EXHIBIT 4.2
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of April 21, 1999 (the "Agreement"),
between StanCorp Financial Group, Inc., an Oregon corporation (the "Company"),
and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent").
WITNESSETH
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WHEREAS, the Board of Directors of the Company authorized and declared a
dividend of one Right for each share of Common Stock (as such terms are
hereinafter defined) of the Company outstanding on April 21, 1999 (the "Record
Date"), and has authorized the issuance of one Right with respect to each share
of Common Stock issued by the Company between the Record Date and the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date (as
such terms are hereinafter defined), with each Right initially representing the
right to purchase one one-hundredth of a share of Preferred Stock (as
hereinafter defined) having the rights, powers and preferences set forth in the
form of Amendment to the Company's Articles of Incorporation attached hereto as
Exhibit A, upon the terms and subject to the conditions herein set forth (the
"Rights");
NOW THEREFORE, in consideration of the mutual agreements set forth herein,
the parties hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following
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terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and Associates
(as such terms are hereinafter, defined) of such Person, shall become the
Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
shares of Common Stock then outstanding; provided, however, that an Acquiring
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Person shall not include the Company, any Subsidiary (as such term is
hereinafter defined) of the Company or any employee benefit plan of the Company
or of any Subsidiary of the Company, or any entity holding shares of Common
Stock for or pursuant to the terms of any such plan. Notwithstanding the
foregoing, no Person shall be deemed to be an "Acquiring Person" either (i) as
the result of an acquisition of Common Stock by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
Beneficially Owned by such Person to 15% or more of the Common Stock of the
Company then outstanding; provided, however, that if a Person shall become the
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Beneficial Owner of 15% or more of the Common Stock then outstanding by
reason of share purchases by the Company and shall, after such share purchases
by the Company, become the Beneficial Owner of any additional shares of Common
Stock, then such Person shall be deemed to be an "Acquiring Person," or (ii) if
the Board of Directors of the Company determines in good faith that a Person who
would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a).
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act (as such term is hereinafter defined), as in effect on the date
of this Agreement.
(d) "Agreement" shall mean this Rights Agreement.
(e) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to beneficially own any, securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the power to vote or dispose of,
including pursuant to any agreement, arrangement or understanding, whether
or not in writing;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire voting or
dispositive power over (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement
arrangement or understanding, whether or not in writing, for the purpose of
acquiring, holding, voting or disposing of any securities of the Company;
provided, however, that nothing in this paragraph (e) shall cause a person to be
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the "Beneficial Owner" of, or to "beneficially own," (A) any securities that may
be issued on the exercise of Rights, (B) any security if the agreement,
arrangement or understanding to vote such security arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act, (C) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, or (D) any securities acquired by a Person engaged in
business as an underwriter of securities through such Person's participation in
good faith in a firm commitment underwriting until the expiration of 40 days
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after the date of such acquisition. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding at any
particular time for purposes of determining the particular percentage of such
outstanding shares of Common Stock of which any Person is the Beneficial Owner
shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act.
(f) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(g) "Close of business" on any given date shall mean 5:00 p.m.,
State of Washington time, on such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 p.m., State of Washington time, on the
next succeeding Business Day.
(h) "Common Stock" shall mean the Common Stock of the Company. The
term "common stock" when used with reference to any Person other than the
Company shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person together with all rights and benefits (however
denominated or constituted) relating to such common stock (including, without
limitation any rights or warrants to acquire additional shares of such common
stock or other securities or assets, or to participate in any trust for the
benefit of holders of such shares, or to share in the benefits of any agreements
or other arrangements for the benefit of such holders), whether or not such
rights are yet exercisable, and together with any other securities which are
represented by the certificates for such common stock or are transferred in
connection with transfers of such common stock.
(i) "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii).
(j) "Current Per Share Market Price" shall have the meaning set forth
in Section 11(d).
(k) "Current Value" shall have the meaning set forth in Section
11(a)(iii).
(l) "Distribution Date" shall have the meaning set forth in
Section 3(a).
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(n) "Final Expiration Date" shall have the meaning set forth in
Section 7(a).
(o) "Person" shall mean any individual, firm, corporation,
partnership or other entity and shall include any successor (by merger or
otherwise) of such entity.
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(p) "Preferred Stock" means Series A Preferred Shares of the Company
and, to the extent that there is not a sufficient number of Series A Preferred
Shares authorized to permit the full exercise of the Rights, any other series of
Preferred Shares of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Preferred Shares.
(q) "Preferred Stock Equivalents" shall have the meaning set forth
in Section 11(b).
(r) "Principal Party" shall have the meaning set forth in Section
13(b).
(s) "Proposed Acquiror" shall mean any Person who has proposed or
publicly announced an intention to propose a transaction that, if consummated,
would cause a Stock Acquisition Date or any Section 13 Event to occur.
(t) "Purchase Price" shall mean the dollar amount payable upon
exercise of one Right to acquire the number of one one-hundredths of a share of
Preferred Stock or other securities or assets for which the Right is then
exercisable and shall initially be the price set forth in Section 7(b).
(u) "Record Date" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
(v) "Redemption Date" shall have the meaning set forth in Section
7(a).
(w) "Redemption Price" shall have the meaning set forth in Section
23(a).
(x) "Rights" shall have the meaning set forth in the WHEREAS clause
at the beginning of this Agreement.
(y) "Rights Certificate" shall have the meaning set forth in
Section 3(a).
(z) "Section 11(i) Event" shall have the meaning set forth in
Section 11(i).
(aa) "Section 13 Event" shall mean any event described in Section
13(a).
(ab) "Spread" shall have the meaning set forth in Section 11(a)(iii).
(ac) "Stock Acquisition Date" shall mean the first date of public
announcement (including, without limitation, the date a report is filed pursuant
to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become an Acquiring Person.
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(ad) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(ae) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii).
