rights Agent
for countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
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SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Except as otherwise provided herein, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby in whole or in part at any
time from and after the Distribution Date and at or prior to the close of
business on March 26, 2011 (the "Expiration Date") (or the earlier redemption of
the Rights). At the Expiration Date (or the earlier redemption of the Rights),
all Rights will be extinguished and all Right Certificates shall become null and
void. To exercise Rights, the registered holder of the Right Certificate
evidencing such Rights shall surrender such Right Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Rights
Agent at the Principal Office of the Rights Agent, accompanied by a medallion
signature guarantee and such other documentation as the Rights Agent may
reasonably request, together with payment in cash, or by certified check or bank
check, of the Purchase Price with respect to the total number of shares of
Common Stock (or, after a Common Stock Event, Common Stock and/or Other
Consideration) as to which the Rights are exercised (which payment shall include
any additional amount payable by such Person in accordance with Section 9(d)
hereof). The Rights Agent shall promptly deliver to the Company all payments of
the Purchase Price received in respect of Right Certificates accepted for
exercise.
(b) The purchase price for each share of Common Stock issuable pursuant to
the exercise of a Right (the "Purchase Price") shall initially be $130.00, shall
be subject to adjustment as provided in Section 11 hereof and shall be payable
in lawful money of the United States of America.
(c) Upon receipt of a Right Certificate representing the Rights, with the
form of election to purchase set forth on the reverse side thereof and the
certificate contained therein duly executed, accompanied by payment of the
Purchase Price with respect to each Right so exercised, the Rights Agent,
subject to Sections 7(e) and 7(g), Section 11(a)(iii) and Section 20(k) hereof,
shall thereupon promptly (i) requisition from any transfer agent of the Common
Stock (or from the Company if there shall be no such transfer agent, or make
available if the Rights Agent is such transfer agent) certificates for the total
number of shares of Common Stock to be purchased and the Company hereby
irrevocably authorizes such transfer agent to comply with any such request, (ii)
after receipt of such certificates, 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 in writing by such holder, and (iii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of a fractional share in accordance with Section 14 hereof and after
receipt promptly deliver such cash to or upon the order of the registered holder
of such Right Certificate. After the occurrence of a Common Stock Event, the
Company will make all necessary arrangements so that any Other Consideration
then deliverable in respect of the Rights is available for distribution by the
Rights Agent. For purposes of this Section 7, the Rights Agent shall be entitled
to rely, and shall be protected in relying, on an Officers' Certificate from the
Company to the effect that the Distribution Date has occurred.
12
(d) Subject to Sections 4(b), 7(e) and 14 hereof, in case the registered
holder of any Right Certificate shall exercise less than all the Rights
evidenced thereby, a new Right Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be executed and delivered by the Company to
the Rights Agent and countersigned and delivered by the Rights Agent to the
registered holder of such Right Certificate or to his duly authorized assigns.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Common Stock Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate of an Acquiring Person or (ii)
a Disqualified Transferee shall become null and void without any further action,
and no holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Right Certificates or other Person, and none of the
terms of this Agreement or the Rights shall be deemed to be waived with respect
to such holder or other Person as a result of (i) any failure to make any
determinations with respect to an Acquiring Person or its Affiliates or
Disqualified Transferees hereunder, (ii) any waiver or failure to waive any of
the provisions of this Agreement, or (iii) any failure to have a legend placed
on any Right Certificate in accordance with Section 4(b) hereof or on any Common
Stock certificate in accordance with Section 3(c) hereof.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of any Right Certificate upon the occurrence of
any purported exercise thereof unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) from whom the Rights evidenced by
such Right Certificate are to be transferred (or the Beneficial Owner to whom
such Rights are to be transferred) or Affiliates thereof as the Company shall
reasonably request.
(g) Notwithstanding any other provision of this Agreement, in the event
that compliance with the Company's Articles of Organization would prohibit the
Company from issuing shares or similar units of the Company's capital stock or
other securities to the holder of any Rights upon exercise thereof, then, upon
such holder's presentation of the Right Certificates therefor to the Rights
Agent, so long as such Rights shall not have become null and void pursuant to
Section 7(e) hereof, Company, at its option, (i) may call a meeting of
stockholders to authorize same or (ii) to the extent required by its Articles of
Organization, in lieu of issuing any such shares or similar units to such
holder, the Company at its option may (A) cause the Rights Agent to deliver such
Right Certificates to the Company, and the Company shall sell, or cause to be
sold, the Rights represented thereby for the account of such holder and promptly
remit the net proceeds thereof to such holder or, (B) provide fair value to such
holder.
13
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.
All Right Certificates surrendered for the purpose of and accepted for
exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents (other than the Rights Agent), be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this 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 Certificates
purchased or retired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK; OTHER
COVENANTS.
