SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF
SECURITIES PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
CTS CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 35-0225010
(State of incorporation or organization) (IRS Employer
Identification No.)
905 West Boulevard North, Elkhart, Indiana 46514
(Address of principal executive offices) (Zip Code)
If this form relates to the
registration of a class of
securities pursuant to
Section 12(b) of the
Exchange Act and is
effective pursuant to
General Instruction A.(c),
please check the following
box.
If this form relates to the
registration of a class of
securities pursuant to
Section 12(g) of the
Exchange Act and is
effective pursuant to
General Instruction A.(d),
please check the following
box.
Securities Act registration statement file number to which this
form relates:
(If applicable)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
to be so Registered
Rights to Purchase Preferred
Shares
--
Name of Each Exchange on Which
Each Class is to be Registered
New York Stock Exchange
--
Securities to be registered pursuant to Section 12(g) of the Act:
--
Title of class
--
Title of class
ITEM 1. Description of Securities to be Registered.
On August 28, 1998, the Board of Directors of CTS
Corporation (the "Company") declared a dividend distribution of
one right (a "Right") for each share of Common Stock, without par
value, of the Company (all such common shares of the Company,
collectively the "Common Shares") outstanding at the close of
business on September 10, 1998 (the "Record Date"), pursuant to
the terms of a Rights Agreement, dated as of August 28, 1998 (the
"Rights Agreement"), between the Company and State Street Bank
and Trust Company, as Rights Agent. The Rights Agreement also
provides, subject to specified exceptions and limitations, that
Common Shares issued or delivered from the Company's treasury
after the Record Date will be entitled to and accompanied by
Rights. The Rights are in all respects subject to and governed
by the provisions of the Rights Agreement, a copy of which
(including all exhibits thereto) is filed as Exhibit 1 hereto and
incorporated herein by this reference. A summary description of
the Rights is set forth in Exhibit C to the Rights Agreement.
ITEM 2. Exhibits.
Exhibit
Number Exhibit
1 Rights Agreement (including a Form of
Certificate of Adoption of Amendment to
Amended Articles of Incorporation as Exhibit
A thereto, a Form of Right Certificate as
Exhibit B thereto and a Summary of Rights to
Purchase Common Shares as Exhibit C thereto)
2 Form of letter to shareholders, dated
September 10, 1998
3 Press release, dated August 28, 1998
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereto duly authorized.
CTS CORPORATION
By: /S/ Jeannine M. Davis
Name: Jeannine M. Davis
Title: Vice President, General
Counsel & Secretary
Dated: September 1, 1998
INDEX TO EXHIBITS
Exhibit
Number
Exhibit
1 Rights Agreement (including a Form of Certificate
of Adoption of Amendment to Amended Articles of
Incorporation as Exhibit A thereto, a Form of
Right Certificate as Exhibit B thereto and a
Summary of Rights to Purchase Common Shares as
Exhibit C thereto)
2 Form of letter to shareholders, dated September 10, 1998
3 Press release, dated August 28, 1998
RIGHTS AGREEMENT
dated as of August 28, 1998
by and between
CTS CORPORATION
and
STATE STREET BANK AND TRUST COMPANY,
as Rights Agent
TABLE OF CONTENTS
Page
1. Certain Definitions . . . . . . . . . . . . . . . . . . .-1-
2. Appointment of Rights Agent . . . . . . . . . . . . . . .-6-
3. Issue of Right Certificates . . . . . . . . . . . . . . .-6-
4. Form of Right Certificates. . . . . . . . . . . . . . . .-8-
5. Countersignature and Registration . . . . . . . . . . . .-8-
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. . . . . . . . . . . . . . . . . . . . . . .-9-
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. . . . . . . . . . . . . . . . . . . . . . . . . -10-
8. Cancellation and Destruction of Right Certificates. . . -11-
9. Company Covenants Concerning Securities and Rights. . . -12-
10. Record Date . . . . . . . . . . . . . . . . . . . . . . -13-
11. Adjustment of Purchase Price, Number and Kind of Securities
or Number of Rights . . . . . . . . . . . . . . . . . . -14-
12. Certificate of Adjusted Purchase Price or Number of