(af) "Trading Day" shall have the meaning set forth in Section 11(d).
2. Appointment of Rights Agent. The Company hereby appoints the Rights
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Agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such co-Rights Agents as it may deem necessary or desirable. The
Rights Agent shall have no duty to supervise, and in no event shall be liable
for, the acts or omissions of any such co-Rights Agent.
3. Issue of Rights Certificates.
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(a) Until the earlier of (i) the close of business on the tenth day
after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date is prior to the Record Date, the Record Date) or (ii) the close
of business on the tenth day after the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 15 percent or more of the
shares of Common Stock then outstanding (the earliest of (i) and (ii) being
herein referred to as the "Distribution Date"), (w) the Rights will be evidenced
by the certificates for the Common Stock registered in the names of the holders
of the Common Stock (which certificates shall also be deemed to be certificates
for Rights) and not by separate Rights Certificates, (x) the Rights and the
right to receive Rights Certificates will be transferable only in connection
with the transfer of the underlying Common Stock and any transfer of Common
Stock shall also constitute the transfer of the associated Rights represented by
the same certificate, (y) in the event the Company purchases or acquires any
Common Stock after the Record Date but prior to the Distribution Date, any
Rights associated with such acquired Common Stock shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights
associated with shares of Common Stock that are no longer outstanding, and (z)
in the event the Company issues any Common Stock after the Record Date but prior
to the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date, the Company shall issue one Right for each such newly issued
share of Common stock (subject to adjustment as provided in Section 11(h)) which
Right shall be evidenced by the certificate for the associated share of Common
Stock. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will
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countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested and provided with all necessary information, send) by first-
class, postage-prepaid mail, to each record holder of shares of Common Stock as
of the close of business on the Distribution Date, at the address of such holder
shown on the records of the Company, a Rights Certificate, in substantially the
form of Exhibit B hereto (a "Rights Certificate"), evidencing one Right for each
share of Common Stock so held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 11(h), at the time the Rights Certificates are
distributed the Company shall make the necessary and appropriate rounding
adjustments pursuant to Section 14(a) so that Rights Certificates are
distributed representing only whole numbers of Rights and cash is paid in lieu
of fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As soon as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form of Exhibit C (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of shares of Common Stock as of the
Close of Business on the Record Date, at the address of such holder shown on the
records of the Company.
(c) All Common Stock certificates which are issued, either upon an
original issuance by the Company or upon a transfer by a holder, after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date, shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder
hereof to certain rights set forth in a Rights Agreement
between StanCorp Financial Group, Inc. (the "Company") and
ChaseMellon Shareholder Services, L.L.C. dated as of April 21, 1999
(the "Rights Agreement"), the terms of which are incorporated herein
by reference and a copy of which is on file at the principal
executive offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate
a copy of the Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances, Rights
beneficially owned by Acquiring Persons or their Affiliates or
Associates (as such terms are defined in the Rights Agreement), and
Rights previously owned by such Persons, may become null and void.
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4. Form of Rights Certificates.
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(a) The Rights Certificates (and the form of election to purchase and
form of assignment to be printed on the reverse thereof) shall be substantially
the same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate (but which do not affect the rights, duties or
responsibilities of the Rights Agent) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22, the Rights Certificates, whenever distributed, shall entitle the
holders thereof to purchase for the Purchase Price such number of one one-
hundredths of a share of Preferred Stock as shall be set forth therein, but the
amount and type of securities purchasable upon exercise and the Purchase Price
shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3 hereof that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) any other Person if such Rights
formerly were beneficially owned by an Acquiring Person (or by an Associate or
Affiliate of such Acquiring Person) at a time after the Acquiring Person became
an Acquiring Person, or (iii) a transferee of Rights from an Acquiring Person
(or from any Associate or Affiliate thereof) who became a transferee prior to or
concurrently with the Acquiring Person becoming an Acquiring Person and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or its Affiliate or Associate) to holders of equity
interests in such Acquiring Person (or its Affiliate or Associate) or to any
Person with whom such Acquiring Person (or its Affiliate or Associate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (B) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding that has as a primary purpose or effect the
avoidance of Section 7(e), and any Rights Certificate issued pursuant to Section
6, 7(d) or 22 upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain the following
legend:
The Rights represented by this Rights Certificate are or
were beneficially owned by a Person who was an Acquiring
Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights
Agreement;
provided, however, that the Rights Agent shall not have any responsibility to
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ascertain the existence of facts that would require the imposition of such
legend and shall be required to
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impose such legend only if instructed to do so by the Company or if a holder
fails to certify upon transfer or exchange in the space provided on the Rights
Certificate that such holder is not an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
5. Countersignature and Registration. The Rights Certificates shall be
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executed on behalf of the Company by its Chairman of the Board, Chief Executive
Officer, President or any Vice President, either manually or by facsimile
signature, and shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date and receipt by the Rights Agent of all
relevant information, the Rights Agent will keep or cause to be kept, at its
offices designated for such purposes, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Certificates.
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(a) Subject to the provisions of Sections 4(b), 7(e) and 14, at any
time after the Close of Business on the Distribution Date, and at or prior to
the Close of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of shares of Preferred
Stock or other securities or property as the Rights Certificate or Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on
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the reverse side of such Rights Certificate and shall have provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company or the
Rights Agent shall reasonably request. Thereupon the Rights Agent shall, subject
to Sections 4(b), 7(e) and 14, countersign and deliver to the person entitled
thereto a Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any transfer,
split-up, combination or exchange of Rights Certificates. The Rights Agent shall
have no duty or obligation to take any action under any section of this
Agreement which requires the payment by a Rights holder of applicable taxes and
governmental charges unless and until the Rights Agent is satisfied that all
such taxes and/or charges have been paid.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
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(a) At any time after the Distribution Date and at or prior to the
earlier of (i) the Close of Business on April 20, 2009 (the "Final Expiration
Date") or (ii) the time at which the Rights are redeemed as provided in Section
23 (the "Redemption Date"), subject to Section 7(e), the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Sections 9(c), 11(a)(iii)) and 23(a) in whole or in
part upon surrender of the Rights Certificate, with the form of election to
purchase and certificate on the reverse side thereof duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each Right that is exercised.