(a) The Company covenants and agrees as long as any of the Rights are
outstanding, it will cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock (or, following the occurrence of
a Common Stock Event, out of its authorized and unissued shares of Common Stock
and/or other securities, or out of its authorized and issued shares held in its
treasury), the number of shares of Common Stock (or, following a Common Stock
Event, shares of Common Stock and/or other securities) that, except as provided
in Section 11(a)(iii) hereof, would then be sufficient to permit the exercise in
full of all outstanding Rights; provided, however, that the reservation of such
shares shall be subject and subordinate to any other reservation of such shares
made by the Company at any time for any lawful purpose; provided, further,
however, that in no event shall such failure to so reserve shares affect the
rights of any holder of Rights hereunder.
(b) The Company covenants and agrees that on and after the Distribution
Date so long as the Common Stock (or, following the occurrence of a Common Stock
Event, shares of Common Stock and/or other securities and/or Other
Consideration) issuable upon the exercise of Rights may be listed on any
national securities exchange, the Company shall use its best efforts to cause
all shares (or similar units) reserved for such issuance to be listed on such
exchange upon official notice of issuance upon such exercise.
(c) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that each share of Common Stock (or, following a
Common Stock Event, each share and/or similar unit of Common Stock or Other
Consideration), delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares (or units), subject to payment of the
Purchase Price, be duly and validly authorized and issued and fully paid and
nonassessable.
14
(d) The Company covenants and agrees that it will pay when due and payable
any and all federal and state transfer taxes and similar charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Common Stock (or, following the occurrence of a Common Stock
Event, each share and/or similar units of Common Stock or Other Consideration)
upon the exercise of Rights; provided, however, that the Company shall not be
required to pay any transfer tax which may be payable in respect of any transfer
involved in the transfer or delivery of Right Certificates or in the issuance or
delivery of certificates for any shares of Common Stock (or, following the
occurrence of a Common Stock Event, each share and/or similar units of Common
Stock or Other Consideration) 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 for any shares of Common Stock (and, following the
occurrence of a Common Stock Event, all shares and/or similar units of Common
Stock or Other Consideration) upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Common
Stock Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration statement under the Securities Act of 1933 (the
"Act"), with respect to the securities issuable upon exercise of the Rights on
an appropriate form, (ii) cause such registration statement to become effective
as soon as practicable after such filing and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities or (B) the Expiration Date
or earlier redemption of the Rights. The Company will also take such action as
may be appropriate under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the first sentence of
this Section 9(e), the exercisability of the Rights in order to prepare and file
such registration statement or to permit it to become effective. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended. The Company shall
thereafter issue a public announcement at such time as the suspension is no
longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained.
SECTION 10. COMMON STOCK RECORD DATE; ETC.
Each person in whose name any certificate for any shares of Common Stock
(or, following the occurrence of a Common Stock Event, shares and/or similar
units of Common Stock or Other Consideration) is issued upon the exercise of
Rights shall for all purposes be
15
deemed to have become the holder of record of such shares of Common Stock (or
such shares and similar units of Common Stock and/or Other Consideration, as the
case may be) represented thereby, and such certificate shall be dated the date
which is the later of (i) the date upon which the Right Certificate evidencing
such Rights was duly surrendered or (ii) the date upon which payment of the
Purchase Price (and any applicable transfer taxes) in respect thereof was made;
provided, however, that if such date is a date upon which the relevant transfer
books of the Company are closed, such person shall be deemed to have become the
record holder of such shares (and/or such shares or similar units of Common
Stock or Other Consideration) on, and such certificate shall be dated, the next
succeeding Business Day on which such transfer books of the Company are open;
provided, further, that the Company covenants and agrees that it shall not close
such transfer books for a period exceeding ten consecutive days. Prior to the
exercise of the Rights evidenced thereby (which shall be deemed to have occurred
on the date such certificate shall be dated in accordance with this Section 10),
the holder of a Right Certificate, as such, shall not be entitled to any rights
of a security holder of the Company with respect to the shares of Common Stock
(and/or such shares or similar units of Common Stock or Other Consideration) for
which the Rights shall be exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as expressly provided herein.
SECTION 11. ANTIDILUTION ADJUSTMENTS.
The Purchase Price and the number and kind of securities covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the date
of this Agreement (A) declare and pay a dividend on the Common Stock
payable in shares of Common Stock, (B) subdivide the outstanding Common
Stock, (C) combine the outstanding Common Stock into a smaller number of
shares or (D) issue, change or alter any shares of its capital stock in a
reclassification or recapitalization (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a) and 7(e) hereof, then, and in each such case, the Purchase
Price in effect at the time of the record date for such dividend or the
effective time of such subdivision, combination, reclassification or
recapitalization, and the number and kind of shares of capital stock
issuable at such time, shall be proportionately adjusted so that the holder
of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of Common Stock or other capital stock
which, if such Right had been exercised immediately prior to such time and
at a time when the Common Stock transfer books of the Company were open,
such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination,
reclassification or recapitalization. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii)
16
hereof, the adjustment provided in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii).