Securities. . . . . . . . . . . . . . . . . . . . . . . -25-
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . . . . . . -25-
14. Fractional Rights and Fractional Securities . . . . . . -28-
15. Rights of Action. . . . . . . . . . . . . . . . . . . . -30-
16. Agreement of Rights Holders . . . . . . . . . . . . . . -30-
17. Right Certificate Holder Not Deemed a Stockholder . . . -31-
18. Concerning the Rights Agent . . . . . . . . . . . . . . -31-
19. Merger or Consolidation or Change of Name of Rights Agent-32-
20. Duties of Rights Agent. . . . . . . . . . . . . . . . . -33-
21. Change of Rights Agent. . . . . . . . . . . . . . . . . -35-
22. Issuance of New Right Certificates. . . . . . . . . . . -36-
23. Redemption. . . . . . . . . . . . . . . . . . . . . . . -37-
24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . -38-
25. Notice of Certain Events. . . . . . . . . . . . . . . . -39-
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . -40-
27. Supplements and Amendments. . . . . . . . . . . . . . . -41-
28. Successors; Certain Covenants . . . . . . . . . . . . . -42-
29. Benefits of This Agreement. . . . . . . . . . . . . . . -42-
30. Governing Law . . . . . . . . . . . . . . . . . . . . . -42-
31. Severability. . . . . . . . . . . . . . . . . . . . . . -42-
32. Descriptive Headings, Etc.. . . . . . . . . . . . . . . -43-
33. Determinations and Actions by the Board . . . . . . . . -43-
34. Counterparts. . . . . . . . . . . . . . . . . . . . . . -43-
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C. . . . . . . . . . . . . . . . . . . . . . . . . . C-1
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of August 28, 1998 (this
"Agreement"), is made and entered into by and between CTS
Corporation, an Indiana corporation (the "Company"), and State
Street Bank and Trust Company (the "Rights Agent").
RECITALS
WHEREAS, on August 28, 1998, the Board of Directors of the
Company authorized and declared a dividend distribution of one
right (a "Right") for each share of Common Stock, without par
value, of the Company (a "Common Share") outstanding as of the
Close of Business (as hereinafter defined) on September 10, 1998
(the "Record Date"), each Right initially representing the right
to purchase one one-hundredth of a Preferred Share (as
hereinafter defined), on the terms and subject to the conditions
herein set forth, and further authorized and directed the
issuance of one Right (subject to adjustment as provided herein)
with respect to each Common Share issued or delivered by the
Company (whether originally issued or delivered from the
Company's treasury) after the Record Date but prior to the
earlier of the Distribution Date (as hereinafter defined) and the
Expiration Date (as hereinafter defined) or as provided in
Section 22.
NOW, THEREFORE, in consideration of the mutual agreements
herein set forth, the parties hereto hereby agree as follows:
AGREEMENTS
1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person (other than the
Company or any Related Person) who or which, together with all
Affiliates and Associates of such Person, is the Beneficial Owner
of 15% or more of the then-outstanding Common Shares.
Notwithstanding the foregoing,
(i) in no event shall any Person be deemed to be an
Acquiring Person solely as a result of a reduction in the
number of Common Shares outstanding unless and until such
time as such Person or any Affiliate or Associate of such
Person thereafter becomes the Beneficial Owner of additional
Common Shares representing 1% or more of the
then-outstanding Common Shares, other than as a result of a
stock dividend, stock split or similar transaction effected
by the Company in which all holders of Common Shares are
treated equally, or any other Person who is the Beneficial
Owner of Common Shares representing 1% or more of the
then-outstanding Common Shares thereafter becomes an
Affiliate or Associate of such Person; and
(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 attained such status
inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person" as
defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for the purposes of this Agreement.
(b) "Affiliate" and "Associate" have the respective
meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
(c) "Agreement" has the meaning ascribed to it in the
Recitals to this Agreement.