(b) The Purchase Price to be paid on exercise of each Right shall
initially be $118.75 and shall be payable in lawful money of the United States
of America in accordance with paragraph (c) below. Each Right shall initially
entitle the holder to acquire one one-hundredth of a share of Preferred Stock
upon exercise of the Right. The Purchase Price and the number of shares of
Preferred Stock or other securities or assets for which a Right is exercisable
shall be subject to adjustment as provided in Sections 11 and 13.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable tax or governmental
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charge in cash, or by certified check or cashier's check payable to the order of
the Company, the Rights Agent shall, subject to Section 20(k), thereupon
promptly (i) requisition from any transfer agent of the Preferred Stock (or make
available, if the Rights Agent is the transfer agent) certificates for the
number of shares of Preferred Stock to be purchased and the Company hereby
authorizes its transfer agent to comply with all such requests, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14, (iii) after
receipt of the certificates for Preferred Stock cause the same to be delivered
to or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder and (iv)
when appropriate, after receipt, deliver such cash to or upon the order of the
registered holder of such Rights Certificate. In the event that the Company is
obligated to issue other securities (including, but not limited to, debt
securities) of the Company, and/or distribute other property pursuant to Section
11, the Company covenants that it will make all arrangements necessary so that
such other securities and/or property are available for distribution by the
Rights Agent, if and when necessary to comply with this Agreement.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Rights Certificate or to
his duly authorized assigns, subject to the provisions of Section 6 and Section
14.
(e) Notwithstanding any other provision of this Agreement, from and
after the occurrence of a Stock Acquisition Date, any Rights beneficially owned
by (i) an Acquiring Person, or any Associate or Affiliate of an Acquiring
Person, (ii) any other Person if such Rights formerly were beneficially owned by
an Acquiring Person (or by an Associate or Affiliate of such Acquiring Person)
at a time after such Acquiring Person became an Acquiring Person, or (iii) a
transferee of Rights from an Acquiring Person (or from any Associate or
Affiliate thereof) who became a transferee prior to or concurrently with the
Acquiring Person becoming an Acquiring Person and receives such Rights pursuant
to either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or its Affiliate or Associate) to holders of equity interests in such
Acquiring Person (or its Affiliate or Associate) or to any Person with whom the
Acquiring Person (or its Affiliate or Associate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights, or (B) a transfer
which the Board of Directors has determined is part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of this
Agreement. The Company shall promptly notify the Rights Agent of the
applicability of this Section 7(e) and shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and of Section 4(b) are complied
with, but neither the Company nor the Rights Agent shall have any liability to
any holder of Rights Certificates or any other Person as a result of the
Company's failure to make any determinations with respect to an Acquiring
Person, or any of its Affiliates, Associates or transferees hereunder.
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(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) properly completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the surrendered Right
Certificate and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company or the Rights Agent shall reasonably request.
8. Cancellation and Destruction of Rights Certificates. All Rights
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Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
9. Reservation and Availability of Capital Stock.
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(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Stock (and,
following the occurrence of a Stock Acquisition Date or a Section 13 Event, out
of its authorized and unissued shares of Common Stock and/or other securities),
the number of shares of Preferred Stock (and, following the occurrence of a
Stock Acquisition Date or a Section 13 Event, Common Stock and/or other
securities) that, as provided in this Agreement, will be sufficient to permit
the exercise in full of all outstanding Rights; provided, however, that shares
issuable pursuant to Section 11(a)(ii) shall be reserved only following the
occurrence of an event described in that section.
(b) If any shares of Preferred Stock are listed on a national
securities exchange, and so long as the shares of Preferred Stock (and,
following the occurrence of a Stock Acquisition Date or a Section 13 Event,
Common Stock and/or other securities) issuable and deliverable upon the exercise
of the Rights may be listed on that exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on the exchange upon official
notice of issuance upon exercise.
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following a Stock Acquisition Date and the determination by the
Company in accordance with
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Section 11(a)(iii) of the consideration to be delivered by the Company upon
exercise of the Rights, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the Act
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) to cause such registration statement to become effective
as soon as practicable after such filing, and (iii) to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the date of the
expiration 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 the exercisability of the Rights, for a
period of time not to exceed 90 days after the date the Company first becomes
obligated to use its best efforts to file a registration statement as set forth
in clause (i) of the first sentence of this Section 9(c), in order to prepare
and file such registration statement and 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, as well as a public
announcement at such time as the suspension is no longer in effect. The Company
will notify the Rights Agent whenever it makes a public announcement pursuant to
Section 9(c) and will provide the Rights Agent with a copy of such announcement.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction, unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (and, following
the occurrence of a Stock Acquisition Date or Section 13 Event, Common Stock
and/or other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares of such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all taxes and governmental charges which may be payable in
respect of the issuance or delivery of the Rights Certificates or of any shares
of Preferred Stock or other securities upon the exercise of Rights. The Company
shall not, however, be required to pay any tax or governmental charge which may
be payable in respect of any transfer, split-up, combination or exchange of
Rights Certificates, or any issuance or delivery of certificates for shares in a
name other than that of the registered holder of the Rights Certificate
evidencing Rights surrendered for exercise, and shall not be required to issue
or deliver any certificates for shares upon the exercise of any Rights until any
such tax or governmental charge shall have been paid (any such tax or
governmental charge being payable by the holder of such Rights Certificate at
the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
12
10. Preferred Stock Record Date. Each Person in whose name any
---------------------------
certificate for a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes or governmental charges) was made; provided,
--------
however, that if the date of such surrender and payment is a date upon which the
- -------
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred. Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate shall not be entitled to
any rights of a shareholder of the Company with respect to shares for which the
Rights shall be exercisable, including, without limitation, to receive dividends
or other distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as
provided herein.