17
(ii) In the event:
(A) any Person shall at any time after the Declaration Date
become an Acquiring Person; or
(B) any Acquiring Person or any Affiliate of any Acquiring
Person, at any time after the date of this Agreement, directly or
indirectly, shall (1) merge into the Company or otherwise combine with
the Company, and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Stock of the
Company shall remain outstanding and unchanged, (2) in one or more
transactions, transfer any assets to the Company in exchange (in whole
or in part) for shares of any class of its equity securities or for
securities exercisable for or convertible into shares of any such
class or otherwise obtain from the Company, with or without
consideration, any additional shares of any such class or securities
exercisable for or convertible into shares of any such class (other
than as part of a pro rata distribution to all holders of such class),
(3) sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise dispose (in one transaction or a series of transactions),
to, from or with the Company or any of the Company's Subsidiaries,
assets on terms and conditions less favorable to the Company than the
Company would be able to obtain through arm's-length negotiation with
an unaffiliated third party, (4) engage in any transaction with the
Company not in the ordinary course of the Company's business involving
the sale, purchase, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) of
assets having an aggregate fair market value of more than $1,000,000,
(5) receive any compensation from the Company or any of the Company's
Subsidiaries other than compensation as a director of the Company or
for full-time employment as a regular employee at rates in accordance
with the Company's (or such Subsidiary's) past practices, (6) receive
the benefit (except proportionately as a stockholder), of any loans,
advances, guarantees, pledges or other financial assistance or any tax
credits or other tax advantage provided by the Company or any of its
Subsidiaries or (7) commence a tender or exchange offer for securities
of the Company; or
(C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any combination
thereof), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries, or any
repurchase by the Company or any of its Subsidiaries of shares of
Common Stock of the Company, or any other class or series of
securities issued by the Company, or any other transaction or series
of transactions involving the Company which reclassification,
recapitalization, merger or consolidation, repurchase or other
transaction or series of transactions is not effected with the
approval of a majority of the Directors then in office (whether or not
with or into or otherwise
18
involving an Acquiring Person or any Affiliate of an Acquiring
Person), which has the effect, directly or indirectly, of increasing
by more than 1% the proportionate share of the outstanding shares of
any class of equity securities or securities exercisable for or
convertible into any class of equity securities of the Company or any
of its Subsidiaries which is directly or indirectly owned by any
Acquiring Person or any Affiliate of an Acquiring Person; or
(D) during such time as there is an Acquiring Person, (1) there
shall be any reduction in the annual rate of dividends paid on shares
of Common Stock which is not effected with the approval of a majority
of the Directors then in office (except as necessary to reflect any
subdivision of the shares of Common Stock or as required under the
laws of the Company's jurisdiction of incorporation), or (2) there
shall be a failure to increase the annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding shares of
Common Stock which is not effected with the approval of a majority of
the Directors then in office (except to the extent such increase in
rate of dividends would be prohibited under the laws of the Company's
jurisdiction of incorporation),
then, and in each such case, upon the close of business 15 Business
Days after the occurrence of such event, proper provision shall be
made so that each holder of a Right, except as provided in Section
7(e) and Section 7(g) hereof, shall thereafter have the right to
receive, upon exercise thereof at the Purchase Price in effect at the
time of exercise in accordance with the terms of this Agreement, such
number of shares of Common Stock of the Company as shall equal the
result obtained by (x) multiplying an amount equal to the then current
Purchase Price by an amount equal to the number of shares of Common
Stock for which a Right was or would have been exercisable immediately
prior to the first occurrence of any such event whether or not such
Right was then exercisable, and dividing that product by (y) 50% of
the current market price per share of the Common Stock of the Company
(as defined in Section 11(d) hereof) determined as of the date of such
first occurrence.