(d) A Person will be deemed the "Beneficial Owner" of, and
to "Beneficially Own," any securities:
(i) the beneficial ownership of which such Person or
any of such Person's Affiliates or Associates, directly or
indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of
conversion rights, exchange rights, warrants, options or
other rights (in each case, other than upon exercise or
exchange of the Rights); provided, however, that a Person
will not be deemed the Beneficial Owner of, or to
Beneficially Own, securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange;
or
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has or
shares the right to vote or dispose of, including pursuant
to any agreement, arrangement or understanding (whether or
not in writing); or
(iii) of which any other Person is the Beneficial Owner,
if such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement, or understanding
(whether or not in writing) with such other Person (or any
of such other Person's Affiliates or Associates) with
respect to acquiring, holding, voting or disposing of any
securities of the Company;
provided, however, that a Person will not be deemed the
Beneficial Owner of, or to Beneficially Own, any security (A) if
such Person has the right to vote such security pursuant to an
agreement, arrangement or understanding (whether or not in
writing) which (1) arises solely from a revocable proxy given to
such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules
and regulations of the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report), or (B) if such beneficial
ownership arises solely as a result of such Person's status as a
"clearing agency," as defined in Section 3(a)(23) of the Exchange
Act; provided, further, however, that nothing in this paragraph
(d) will cause a Person engaged in business as an underwriter of
securities to be the Beneficial Owner of, or to Beneficially Own,
any securities acquired through such Person's participation in
good faith in an underwriting syndicate until the expiration of
40 calendar days after the date of such acquisition, or such
later date as the Board of Directors of the Company may determine
in any specific case.
(e) "Business Day" means any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New
York (or such other state in which the principal office of the
Rights Agent is located) are authorized or obligated by law or
executive order to close.
(f) "Close of Business" on any given date means 5:00 P.M.,
Eastern time, on such date; provided, however, that if such date
is not a Business Day it means 5:00 P.M., Eastern time, on the
next succeeding Business Day.
(g) "Common Shares" when used with reference to the Company
means the shares of Common Stock, without par value, of the
Company; provided, however, that, if the Company is the
continuing or surviving corporation in a transaction described in
Section 13(a)(ii), "Common Shares" when used with reference to
the Company means shares of the capital stock or units of the
equity interests with the greatest aggregate voting power of the
Company. "Common Shares" when used with reference to any
corporation or other legal entity other than the Company,
including an Issuer, means shares of the capital stock or units
of the equity interests with the greatest aggregate voting power
of such corporation or other legal entity.
(h) "Company" means CTS Corporation, an Indiana
corporation.
(i) "Continuing Director" means any member of the Board of
Directors of the Company who is not (i) an Acquiring Person, (ii)
an Affiliate or Associate of an Acquiring Person or (iii) a
representative or nominee of an Acquiring Person, or any
Affiliate or Associate thereof, and who either (A) is a member of
the Board of Directors of the Company as of the date of this
Agreement or (B) subsequently becomes a member of the Board of
Directors of the Company and whose election or nomination for
election to the Board of Directors of the Company is approved or
recommended by a vote of a majority of the Board of Directors of
the Company, which majority includes a majority of the Continuing
Directors then on the Board of Directors of the Company, but
excluding for this clause (B) any member whose initial assumption
of office occurs as a result of an actual or threatened election
contest (within the meaning of Rule 14a-11 of the Exchange Act)
with respect to the election or removal of members of the Board
of Directors of the Company or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors of the Company.
(j) "Distribution Date" means the earlier of: (i) the
Close of Business on the Share Acquisition Date or (ii) the Close
of Business on the tenth Business Day (or, unless the
Distribution Date shall have previously occurred, such later date
as may be specified by the Board of Directors of the Company)
after the date of the commencement of a tender or exchange offer
by any Person (other than the Company or any Related Person), if
upon the consummation thereof such Person would be the Beneficial
Owner of 15% or more of the then-outstanding Common Shares.
(k) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(l) "Expiration Date" means the earliest of (i) the Close
of Business on the Final Expiration Date, (ii) the time at which
the Rights are redeemed as provided in Section 23, and (iii) the
time at which all exercisable Rights are exchanged as provided in
Section 24.
(m) "Final Expiration Date" means August 27, 2008.
(n) "Flip-in Event" means any event described in clauses
(A), (B) or (C) of Section 11(a)(ii).
(o) "Flip-over Event" means any event described in clauses
(i), (ii) or (iii) of Section 13(a).
(p) "Issuer" has the meaning ascribed to it in
Section 13(b).