11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
------------------------------------------------------------------
The Purchase Price, 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 the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Stock payable in
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares of
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the number and kind of shares of capital
stock issuable at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, shall
be proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of
the Company were open, he or she would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. The adjustments provided for in this
Section 11(a)(i) shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or reclassification is
effected. If an event occurs which would require an adjustment under both
this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this
13
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event that a Stock Acquisition Date occurs, proper
provision shall be made so that each holder of a Right, except as provided
below and in Section 7(e), shall thereafter have a right to receive, upon
exercise thereof and payment of the Purchase Price in accordance with the
terms of this Agreement, in lieu of a number of one one-hundredths of a
share of Preferred Stock, such number of shares of Common Stock as shall
equal the result obtained by dividing the then current Purchase Price by 50
percent of the Current Per Share Market Price of the Common Stock
(determined pursuant to Section 11(d)) on the Stock Acquisition Date (such
number of shares being the "Adjustment Shares").
(iii) In the event the number of shares of Common Stock which
are authorized by the Company's articles of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights are not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current
Value") over (2) the then current Purchase Price (such excess, the
"Spread"), and (B) with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the applicable Purchase Price,
(3) shares of Common Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred
stock that the Board of Directors of the Company has deemed to have the
same value as shares of Common Stock ("Common Stock Equivalents")), (4)
debt securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value, where
such aggregate value has been determined by the Board of Directors of the
Company based upon the advice of a nationally recognized investment banking
firm selected by the Board of Directors of the Company; provided, however,
-------- -------
if the Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within 30 days following the Stock Acquisition
Date, then the Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the Purchase
Price, shares of Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to
the Spread. If the Board of Directors of the Company shall determine in
good faith that it is likely that sufficient additional shares of Common
Stock could be authorized for issuance upon exercise in full of the Rights,
the 30-day period set forth above may be extended to the extent necessary,
but not more than 90 days after the Stock Acquisition Date, in order that
the Company may seek shareholders approval for the authorization of such
additional shares (such period, as it may be extended as so permitted, the
"Substitution Period"). To the extent the Company determines that some
action must be taken pursuant to the first or second
14
sentences of this Section 11(a)(iii), the Company (x) shall provide that
such action shall apply uniformly to all outstanding Rights other than
those that are null and void as provided in Section 7(e), 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 first sentence and to determine the value thereof. In the event of
any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer
in effect (with prompt notice by the Company of such announcements to the
Rights Agent). For purposes of this Section 11(a)(iii), the value of the
Common Stock shall be the Current Per Share Market Price (as determined
pursuant to Section 11(d) hereof) of the Common Stock on the date of the
Stock Acquisition Date and the value of any Common Stock Equivalent shall
be deemed to have the same value as the Common Stock on such date.
(b) In case the Company shall at any time after the date of this
Agreement fix a record date for the issuance of rights, options or warrants to
all holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred
Stock (or shares having the same rights, privileges and preferences as the
Preferred Stock ("Preferred Stock Equivalents")) or securities convertible into
Preferred Stock or Preferred Stock Equivalents at a price per share of Preferred
Stock or Preferred Stock Equivalent (or having a conversion price per share, if
a security convertible into Preferred Stock or Preferred Stock Equivalents) less
than the then Current Per Share Market Price of the Preferred Stock (as defined
in Section 11(d)) on such record date, the number of shares of Preferred Stock
for which each Right shall be exercisable after such record date shall
determined by multiplying the number of shares of Preferred Stock for which each
Right was exercisable immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date plus the number of additional shares of Preferred Stock
and/or Preferred Stock Equivalents to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible) and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of shares
of Preferred Stock and/or Preferred Stock Equivalents so to be offered (and/or
the aggregate initial conversion price of convertible securities so to be
offered) would purchase at such Current Per Share Market Price. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights, options or
warrants are not so issued, the number of shares of Preferred Stock for which
each Right shall
15
be exercisable shall be readjusted to be the number of shares of Preferred Stock
for which each Right would then be exercisable if such record date had not been
fixed; and to the extent such rights, options or warrants are issued but not
exercised prior to their expiration, the number of shares for which each Right
shall be exercisable shall be readjusted to be the number which would have
resulted from the adjustment provided for in this Section 11(b) if only the
rights or warrants that were exercised had been issued.
(c) (i) In case the Company shall at any time after the date of this
Agreement fix a record date for the making of a distribution to all holders
of Preferred Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in shares of
Preferred Stock but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the number of shares of Preferred Stock for
which each Right shall be exercisable after such record date shall be
determined by multiplying the number of shares of Preferred Stock for which
each Right was exercisable immediately prior to such record date by a
fraction, the numerator of which shall be the then Current Per Share Market
Price of the Preferred Stock (as defined in Section 11(d)) on such record
date, and the denominator of which shall be such Current Per Share Market
Price of the Preferred Stock, less the fair market value (as determined in
good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent and the holders of the Rights) of the portion of the
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the number
of shares of Preferred Stock for which each Right shall be exercisable
shall be readjusted to be the number of shares of Preferred Stock for which
each Right would then be exercisable if such record date had not been
fixed.
(ii) In case the Company shall at any time after the date of this
Agreement fix a record 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 continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in shares of Common Stock) or
subscription rights or warrants (excluding those referred to in Section
11(h)(ii)), the number of shares of Preferred Stock for which each Right
shall be exercisable after such record date shall be determined by
multiplying the number of shares of Preferred Stock for which each Right
was exercisable immediately prior to such record date by a fraction, the
numerator of which shall be the then Current Per Share Market Price of the
Common Stock (as defined in Section 11(d)) on such record date, and the
denominator of which shall be such Current Per Share Market
16
Price of the Common Stock, less the fair market value (as determined in
good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent and the holders of the Rights) of the portion of the
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of Common Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the number
of shares of Preferred Stock for which each Right shall be exercisable
shall be readjusted to be the number of shares of Preferred Stock for which
each Right would then be exercisable if such record date had not been
fixed.