(iii) In lieu of issuing whole or fractional shares of Common Stock
in accordance with Section 11(a)(ii) hereof, the Company shall (i) in the
event that the number of shares of Common Stock which are authorized by the
Company's charter but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii) hereof,
or (ii) if two-thirds of the Directors determine that it would be
appropriate and not contrary to the interests of the holders of Rights
(other than any Acquiring Person or Disqualified Transferee or any
Affiliate of the Acquiring Person or Disqualified Transferee) (A) determine
an amount, if any (the "Excess Amount"), equal to the excess of (1) the
value (the "Current Value") of the whole or fractional shares of
19
Common Stock issuable upon the exercise of a Right in accordance with
Section 11(a)(ii) hereof, over (2) the Purchase Price and (B) with respect
to each Right, make adequate provision to substitute for such shares of
Common Stock, upon payment of the applicable Purchase Price, (1) cash, (2)
a reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares or units
of preferred stock which the Board of Directors of the Company has deemed
in good faith to have the same value as a share of Common Stock (such
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 (which would include the additional
consideration provided to any holder by reducing the Purchase Price) having
an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company; provided,
however, subject to the provisions of Section 9(e), that if the Company
shall not have made adequate provision to deliver value pursuant to clause
(B) above within 30 days following the close of business 15 Business Days
after the first occurrence of a Common Stock Event described in Section
11(a)(ii) hereof, then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, whole or fractional shares of Common Stock (to the extent
available) and then, if necessary, cash, securities and/or assets which in
the aggregate are equal to the Excess Amount. If the Board of Directors of
the Company shall determine in good faith that it is likely that sufficient
additional shares of Common Stock or Common Stock Equivalents could be
authorized for issuance upon exercise in full of the Rights, the 30-day
period set forth above may be extended to the extent necessary, but not
more than 90 days following the close of business 15 Business Days after
the first occurrence of such a Common Stock Event (such 30-day period, as
it may be extended to 90 days, is referred to herein as the "Substitution
Period"). To the extent that the Company determines that some action is to
be taken pursuant to the preceding provisions of this Section 11(a)(iii),
the Company (x) shall provide, subject to Sections 7(e) and 7(g) hereof,
that (except as to the form of consideration which shall be determined as
appropriate by two-thirds of the Directors) such action shall apply
uniformly to all outstanding Rights which shall not have become null and
void 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 provisions and to determine the value thereof. In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been
temporarily suspended. The Company shall thereafter issue a public
announcement at such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common Stock issuable
upon exercise of a Right in accordance with Section 7(c) hereof shall be
the current market price per share of the Common Stock (as determined
pursuant to Section 11(d) hereof) on the close of business 15 Business Days
after the date of the first occurrence of such a Common Stock Event and the
value of any Common Stock Equivalent shall be deemed to be equal to the
current market price per share of the Common Stock on such date.
20
(iv) At any time prior to the Expiration Date, by the vote of two-
thirds of the Directors, the Company may amend or supplement this Agreement
to add any and all necessary and appropriate provisions in order that each
holder of a Right would thereafter have the right to receive, upon exercise
thereof at the Purchase Price in effect at the time of exercise, the shares
of Common Stock or Other Consideration contemplated by this Section 11 in
the event that any Person, alone or together with its Affiliates, shall
become the Beneficial Owner of more than a specified percentage of the
outstanding shares of Common Stock of the Company or shall meet such other
conditions, as are determined by the Directors and are stated in such
amendment or supplement.
(b) In the event the Company shall after the Dividend Record Date fix a
record date for the issuance of any options, warrants or other rights to all
holders of Common Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase (i) Common Stock, (ii)
Common Stock Equivalents or (iii) securities convertible into Common Stock or
Common Stock Equivalents at a price per share of Common Stock or Common Stock
Equivalents (or having a conversion price per share of Common Stock or Common
Stock Equivalents, if a security is convertible into Common Stock or Common
Stock Equivalents) less than the current market price per share of Common Stock
(determined in accordance with Section 11(d) hereof) determined as of 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 Common Stock outstanding on such record date plus the number of shares of
Common Stock and/or Common Stock Equivalents which the aggregate minimum
offering price of the total number of shares of Common Stock and/or Common Stock
Equivalents to be offered (and/or the aggregate minimum conversion price of such
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 Common Stock
and/or Common Stock Equivalents outstanding on such record date plus the maximum
number of additional shares of Common Stock to be offered for subscription or
purchase (or the maximum number of shares into which such convertible securities
so to be offered are convertible). In case such subscription price may be paid
by delivery of consideration part or all of which shall be in a form other than
cash, for purposes of this Section 11(b) the value of such consideration shall
be the fair market value thereof as determined in good faith by the Board of
Directors of the Company (which determination shall be described in an Officers'
Certificate filed with the Rights Agent). Shares of Common Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights 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 (subject, however, to such other adjustments as are provided herein).
(c) In the event that the Company shall after the Dividend Record Date fix
a record
21
date for the making of a distribution to all holders of Common Stock (including
any such distribution made in connection with a consolidation or merger in which
the Company is the surviving or continuing corporation) of evidences of
indebtedness, cash (other than cash dividends paid out of the earnings or
retained earnings of the Company), other property (other than a dividend payable
in shares of Common Stock, but including any dividend payable in stock other
than Common 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, of which the numerator
shall be the current market price per share of Common Stock (as defined in
Section 11(d) hereof) determined as of such record date, less the fair market
value, as determined in good faith by the Board of Directors of the Company
(which determination shall be described in an Officers' Certificate filed with
the Rights Agent) of that portion of such evidences of indebtedness, such other
property and/or such subscription rights or warrants applicable to one share of
Common Stock and of which the denominator shall be such current market price per
share of the Common Stock. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event 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 (subject, however, to
such other adjustments as are provided herein).