(q) "Nasdaq" means The NASDAQ Stock Market.
(r) "Person" means any individual, firm, corporation or
other legal entity, and includes any successor (by merger or
otherwise) of such entity.
(s) "Preferred Shares" means shares of Series A Junior
Participating Preferred Stock, without par value, of the Company
having the rights and preferences set forth in the Form of
Certificate of Adoption of Amendment to Amended and Restated
Articles of Incorporation attached as Exhibit A.
(t) "Purchase Price" means initially $125.00 per one one-hundredth
of a Preferred Share, subject to adjustment from time to time as provided
in this Agreement.
(u) "Record Date" has the meaning ascribed to it in the
Recitals to this Agreement.
(v) "Redemption Period" has the meaning ascribed to it in
Section 23(a).
(w) "Redemption Price" means $.01 per Right, subject to
adjustment by resolution of the Board of Directors of the Company
to reflect any stock split, stock dividend or similar transaction
occurring after the Record Date.
(x) "Related Person" means (i) any Subsidiary of the
Company or (ii) any employee benefit or stock ownership plan of
the Company or of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such
plan.
(y) "Right" has the meaning ascribed to it in the Recitals
to this Agreement.
(z) "Right Certificate" means a certificate evidencing the
Rights, in substantially the form attached as Exhibit B to this
Agreement.
(aa) "Rights Agent" means State Street Bank and Trust
Company, unless and until a successor Rights Agent has attained
such status pursuant to the terms of this Agreement, and
thereafter, "Rights Agent" means such successor Rights Agent.
(bb) "Securities Act" means the Securities Act of 1933, as
amended.
(cc) "Share Acquisition Date" means the first date of public
announcement by the Company (by press release, filing made with
the Securities and Exchange Commission or otherwise) that an
Acquiring Person has attained such status.
(dd) "Subsidiary", when used with reference to any Person,
means any corporation or other legal entity of which a majority
of the voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by such Person;
provided, however, that for purposes of Section 13(b),
"Subsidiary" when used with reference to any Person means any
corporation or other legal entity of which at least 20% of the
voting power of the voting equity securities or equity interests
is owned, directly or indirectly, by such Person.
(ee) "Trading Day" means any day on which the principal
national securities exchange on which the Common Shares are
listed or admitted to trading is open for the transaction of
business or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, a Business Day.
(ff) "Triggering Event" means any Flip-in Event or Flip-over
Event.
2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company and the
holders of the Rights (who, in accordance with Section 3, will
also be, prior to the Distribution Date, the holders of the
Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of the
New York Stock Exchange governing transfer agents and registrars.
The Company may from time to time act as Co-Rights Agent or
appoint such Co-Rights Agents as it may deem necessary or
desirable and will give prior notice of such appointment to the
Rights Agent. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any such
Co-Rights Agent. To the extent that any Co-Rights Agent takes
any action pursuant to this Agreement, such Co-Rights Agent will
be entitled to all of the rights and protections of, and subject
to all of the applicable duties and obligations imposed upon, the
Rights Agent pursuant to the terms of this Agreement. In no
event shall the Rights Agent have any duty to supervise or in any
way be liable for the acts or omissions of such Co-Rights Agents.
3. Issue of Right Certificates. (a) Until the
Distribution Date, (i) the Rights will be evidenced by the
certificates representing Common Shares registered in the names
of the record holders thereof (which certificates representing
Common Shares will also be deemed to be Right Certificates),
(ii) the Rights will be transferable only in connection with the
transfer of the underlying Common Shares, and (iii) the surrender
for transfer of any certificates evidencing Common Shares in
respect of which Rights have been issued will also constitute the
transfer of the Rights associated with the Common Shares
evidenced by such certificates. On or as promptly as practicable
after the Record Date, the Company will send by first class,
postage prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of
such holder shown on the records of the Company as of such date,
a copy of a Summary of Rights to Purchase Preferred Stock in
substantially the form attached as Exhibit C to this Agreement.