(d) (i) For the purpose of any computation hereunder, the "Current
Per Share Market Price" of common stock (including Common Stock) on any
date shall be deemed to be the average of the daily closing prices per
share of the common stock for the 30 consecutive Trading Days (as such term
is hereinafter defined) immediately prior to but not including such date;
provided, however, that in the event the Current Per Share Market Price of
-------- -------
common stock is determined during a period following the announcement by
the issuer of such common stock of (A) a dividend or distribution on such
common stock payable in such common stock or securities convertible into
such common stock, or (B) any subdivision, combination or reclassification
of such common stock, and prior to the expiration of 30 Trading Days after
but not including the ex-dividend date for such dividend or distribution,
or the record date for such subdivision, combination or reclassification,
then, and in each such case, the Current Per Share Market Price shall be
appropriately adjusted to take into account such event. The closing price
for each day shall be the last sale price as reported by the New York Stock
Exchange (the "NYSE") or such other system then in use, or, if on any such
date the common stock is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market
maker making a market in the common stock selected by a majority of the
Board of Directors. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the common stock is listed
or admitted to trading is open for the transaction of business or, if the
common stock is not listed or admitted to trading on any national
securities exchange, a Business Day. If the common stock is not publicly
held or so listed or traded for the 30-day period, "Current Per Share
Market Price" shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "Current
Per Share Market Price" of Preferred Stock shall be determined in the same
manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof). If the Current Per
Share Market Price of Preferred Stock cannot be determined in the manner
provided above or if the Preferred Stock is not publicly held
17
or listed or traded in a manner described in clause (i) of this Section
11(d), the "Current Per Share Market Price" of Preferred Stock shall be
conclusively deemed to be an amount equal to the Current Per Share Market
Price of the Common Stock multiplied by the Adjustment Number as that term
is defined in Section 2 of the Amendment to the Company's Articles of
Incorporation, as amended, designating the Preferred Stock (initially 100).
If neither the Common Stock nor the Preferred Stock is publicly held or so
listed or traded, "Current Per Share Market Price" of Preferred Stock shall
mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the current market price of
one one-hundredth of a share of Preferred Stock shall be equal to the
Current Per Share Market Price of one share of Preferred Stock divided by
100.
(e) No adjustment in the Purchase Price or the number of shares for
which a Right is exercisable shall be required unless such adjustment would
require an increase or decrease of at least one percent in the Purchase Price or
the number of shares for which a Right is exercisable; 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 of Common Stock or one-
millionth of a share of Preferred Stock, as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from the
date of the transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a),
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Preferred Stock contained in Section 11 and the provisions of Sections 7, 9, 10,
13 and 14 with respect to the Preferred Stock shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price or the number of shares of Preferred Stock
for which a Right is exercisable hereunder shall evidence the right to purchase,
at the adjusted Purchase Price, the number of one one-hundredths of a share of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) (i) In the event the Company shall, after the date of this
Agreement and prior to the Distribution Date, (A) declare a dividend on the
Common Stock payable in Common Stock, (B) subdivide the outstanding Common
Stock, (C) combine
18
the outstanding Common Stock into a smaller number of shares of Common Stock, or
(D) issue any shares of Common Stock in a reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each share of Common Stock then outstanding,
and the number of Rights to be associated with each share of Common Stock which
may thereafter become outstanding prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights 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 number of shares of Common Stock outstanding immediately prior to such event
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event.
(ii) In the event the Company shall, after the date of this
Agreement and prior to the Distribution Date, fix a record date for the issuance
of rights, options or warrants 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 Common Stock or securities convertible into Common
Stock at a price per share of Common Stock (or having a conversion price per
share, if a security convertible into Common Stock) less than the then Current
Per Share Market Price of the Common Stock (as defined in Section 11(d)) on such
record date, the number of Rights associated with each share of Common Stock
then outstanding, and the number of Rights to be associated with each share of
Common Stock which may thereafter become outstanding prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights associated
with each share of Common Stock after such record date shall be determined by
multiplying the number of Rights associated with each share of Common Stock
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 which the aggregate offering price of
the total number of shares of Common Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Per Share Market Price and the
denominator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors, whose determination shall be described in a statement
filed with the Rights Agent and conclusive and binding for all purposes. 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. In the event that such
rights, options or warrants are not so issued, the
19
number of Rights associated with each share of Common Stock shall be
readjusted to be the number of Rights that would have been associated with
each share of Common Stock if such record date had not been fixed; and to
the extent such rights, options or warrants are issued but not exercised
prior to their expiration, the number of Rights associated with each share
shall be readjusted to be the number which would have resulted from the
adjustment provided for in this Section 11(h)(ii) if only the rights,
options or warrants that were exercised had been issued.
(iii) Notwithstanding the foregoing, the adjustments provided
for in this Section 11(h) shall not be made if the Company exercises its
election provided for in Section 11(i).