(d) Except as otherwise provided to the contrary in this Agreement, for the
purpose of any computation hereunder, the "current market price" per share (or
unit) of any security on any date shall be deemed to be the average of the daily
Closing Price of such security for the 20 consecutive Trading Days immediately
prior to such date; provided, however, that in the event that the current market
price per share of such security is determined during a period following the
announcement by the issuer of such security of (i) a dividend or distribution on
such security payable in shares (or units) of such security or securities
convertible into shares (or units) of such security or (ii) any subdivision,
combination or reclassification of such security, and prior to the expiration of
20 Trading Days after (A) the ex-dividend date for such dividend or
distribution, or (B) the record date for such subdivision, combination or
reclassification, as the case may be, then, and in each such case, the "current
market price" shall be the Closing Price of such security on the last day of
such 20 Trading Day period. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which such security is listed or
admitted to trading is open for the transaction of business or, if such security
is not listed or admitted to trading on any national securities exchange, a day
which is a Business Day. For purposes of this Agreement, the "Closing Price" of
any security on any day shall be the last sale price, regular way, with respect
to shares (or units) of such security, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, with
respect to such security, 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 such security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which such security is
listed or admitted to trading; or, if such security is not so listed or
22
admitted to trading, the last quoted price with respect to shares (or units) of
such security, or, if not so quoted, as the average of the high bid and low
asked prices in the over-the-counter market with respect to shares (or units) of
such security, as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System or such other similar system then in use; or, if
on any such date such security is not quoted by any such organization, the
average of the closing bid and asked prices with respect to shares (or units) of
such security, as furnished by a professional market maker making a market in
such security selected by the Board of Directors of the Company in good faith;
or, if no such market maker is available, the fair market value of shares (or
units) of such security as of such day as determined in good faith by the Board
of Directors of the Company (which determination shall be described in an
Officers' Certificate filed with the Rights Agent).
23
(e) No adjustment in the Purchase Price shall be required unless adjustment
would require an increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share (or similar unit)
of Common Stock or securities. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 hereof shall be made
no later than the earlier of (i) three years from the date of the transaction
which mandates the adjustment or (ii) the date of the expiration of the right to
exercise the Rights. Anything in this Section 11 to the contrary
notwithstanding, the Company, upon the affirmative vote of two-thirds of the
Directors then in office, shall be entitled to make such reductions in the
Purchase Price, in addition to those required by this Section 11, as it in its
discretion shall determine to be advisable in order that any dividends,
subdivision of shares, distribution of rights to purchase shares of beneficial
interest or other stock or securities, or distribution of securities convertible
into or exchangeable for stock hereafter made by the Company to its stockholders
shall not be taxable.
(f) In the event that at any time, as a result of an adjustment made in
respect of a Common Stock Event, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of the Common Stock contained in Sections
11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m) hereof, and the provisions
of Sections 7, 9, 10, 11(d) and 13 hereof with respect to the shares of Common
Stock shall apply on like terms to any such other shares.
(g) All Right Certificates originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights represented
thereby, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made pursuant to Sections 11(b) and 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest ten- thousandth) obtained by
(i) multiplying (x) the number of shares covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment 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
24
Price to adjust the number of Rights in substitution for any adjustment in the
number of shares of Common 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 shares of Common 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 ten- thousandth) obtained by dividing the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price by the Purchase Price in effect immediately after such adjustment of the
Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i) the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the 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 may bear, at the option of the Company, the adjusted Purchase Price) and
shall be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Common Stock issuable upon exercise of such Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated value, if any, of the number of shares of
Common 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 such number of fully paid and
nonassessable shares of Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the number
of shares of Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of shares of
Common Stock and other capital stock or securities of the Company, if any,
issuable
25
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 securities upon the occurrence of the event requiring
such adjustment.
26
(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, by means of a resolution of the Board of Directors acting in
good faith (which resolution shall be conclusive on all concerned if approved by
a majority of the Directors), shall determine to be advisable in order that any
consolidation or subdivision of the Common Stock, issuance wholly for cash of
any Common Stock at less than the current market price thereof, issuance wholly
for cash of Common Stock (or other securities which by their terms are
convertible into or exchangeable for Common Stock), stock dividends or issuance
of rights, options or warrants referred to hereinabove in this Section 11,
hereafter made or declared by the Company to the holders of its Common Stock,
shall not be taxable to such holders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, more than 25% of (A) the assets
(taken at net asset value as stated on the books of the Company and determined
on a consolidated basis in accordance with generally accepted accounting
principles consistently applied) or (B) the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any other Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale, there are any
rights, warrants or other instruments or securities outstanding or agreements
(whether or not in writing) in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale, the stockholders of such other Person shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates.
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 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 otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Dividend Declaration Date and
prior to the Distribution Date (i) declare a dividend on the outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, (iii) combine the outstanding Common Stock into a
smaller number of shares or (iv) issue any shares of its capital stock in a
reclassification of the outstanding Common Stock, the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date (or with respect to
reserved shares as specified in Section 3(d) prior to the
27
earliest of the occurrence of a Common Stock Event, the Expiration Date or
redemption), 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.
SECTION 12. CERTIFICATE OF ADJUSTMENTS.
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall (a) promptly prepare an Officers' Certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Common Stock a copy of such Officers' Certificate and (c) mail a brief summary
thereof to each registered holder of a Right Certificate in accordance with
Section 25 hereof. The Rights Agent shall be fully protected in relying on any
such Officers' Certificate and on any adjustment therein contained, and shall
not be deemed to have knowledge of any such adjustment unless and until it shall
have received such an Officers' Certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER.