(b) Rights will be issued by the Company in respect of all
Common Shares (other than Common Shares issued upon the exercise
or exchange of any Right) issued or delivered by the Company
(whether originally issued or delivered from the Company's
treasury) after the Record Date but prior to the earlier of the
Distribution Date and the Expiration Date. Certificates
evidencing such Common Shares will have stamped on, impressed on,
printed on, written on, or otherwise affixed to them the
following legend or such similar legend as the Company may deem
appropriate and as is 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 or
transaction reporting system on which the Common Shares may from
time to time be listed or quoted, or to conform to usage:
This Certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights
Agreement between CTS Corporation and State Street Bank
and Trust Company, dated as of August 28, 1998 (the
"Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is
on file at the principal executive offices of CTS
Corporation. The Rights are not exercisable prior to
the occurrence of certain events specified in the
Rights Agreement. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be
redeemed, may be exchanged, may expire, may be amended,
or may be evidenced by separate certificates and no
longer be evidenced by this Certificate. CTS
Corporation will mail to the holder of this Certificate
a copy of the Rights Agreement, as in effect on the
date of mailing, without charge promptly after receipt
of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement,
Rights that are or were beneficially owned by an
Acquiring Person or any Affiliate or Associate of an
Acquiring Person (as such terms are defined in the
Rights Agreement) may become null and void.
(c) As promptly as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will
countersign and the Company will send or cause to be sent (and
the Rights Agent will, if requested, send), by first class,
insured, postage prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a
Right Certificate evidencing one Right for each Common Share so
held, subject to adjustment as provided herein. As of and after
the Distribution Date, the Rights will be evidenced solely by
such Right Certificates.
(d) In the event that the Company purchases or otherwise
acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares
will be deemed canceled and retired so that the Company will not
be entitled to exercise any Rights associated with the Common
Shares so purchased or acquired.
4. Form of Right Certificates. The Right Certificates
(and the form of election to purchase and the form of assignment
to be printed on the reverse thereof) will be substantially in
the form attached as Exhibit B to this Agreement with such
changes and marks of identification or designation, and such
legends, summaries or endorsements printed thereon, as the
Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
exchange or transaction reporting system on which the Rights may
from time to time be listed or quoted, or to conform to usage.
Subject to the provisions of Section 22, the Right Certificates,
whenever issued, on their face will entitle the holders thereof
to purchase such number of one one-hundredths of a Preferred
Share as are set forth therein at the Purchase Price set forth
therein, but the Purchase Price, the number and kind of
securities issuable upon exercise of each Right and the number of
Rights outstanding will be subject to adjustment as provided
herein.
5. Countersignature and Registration. (a) The Right
Certificates will be executed on behalf of the Company by its
Chairman of the Board, its President or any Vice President,
either manually or by facsimile signature, and will have affixed
thereto the Company's seal or a facsimile thereof, which will be
attested by the Secretary or an Assistant Secretary of the
Company either manually or by facsimile signature. The Right
Certificates will be manually countersigned by the Rights Agent
and will not be valid for any purpose unless so countersigned.
In case any officer of the Company who signed any of the Right
Certificates ceases to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by
the Company with the same force and effect as though the person
who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed
on behalf of the Company by any person who, at the actual date of
the execution of such Right Certificate, is a proper officer of
the Company to sign such Right Certificate, although at the date
of the execution of this Rights Agreement any such person was not
such officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at the principal office of the Rights
Agent designated for such purpose and at such other offices 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 or any transaction reporting
system on which the Rights may from time to time be listed or
quoted, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each
of the Right Certificates and the date of each of the Right
Certificates.
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. (a) Subject to the provisions of Sections 7(d) and
14, at any time after the Close of Business on the Distribution
Date and prior to the Expiration Date, any Right Certificate or
Right Certificates representing exercisable Rights may be
transferred, split up, combined or exchanged for another Right
Certificate or Right Certificates, entitling the registered
holder to purchase a like number of one one-hundredths of a
Preferred Share (or other securities, as the case may be) as the
Right Certificate or Right Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to
purchase. Any registered holder desiring to transfer, split up,
combine or exchange any such Right Certificate or Right
Certificates must make such request in a writing delivered to the
Rights Agent and must surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged
at the principal office of the Rights Agent designated for such
purpose. Thereupon or as promptly as practicable thereafter,
subject to the provisions of Sections 7(d) and 14, the Company
will prepare, execute and deliver to the Rights Agent, and the
Rights Agent will countersign and deliver, one or more new Right
Certificates as so requested. The Company may require payment of
a sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split up, combination
or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will prepare, execute and deliver a new
Right Certificate of like tenor to the Rights Agent and the
Rights Agent will countersign and deliver such new Right
Certificate to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the
Distribution Date and prior to the Expiration Date, upon
surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights
Agent at the office or offices of the Rights Agent designated for
such purpose, together with payment in cash, in lawful money of
the United States of America by certified check or bank draft
payable to the order of the Company, equal to the sum of (i) the
exercise price for the total number of securities as to which
such surrendered Rights are exercised and (ii) an amount equal to
any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with the provisions of
Section 9(d).