(i) The Company may elect on or after the date of any event described
in clauses (A) through (D) of Section 11(h)(i) or described in Section
11(h)(ii), if such event occurs before the Distribution Date (a "Section 11(h)
Event"), to adjust the Purchase Price and the number of shares of Preferred
Stock purchasable upon the exercise of a Right in substitution for any
adjustment under Section 11(h) in the number of Rights associated with each
share of Common Stock. If such election is made, (i) the number of Rights
associated with each share of Common Stock prior to the Section 11(h) Event
shall be maintained after the Section 11(h) Event, (ii) any new shares of Common
Stock issued in the Section 11(h) Event shall, as provided in Section 3(a), have
issued with it the number of Rights associated with each share of Common Stock
outstanding, and (iii) any combination of shares of Common Stock into a smaller
number of shares in the Section 11(h) Event shall result in a similar
combination of the associated Rights. The Purchase Price and the number of
Shares of Preferred Stock purchasable upon exercise of a Right after such
adjustment shall be determined by multiplying the Purchase Price and the number
of Shares of Preferred Stock purchasable upon exercise of a Right, respectively,
in effect immediately prior to such adjustment by a fraction, the numerator of
which shall be the number of Rights that would have been associated with each
share of Common Stock after the Section 11(h) Event if the Company had not
exercised its election provided for in this Section 11(i) and the denominator of
which shall be the number of Rights associated with each share of Common Stock
immediately prior to the Section 11(h) Event. To the extent the number of
Rights that would have been associated with each share of Common Stock if the
Company had not exercised its election provided for in this Section 11(i) may be
readjusted as provided in the last sentence of Section 11(h)(ii), the Purchase
Price and number of shares of Preferred Stock purchasable upon exercise of a
Right shall be similarly readjusted.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of one one-hundredths of a share of Preferred Stock which
were expressed in the initial Rights Certificates issued hereunder.
20
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price or the number of one one-hundredths of a share
of Preferred Stock for which a Right is exercisable be made effective as of a
record date for a specified event, the Company may elect to defer (with prompt
notice of such deferral to the Rights Agent) until the occurrence of such event
the issuance to the holder of any Right exercised after such record date the
number of one one-hundredths of a share of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price and the number of one one-hundredths of a
share of Preferred Stock for which a Right is exercisable in effect prior to
such adjustment; provided, however, that the Company shall deliver to such
-------- -------
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares upon the occurrence of the event requiring
such adjustment.
(l) 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 in their good faith judgment the Board of Directors shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any Preferred Stock at less than
the current market price, issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable for shares
of Preferred Stock, dividends on Preferred Stock payable in Preferred Stock or
issuance of rights, options or warrants referred to in Section 11(b), hereafter
made by the Company to holders of its Preferred Stock shall not be taxable to
such shareholders or shall reduce the taxes payable by such shareholders.
(m) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 26, take (or
permit any Subsidiary to take) any action, including any merger, consolidation
or sale of assets if at the time such action is taken or immediately thereafter
it is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever
----------------------------------------------------------
an adjustment is made as provided in Sections 11 and 13, the Company shall
promptly (a) prepare a certificate setting forth such adjustment and a brief
statement of the facts and computations accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Preferred Stock and
the Common Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of Rights in accordance with Section 25. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall have no duty with respect to and shall not be deemed
to have knowledge of any adjustment unless and until it shall have received such
a certificate.
21
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
--------------------------------------------------------------------
(a) In the event that, following the Distribution Date, directly or
indirectly,
(i) 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(m)) and the Company shall not be the
continuing or surviving corporation of such consolidation or merger,
(ii) any Person shall acquire shares of Common Stock of the
Company in a share exchange,
(iii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m)) shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such consolidation or merger, all or part of the
outstanding Common Stock shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or
(iv) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50 percent or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person other than the Company or one or more of its wholly
owned Subsidiaries in a transaction that complies with Section 11(m),
then, and in each such case, proper provision shall be made so that (A) each
- ----
holder of a Right (except as otherwise provided in Section 7(e)) shall
thereafter have the right to receive, upon the exercise thereof and payment of
the Purchase Price in accordance with the terms of this Agreement, such number
of validly authorized and issued, fully paid, nonassessable and freely tradeable
shares of common stock of the Principal Party (as hereinafter defined) not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by dividing the then current
Purchase Price by 50 percent of the Current Per Share Market Price of the common
stock of the Principal Party (determined pursuant to Section 11(d)) on the date
of consummation of the Section 13 Event, (B) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement, (C)
the term "Company" shall thereafter be deemed to refer to the Principal Party,
it being specifically intended that the provisions of Section 11 shall apply to
the Principal Party only following the first occurrence of a Section 13 Event,
and (D) the Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of shares of its common stock in
accordance with Section 9) in connection with such consummation as may be
necessary to ensure that the
22
provisions of this Agreement shall thereafter be applicable, as nearly as
reasonably may be, in relation to the common stock thereafter deliverable upon
the exercise of the Rights. The provisions of Section 11(a)(ii) shall be of no
effect following the first occurrence of an event described in Section 13.
(b) The term "Principal Party" shall mean
(i) in the case of any transaction described in clause (i), (ii)
or (iii) of Section 13(a), the Person that is the issuer of any securities
into which shares of Common Stock of the Company are converted in such
merger or consolidation, or for which shares of Common Stock are exchanged
in such share exchange, and if no securities are so issued, the Person that
is the other party to such merger, consolidation or share exchange or, if
there is more than one such Person, the Person the common stock of which
has the highest aggregate Current Per Share Market Price (determined
pursuant to Section 11(d)); and
(ii) in the case of any transaction described in clause (iv) of
Section 13(a), the Person that is the party receiving the greatest portion
of the assets or earning power transferred pursuant to such transaction or
transactions; or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power
transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot be
determined, whichever Person the common stock of which has the highest
aggregate current market price (determined pursuant to Section 11(d));
provided, however, that, if the common stock of such Person is not at such time
- -------- -------
and has not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act or such Person is not a corporation, then
(A) if such Person is a direct or indirect Subsidiary of one other Person which
has common stock so registered, "Principal Party" shall refer to such other
Person, (B) if such Person is a direct or indirect Subsidiary of another Person
but is not a direct or indirect Subsidiary of another Person which has common
stock so registered, "Principal Party" shall refer to the ultimate parent entity
of such first-mentioned Person, (C) if such Person is directly or indirectly
controlled by more than one Person, and one or more of such other persons has
common stock so registered, "Principal Party" shall refer to whichever of such
Persons that is the issuer of common stock so registered having the highest
aggregate current market price (determined pursuant to Section 11(d)), and (D)
if such Person is directly or indirectly controlled by more than one Person, and
none of such other Persons have common stock so registered, "Principal Party"
shall refer to whichever ultimate parent entity is the corporation having the
greatest shareholders' equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.