In the event that, following the Stock Acquisition Date, directly or
indirectly, (a) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof) and the Company shall not be the continuing
or surviving Person of such consolidation or merger, (b) any Person (other than
a Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof) shall consolidate with, or merge with and into the Company, the Company
shall be the continuing or surviving corporation of such consolidation or merger
and, in connection with such consolidation or merger, all or part of the Common
Stock of the Company shall be changed or otherwise transformed into other stock
or other securities of any other Person or the Company or cash or any other
property, or (c) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, more than 25% of (A) the assets (taken at net
asset value as stated on the books of the Company and determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied) or (B) the earning power, of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any other Person (other
than the Company or any Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o) hereof) then, from and after such
event, proper provision shall be made so that (i) each holder of a Right, except
as provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at the Purchase Price in effect at
28
the time of such exercise in accordance with the terms of this Agreement, such
number of shares of validly authorized and issued, fully paid, non-assessable
and freely tradeable Common Stock of such other Person (or, in the case of a
transaction or series of transactions described in clause (c) above, the Person
receiving the greatest amount of the assets or earning power of the Company, or
if the Common Stock of such Person is not and has not been continuously
registered under Section 12 of the Exchange Act for the preceding 12-month
period and such Person is a direct or indirect subsidiary of another Person, the
Common Stock of which is and has been so registered, that other Person, or if
such Person is a direct or indirect subsidiary of more than one other Person,
the Common Stock of two or more of which are and have been so registered, such
other Person whose issued Common Stock has the greatest aggregate value), free
and clear of any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (x) multiplying the Purchase
Price in effect immediately prior to the first occurrence of any Common Stock
Event by the number of shares of Common Stock for which a Right is exercisable
immediately prior to such first occurrence (and without taking into account any
prior adjustment made pursuant to 11(a)(ii)) and dividing that product by (y)
50% of the current market price per share (as defined in Section 11(d) hereof)
of the Common Stock of such other Person determined as of the date of
consummation of such consolidation, merger, sale or transfer; (ii) the issuer of
such Common Stock 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; (iii) the term "Company" shall
thereafter be deemed to refer to such issuer, it being specifically intended
that the provisions of Section 11 hereof (other than Section 11(a)(ii) hereof)
shall apply only to such issuer following the first occurrence of a Common Stock
Event under this Section 13; (iv) such issuer shall take such steps (including,
but not limited to, the reservation of a sufficient number of shares of its
Common Stock) in connection with such consummation as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to the shares of its Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of any
Common Stock Event described in clauses (a), (b) or (c) of this Section 13. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless (i) such issuer shall have a sufficient number of authorized shares of
its Common Stock which have not been issued or reserved for issuance as will
permit the exercise in full of the Rights in accordance with this Section 13 and
(ii) prior thereto the Company and such issuer shall have executed and delivered
to the Rights Agent a supplemental agreement so providing and further providing
that as soon as practicable after the date of any Common Stock Event described
above in this Section 13 such issuer will (A) prepare and file a registration
statement under the Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, and will use its
best efforts to cause such registration statement to (I) become effective as
soon as practicable after such filing and (II) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date and (B) will deliver to holders of the Rights historical
financial statements of such issuer and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act. Furthermore, in case the Person which is to be party to a
transaction referred to
29
in this Section 13 has any provision in any of its authorized securities or in
its charter or by-laws or other agreement or instrument governing its affairs,
which provision would have the effect of causing such Person to issue, in
connection with, or as a consequence of, the consummation of a Common Stock
Event described in Clauses (a), (b) or (c) of this Section 13, shares of Common
Stock of such Person at less than the then current market price per share
thereof (as defined in Section 11(d) hereof), or to issue securities exercisable
for, or convertible into, Common Stock of such Person at less than such then
current market price; then, in such event, the Company hereby agrees with each
holder of the Rights that it shall not consummate any such transaction unless
prior thereto the Company and such Person shall have executed and delivered to
the Rights Agent a supplemental agreement providing that such provision in
question shall have been canceled, waived or amended so that it will have no
effect in connection with, or as a consequence of, the consummation of the
proposed transaction. The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Common Stock Event described in this Section 13 shall occur at any time
after the occurrence of a Common Stock Event described in Section 11(a)(ii)
hereof, the Rights which have not therefore been exercised shall thereafter
become exercisable in the manner described in this Section 13.
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
issuing such fractional Rights, at the election of the Company, there shall be
paid to the registered holders of the Rights with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
Closing Price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of shares of
its capital stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares. In lieu of fractional shares, at the election
of the Company, there shall be paid to the registered holders of Rights 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 a share of such capital stock. For
purposes of this Section 14(b), the current market value of a share of such
capital stock shall be the Closing Price of such capital stock for the Trading
Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or (except as provided in
Section 14(b) hereof) any fractional share upon exercise of a Right.
SECTION 15. RIGHTS OF ACTION.