(b) Upon receipt of a Right Certificate representing
exercisable Rights with the form of election to purchase duly
executed, accompanied by payment as described above, the Rights
Agent will promptly (i) requisition from any transfer agent of
the Preferred Shares (or make available, if the Rights Agent is
the transfer agent) certificates representing the number of one
one-hundredths of a Preferred Share to be purchased (and the
Company hereby irrevocably authorizes and directs its transfer
agent to comply with all such requests), or, if the Company
elects to deposit Preferred Shares issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of
one one-hundredths of a Preferred Share as are to be purchased
(and the Company hereby irrevocably authorizes and directs such
depositary agent to comply with all such requests), (ii) after
receipt of such certificates (or depositary receipts, as the case
may be), cause the same to be delivered to or upon the order of
the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder, (iii)
when appropriate, requisition from the Company or any transfer
agent therefor (or make available, if the Rights Agent is the
transfer agent), certificates representing the number of
equivalent common shares to be issued in lieu of the issuance of
Common Shares in accordance with the provisions of Section
11(a)(iii), (iv) when appropriate, after receipt of such
certificates, cause the same to be delivered to or upon the order
of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder, (v) when
appropriate, requisition from the Company the amount of cash to
be paid in lieu of the issuance of fractional shares in
accordance with the provisions of Section 14 or in lieu of the
issuance of Common Shares in accordance with the provisions of
Section 11(a)(iii), (vi) when appropriate, after receipt, deliver
such cash to or upon the order of the registered holder of such
Right Certificate, and (vii) when appropriate, deliver any due
bill or other instrument provided to the Rights Agent by the
Company for delivery to the registered holder of such Right
Certificate as provided by Section 11(l).
(c) In case the registered holder of any Right Certificate
exercises less than all the Rights evidenced thereby, the Company
will prepare, execute and deliver a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised
and the Rights Agent will countersign and deliver such new Right
Certificate to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of
Section 14.
(d) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company will be
obligated to undertake any action with respect to any purported
transfer, split up, combination or exchange of any Right
Certificate pursuant to Section 6 or exercise of a Right
Certificate as set forth in this Section 7 unless the registered
holder of such Right Certificate has (i) completed and signed the
certificate following the form of assignment or the form of
election to purchase, as applicable, set forth on the reverse
side of the Right Certificate surrendered for such transfer,
split up, combination, exchange or exercise 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 may reasonably request.
8. Cancellation and Destruction of Right Certificates.
All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange will, if surrendered
to the Company or to any of its stock transfer agents, be
delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, will be canceled by
it, and Right Certificates will not be issued in lieu thereof
except as expressly permitted by the provisions of this
Agreement. The Company will deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent will so cancel
and retire, any other Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent will deliver all canceled Right Certificates to the
Company, or will, at the written request of the Company, destroy
such canceled Right Certificates, and in such case will deliver a
certificate of destruction thereof to the Company.
9. Company Covenants Concerning Securities and Rights.
The Company covenants and agrees that:
(a) It will cause to be reserved and kept available
out of its authorized and unissued Preferred Shares or any
Preferred Shares held in its treasury, a number of Preferred
Shares that will be sufficient to permit the exercise in
full of all outstanding Rights in accordance with Section 7.
(b) So long as the Preferred Shares (and, following
the occurrence of a Triggering Event, Common Shares and/or
other securities) issuable upon the exercise of the Rights
may be listed on a national securities exchange it shall
endeavor to cause, from and after such time as the Rights
become exercisable, all securities reserved for issuance
upon the exercise of Rights to be listed on such exchange
upon official notice of issuance upon such exercise.