23
(c) The Company shall not enter into any transaction described in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. In
addition, the Company shall not consummate any such transaction unless the
Principal Party shall have a sufficient number of authorized shares of common
stock which have not been issued or reserved for issuance to permit the exercise
in full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set forth
in this Section 13 and further providing that, as soon as practicable after
execution of such agreement, the Principal Party will
(i) prepare and file a registration statement under the Act with
respect to the securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after such filing,
(B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Final Expiration Date and, as soon as
practicable following the execution of such agreement, take such action as
may be required to ensure that any acquisition of such shares of common
stock upon the exercise of the Rights complies with any applicable state
security or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which comply
in all respects with the requirements for registration on Form 10 under the
Exchange Act.
(d) In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Articles or Certificate of Incorporation or
Bylaws or other instrument governing its corporate affairs, which provision
would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, shares of common stock of such Principal Party
at less than the then Current Per Share Market Price (determined pursuant to
Section 11(d)) or securities exercisable for, or convertible into, shares of
common stock of such Principal Party at less than the then Current Per Share
Market Price (other than to holders of Rights pursuant to this Section 13) or
(ii) providing for any special payment, tax or similar provisions in connection
with the issuance of the shares of common stock of such Principal Party pursuant
to the provisions of Section 13; then, in such event, the Company shall not
consummate any such transaction unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction.
24
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the Stock Acquisition
Date, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13. The provisions of
Section 11(a)(ii) shall be of no effect following the first occurrence of a
Section 13 Event.
14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Right would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, or, in case no such sale takes place on such day, the average of the
high bid and low asked prices in the over-the-counter market, as reported by the
NYSE or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredths of a share of Preferred Stock
the Company shall pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value
of one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Stock Acquisition Date or Section 13
Event, the Company shall not be required to issue fractions of shares of Common
Stock upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an
25
amount in cash equal to the same fraction of current market value of one share
of Common Stock. For purposes of this Section 14(c), the current market value of
one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
(e) The Rights Agent shall have no duty or obligation with respect to
this Section 14 and Section 24(d) unless and until it has received specific
instructions (and sufficient cash, if required) from the Company with respect to
its duties and obligations under such Sections.
15. Rights of Action. All rights of action in respect of this Agreement,
----------------
excepting the rights of action given to the Rights Agent under Section 18, are
vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock); and
any registered holder of any Right Certificate (or, prior to the Distribution
Date, of Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
16. Agreement of Rights Holders. Every holder of a Right, by accepting
---------------------------
the same, consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates fully executed;
(c) subject to Sections 6 and 7(f), the Company and the Rights Agent
may deem and treat the Person in whose name the Rights Certificate (or, prior to
the Distribution
26
Date, the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Right Certificates or the associated Common Stock
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent, subject to
the last sentence of Section 7(e), shall be affected by any notice to the
contrary; and
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, judgment or ruling 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; provided, however, the Company must use its best
-------- -------
efforts to have any such order, decree, judgment or ruling lifted or otherwise
overturned as soon as possible.
17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as
--------------------------------------------------
such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the number of one one-hundredths of a
share of Preferred Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 23(c)), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the preparation, delivery, administration,
execution and any amendment of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, damage, judgment,
fine, penalty, claim, demand, settlement costs or expense incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, as
determined by a court of competent jurisdiction, for any action taken, suffered
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including without limitation the costs and
expenses of defending against any claim of liability.
27
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with its acceptance and administration of this Agreement in reliance upon any
Rights Certificate or certificate for 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, or otherwise upon the advice of counsel as set
forth in Section 20.
19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the stock
transfer business of the Rights Agent or any successor rights agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes only the duties
----------------------
and obligations expressly imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the written advice or opinion of such counsel
shall be full and
28
complete authorization and protection to the Rights Agent for,
and the Rights Agent shall incur no liability for or in respect of, any action
taken, suffered or omitted by it in good faith and in accordance with such
written advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking, omitting to take or
suffering any action hereunder (including, without limitation, the identity of
any Acquiring Person and the determination of Current Per Share Market Price),
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively provided and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization and protection to the Rights Agent for any action
taken, omitted to be taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct,
each as determined by a court of competent jurisdiction. Anything to the
contrary notwithstanding, in no event shall the Rights Agent be liable for
special, punitive, indirect, consequential or incidental loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Rights
Agent has been advised of the likelihood of such loss or damage.
(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 Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not have any liability or be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void
pursuant to Section 7(e) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in this Agreement
or the ascertaining of the existence of facts that would require any such change
or adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Preferred Stock
or Common Stock to be issued pursuant to this Agreement or any Right Certificate
or as to whether any shares of Preferred Stock or Common Stock will, when
issued, be validly authorized and issued, fully paid and nonassessable.
29
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken, omitted to be taken or suffered by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. Any application by the
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 to be
taken by the Rights Agent under this Agreement and the date on or after which
such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken or suffered by, or omission of,
the Rights Agent in accordance with a proposal included in any such application
on or after the date specified in such application (which date shall not be less
than five Business Days after the date any such officer of the Company actually
receives such application, unless any such officer shall have consented in
writing to an earlier date) unless, prior to taking any such action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken, suffered or omitted.
(h) The Rights Agent and any shareholder, affiliate, director,
officer, or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other Person.