30
Excepting the rights of action given the Rights Agent under Section 18
hereof, all rights of action in respect of this Agreement are vested in the
respective registered holders of the Rights; and any registered holder of any
Right, without the consent of the Rights Agent or of the holder of any other
Right, may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights in the manner provided in such Right Certificate and in
this Agreement, and the Company hereby agrees to reimburse such registered
holder for all expenses (including reasonable attorneys' fees) incurred by such
registered holder in connection therewith. 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 the obligations hereunder, and shall be entitled to injunctive relief
against actual or threatened violations of the obligations hereunder of any
Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS.
Every holder of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the Principal
Office of the Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer and accompanied by a medallion signature guarantee and such other
documentation as the Rights Agent may reasonably request;
(c) subject to sections 6(a) and 7(f) hereof, the Company and the Rights
Agent may deem and treat the person in whose name a Right Certificate (or, prior
to the Distribution Date, the associated Common Stock certificate) is registered
as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificates, or, prior to the Distribution Date, the associated Common Stock
certificates, 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 or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority prohibiting or otherwise restraining performance of such
obligation;
31
provided, however, the Company must use its best efforts to have any such order,
decree 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 shall be entitled to vote, receive
dividends or otherwise be deemed for any purpose the holder of any shares of
Common Stock or the shares or similar units of any other securities of the
Company which may 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 in the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25), or to
receive dividends or preemptive rights, or otherwise, until the time specified
in Section 10 hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT.
The Company agrees to pay to the Rights Agent reasonable compensation for
all services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses (including reasonable attorneys'
fees) of defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Right Certificate or
certificate for any shares of 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.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any corporation into which the Rights Agent may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent shall be a party, or any corporation
succeeding to the shareholder services business of the Rights Agent, shall be
the successor to the Rights Agent under this Agreement
32
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement and any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver such 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 duties and obligations expressly
imposed upon it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent. The Rights Agent shall
perform its duties and obligations hereunder upon the following terms and
conditions:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel to the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate (an "Officers' Certificate") signed by a person believed by the
Rights Agent to be the Chairman of the Board, the President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such Officers' Certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
33
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature on any such Right Certificate) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any adjustment required under the provisions of Sections 11
or 13 hereof or responsible for the manner, method or amount of any such
adjustment or procedures or the ascertaining of the existence of facts that
would require any such adjustment or procedure (except with respect to the
exercise of Rights evidenced by Right Certificates after receipt of a
certificate describing any such adjustment or procedures); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Common Stock or other securities to be
issued pursuant to this Agreement or any Right Certificate or as to whether any
shares of Common Stock, or any shares or similar units of 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 reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer. Any application by the
Rights Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent with respect to its duties or obligations under this Rights
Agreement and the date on and/or after which such action shall be taken or
omitted and the Rights Agent shall not be liable for any action taken or omitted
in accordance with a proposal included in any such application on or after the
date specified therein (which date shall not be less than three business days
after the date any such officer actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking or omitting any such action, the Rights Agent has received written
34
instructions in response to such application specifying the action to be taken
or omitted.
(h) The Rights Agent and any shareholder, 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 entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
35
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certification appearing on the reverse side
thereof following the form of election to purchase has either not been completed
or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights
Agent shall not take any further action with respect to such requested exercise
of transfer without first consulting with the Company.
(l) The provisions of this Section 20 are solely for the benefit of the
Rights Agent or the Company and any failure or omission under this Section 20
shall not affect the rights of the Company under this Agreement and the Rights
Agent or the Company shall have no liability to any holder of Rights or other
Person on account of such failure or omission.
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 by registered or
certified mail, and, subsequent to 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, to each transfer agent of the Common Stock by registered or
certified mail, and, subsequent to 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 corporation organized and doing business under the laws of the United
States, The Commonwealth of Massachusetts or the State of New York (or of any
other State of the United States so long as such corporation is authorized to do
business as a banking institution in The Commonwealth of Massachusetts or the
State of New York), in good standing, having a Principal Office in The
Commonwealth of Massachusetts or the State of New York, which is authorized
under such laws to exercise corporate trust powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. 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; and,
except as the context herein otherwise requires, such successor Rights Agent
shall be deemed to be the "Rights Agent" for all purposes of this Agreement. 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
36
transfer agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the 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 the Board of Directors of
the Company to reflect any adjustment or change in the Purchase Price per share
and the number or kind or class of shares of stock or other securities or
property purchasable under the Right Certificate made in accordance with the
provisions of this Agreement.
SECTION 23. REDEMPTION AND TERMINATION.
The Directors then in office may, at their option, upon the affirmative
vote or written consent of not less than two-thirds of such Directors, at any
time prior to the Expiration Date, redeem all (but not less than all) of the
then outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend, combination of shares or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). Immediately upon the taking
of such action ordering the redemption of all of the Rights, evidence of which
shall have been filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights so redeemed will terminate
and the only right thereafter of the holders of such Rights so redeemed shall be
to receive the Redemption Price (without the payment of any interest thereon).