(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 or any other Person resulting from any
such act, default, neglect or misconduct, absent gross negligence, bad faith or
willful misconduct 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
its believes that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
30
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
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 and Preferred Stock by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Rights 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 Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a Person organized and
doing business under the laws of the United States or of any State of the United
States, in good standing, which is authorized under such laws to exercise stock
transfer powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million or (b) an affiliate or
subsidiary of a corporation described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any
such appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
22. Issuance of New Rights Certificates. Notwithstanding any of the
-----------------------------------
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or
31
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Common Stock of the Company
following the Distribution Date and prior to the Final Expiration Date, the
Company (a) shall, with respect to Common Stock of the Company so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities issued
by the Company prior to the Distribution Date, and (b) may, in any other case,
if deemed necessary or appropriate by the Board of Directors, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
-------- -------
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
23. Redemption.
----------
(a) The Board of Directors of the Company may at its option, at any
time prior to the earliest of (i) the Close of Business on the tenth day
following a Stock Acquisition Date (or, if the Stock Acquisition Date shall have
occurred prior to the Record Date, the close of business on the tenth day
following the Record Date) or (ii) the Close of Business on the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $.001 per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the "Redemption Price").
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable as provided in Section 11(a)(ii) until such time as the
Company's right of redemption hereunder has expired.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at such later time as shall be
specified in the resolution taking such action), and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the holders of the then outstanding Rights and the Rights Agent 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 shares of Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made. The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the Current Per Share Market Price, as defined in Section 11(d),
of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
32
(c) In case the Company shall propose (a) to pay any dividend payable
in stock of any class to the holders of its Preferred Stock or Common Stock or
to make any other distribution to the holders of its Preferred Stock or Common
Stock (other than a regular quarterly cash dividend), (b) to offer to the
holders of its Preferred Stock or Common Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or Common Stock or
shares of stock of any class or any other securities, (c) to effect any
reclassification of its Preferred Stock or Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock or Common Stock), (d) to effect any consolidation, merger or
share exchange into or with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(m)), (e) to effect any
sale or other transfer or to permit one or more of its Subsidiaries to effect
any sale or other transfer, in one or more related transactions, of 50 percent
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(m)), or (f) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 25, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, exchange, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Preferred Stock or 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 20 days prior to the
record date for determining holders of the Preferred Stock or Common Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Preferred Stock or Common Stock
whichever shall be the earlier.
In case a Stock Acquisition Date shall occur, the Company shall as soon as
practicable thereafter give to the Rights Agent and to each holder of a Rights
Certificate, in accordance with Section 25, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to
holders of Rights under Section 11(a)(ii).
24. Exchange.
--------
(a) The Board of Directors of the Company may, at its option, at any
time and from time to time after a Stock Acquisition Date, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e)) for
shares of Common Stock or Common Stock Equivalents, or any combination thereof,
at an exchange ratio of one share of Common Stock, or such number of Common
Stock Equivalents or units representing fractions thereof as would be deemed to
have the same value as one share of Common Stock, per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio").
33
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 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 and/or
Common Stock Equivalents equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange (with prompt notice thereof to the Rights Agent); provided,
--------
however, that the failure to give, or any defect in, such notice shall not
- -------
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to the Rights Agent and to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the shares of Common
Stock and/or Common Stock Equivalents for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become null and void pursuant to the provisions of
Section 7(e)) held by each holder of Rights.
(c) In the event that the number of shares of Common Stock which are
authorized by the Company's Articles of Incorporation as amended but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit an exchange of Rights as contemplated in
accordance with this Section 24, the Company may, at its option, take all such
action as may be necessary to authorize additional shares of Common Stock for
issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the company
shall pay to the registered holders of Rights with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the value of a whole share of Common Stock. For
purposes of this Section 24, the value of a whole share of Common Stock shall be
the closing price (as determined pursuant to the second sentence of Section
11(d)(i) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24, and the value of any Common Stock Equivalent shall be deemed
to have the same value as the Common Stock on such date.
25. Notices. Notices or demands authorized by this Agreement to be given
-------
or made by the Rights Agent or by the holder of any Rights Certificate to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
34
StanCorp Financial Group, Inc.
1100 SW Sixth Avenue
Portland, Oregon 97204
Attention: Corporate Secretary
Copy to: Ruth A. Beyer
Stoel Rives LLP
900 SW Fifth Ave., Suite 2300
Portland, OR 97204
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
520 Pike Street, Suite 1220
Seattle, WA 98101
Attention: Relationship Manager
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate 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.
26. Supplements and Amendments. Prior to the Distribution Date, the
--------------------------
Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates representing shares of Common Stock. From and after the
Distribution Date, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interest of the holders of Rights Certificates (other than
an Acquiring Person or an Affiliate or Associate of any such Person); provided,
--------
however, this Agreement may not be supplemented or amended to lengthen, pursuant
- -------
to clause (iii) of this sentence, (A) a time period relating to when the Rights
may be redeemed at such time as the Rights are not then redeemable, or (b) any
other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of or the benefits to, the holders of Rights.
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 26 and provided that such amendment or supplement
35
does not change or increase the Rights Agent's duties, liabilities or
obligations without the consent of the Rights Agent (which consent will not be
unreasonably withheld), the Rights Agent shall execute such supplement or
amendment. Prior to Distribution Date, the interests of the holders of Rights
shall be deemed coincident with the interests of the holders of shares of Common
Stock.
27. 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.
28. Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the Common Stock) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, the Common Stock).
29. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions covenants
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated; provided, however, that
-------- -------
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
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(a) 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.
30. 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 of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (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 (b) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Company in good faith, shall (a) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (b) not subject the Board of Directors of the Company to any
liability to the holders of the Rights. The Rights Agent shall be entitled to
assume that the Company's Board of Directors acted in good faith and shall be
fully protected and incur no liability in reliance thereon.
36
31. Governing Law. This Agreement and each Rights Certificate issued
-------------
hereunder shall be deemed to be a contract made under the laws of the State of
Oregon and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State; provided, however, that all provisions regarding the
rights, duties and obligations of the Rights Agent shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
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.
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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
STANCORP FINANCIAL GROUP, INC.
By
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Its
---------------------------------------------
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By
--------------------------------------------------
Its
---------------------------------------------
37