Within 10 days after such action ordering the redemption of all of the Rights,
the Company shall give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
SECTION 24. EXCHANGE.
(a) The Company, by a vote of two-thirds of the Directors then in office,
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
exclude Rights that have become null and void in accordance with Section 7(e)
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 after the date hereof (such exchange
ratio being
37
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Stock for or pursuant to the terms of any such employee benefit plan), together
with all Affiliates of such Person, becomes the Beneficial Owner of 50% or more
of the Common Stock then outstanding.
(b) Immediately upon the action of the Directors ordering the exchange of
any Rights pursuant to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.
(c) In 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
take all such action as may be necessary to authorize additional Common Stock
for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to each registered holder of a Right Certificate with regard to which
a fractional share of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (e), the current market value
of a whole share of Common Stock shall be the Closing Price of a share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
SECTION 25. NOTICE OF PROPOSED ACTIONS.
In case the Company shall after the Distribution Date propose (a) to pay
any dividend payable in stock of any class to the holders of its Common Stock or
to make any other distribution to the holders of its Common Stock (other than a
regular periodic cash dividend out of earnings or the retained earnings of the
Company), or (b) to offer to the holders of its
38
Common Stock rights or warrants to subscribe for or to purchase any additional
shares of Common Stock or shares of stock of any class or any other securities,
rights or options, or (c) to effect any reclassification of the Common Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Common Stock), or (d) 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 transaction or a
series of related transactions, of more than 25% of (i) the assets (taken at net
asset value as stated on the books of the Company and determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied) or (ii) the earning power, of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any other Person or
Persons or (e) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the Rights Agent and
each holder of a Right, in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of Common 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 (a) or
(b) above at least twenty days prior to the record date for determining holders
of the Common Stock for purposes of such action, and in the case of any such
other action, at least twenty days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of Common
Stock whichever shall be the earlier. The failure to give notice required by
this Section 25 or any defect therein shall not affect the legality or validity
of the action taken by the Company or the vote upon any such action.
In case any Common Stock Event described in Section 11(a)(ii) hereof shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such Common
Stock Event, which shall specify such event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
Notwithstanding anything in this Agreement to the contrary, prior to the
Distribution Date a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holder of securities of the
Company, including the Rights, for purposes of this Agreement and no other
notice need be given.
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 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:
MYKROLIS CORPORATION
One Patriots Park
39
BEDFORD, MASSACHUSETTS 01730
Attention: General Counsel
40
Subject to the provisions of Sections 19 and 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
Equiserve Trust Company, N.A.
150 ROYALL STREET
CANTON, MA 02021
Attention: Client Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS.
The Company, upon the vote of two-thirds of the Directors then in office,
may from time to time amend this Agreement without the approval of any holders
of the Rights in order to (i) cure any ambiguity, (ii) correct or supplement any
provisions contained herein which may be defective or inconsistent with any
other provisions herein, (iii) change any time period governing redemption of
the Rights or (iv) make any other provision in regard to matters or questions
arising hereunder which the Directors, upon the vote of two-thirds of the
Directors then in office may deem necessary or desirable and which shall not
adversely affect the interests of the holders of the Rights; provided, however,
that no such amendment may be made pursuant to this sentence (i) if at such time
the Rights are not then redeemable or (ii) after the occurrence of a Common
Stock Event. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Stock. The Rights Agent shall join with the Company in the execution and
delivery of any such supplement or amendment, unless such supplement or
amendment affects any of the rights, duties or obligations of the Rights Agent
hereunder, in which case the Rights Agent may, but shall not be required to,
join in such execution and delivery.
SECTION 28. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS; ETC.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors, or to the Company, or as may be
necessary or advisable in the
41
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. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith and
with the concurrence of a majority of the Directors shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties and (y) not subject any director to any liability
to the holders of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the associated shares of
Common Stock) any legal or equitable right, remedy or claim under this Agreement
or the Rights; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders of the Rights (and,
prior to the Distribution Date, the associated Common Stock).
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 Commonwealth of Massachusetts and
for all purposes shall be governed by and construed in accordance with the laws
of said Commonwealth applicable to contracts to be made and performed entirely
within said Commonwealth.
SECTION 32. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
SECTION 33. DESCRIPTIVE HEADINGS.
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
SECTION 34. SEVERABILITY.
The invalidity or unenforceability of any term or provision hereof shall
not affect the validity or enforceability of any other term or provision hereof.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in
42
no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Company, upon the affirmative vote of
two-thirds of the Directors then in office, determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
close of business on the tenth day following the date of such determination by
the Board of Directors of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
MYKROLIS CORPORATION
By: /s/ C. William Zadel
----------------------
Title: Chairman & Chief Executive Officer
Attest:
By: /s/ Peter W. Walcott
--------------------
Title: Vice President & Secretary
EQUISERVE TRUST COMPANY, N.A.
By: /s/ Carol Mulvey-Eori
----------------------
Title: Managing Director
43