(c) It will take all such action as may be necessary
to ensure that all Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other
securities) delivered upon exercise of Rights, at the time
of delivery of the certificates for such securities, will be
(subject to payment of the Purchase Price) duly authorized,
validly issued, fully paid and nonassessable securities.
(d) It will pay when due and payable any and all
federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Right
Certificates and of any certificates representing securities
issued upon the exercise of Rights; provided, however, that
the Company will not be required to pay any transfer tax or
charge which may be payable in respect of any transfer or
delivery of Right Certificates to a person other than, or
the issuance or delivery of certificates or depositary
receipts representing securities issued upon the exercise of
Rights in a name other than, that of the registered holder
of the Right Certificate evidencing Rights surrendered for
exercise, or to issue or deliver any certificates or
depositary receipts representing securities issued upon the
exercise of any Rights until any such tax or charge has been
paid (any such tax or charge being payable by the holder of
such Right Certificate at the time of surrender) or until it
has been established to the Company's reasonable
satisfaction that no such tax is due.
(e) It will use its best efforts (i) to file on an
appropriate form, as soon as practicable following the later
of the Share Acquisition Date and the Distribution Date, a
registration statement under the Securities Act with respect
to the securities issuable upon exercise of the Rights,
(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 Securities Act) until the earlier of
(A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date.
The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily
suspend, for a period of time after the date set forth in
clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file
such registration statement and to permit it to become
effective. Upon any such suspension, the Company will 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. In addition, if the Company determines that a
registration statement should be filed under the Securities
Act or any state securities laws following the Distribution
Date, the Company may temporarily suspend the exercisability
of the Rights in each relevant jurisdiction until such time
as a registration statement has been declared effective and,
upon any such suspension, the Company will issue a public
announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. Notwithstanding anything in this Agreement to the
contrary, the Rights will not be exercisable in any
jurisdiction if the requisite registration or qualification
in such jurisdiction has not been effected or the exercise
of the Rights is not permitted under applicable law.
(f) Notwithstanding anything in this Agreement to the
contrary, after the later of the Share Acquisition Date and
the Distribution Date it will not take (or permit any
Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will
eliminate or otherwise diminish the benefits intended to be
afforded by the Rights.
(g) In the event that the Company is obligated to
issue other securities of the Company and/or pay cash
pursuant to Section 11, 13, 14 or 24, it will make all
arrangements necessary so that such other securities and/or
cash are available for distribution by the Rights Agent, if
and when appropriate.
10. Record Date. Each Person in whose name any certificate
representing Preferred Shares (or Common Shares and/or other
securities, as the case may be) is issued upon the exercise of
Rights will for all purposes be deemed to have become the holder
of record of the Preferred Shares (or Common Shares and/or other
securities, as the case may be) represented thereby on, and such
certificate will be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable transfer taxes)
was made; provided, however, that if the date of such surrender
and payment is a date upon which the transfer books of the
Company for the Preferred Shares (or Common Shares and/or other
securities, as the case may be) are closed, such Person will be
deemed to have become the record holder of such securities on,
and such certificate will be dated, the next succeeding Business
Day on which the transfer books of the Company for the Preferred
Shares (or Common Shares and/or other securities, as the case may
be) are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate will not be entitled
to any rights of a holder of any security for which the Rights
are or may become exercisable, including without limitation the
right to vote, to receive dividends or other distributions, or to
exercise any preemptive rights, and will not be entitled to
receive any notice of any proceedings of the Company, except as
provided herein.
11. Adjustment of Purchase Price, Number and Kind of
Securities or Number of Rights. The Purchase Price, the number
and kind of securities issuable upon exercise of each Right and
the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event that the Company at any time after
the Record Date (A) declares a dividend on the Preferred
Shares payable in Preferred Shares, (B) subdivides the
outstanding Preferred Shares, (C) combines the outstanding
Preferred Shares into a smaller number of Preferred Shares
or (D) issues any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a), the Purchase Price in effect on the record date for
such dividend or on the effective date of such subdivision,
combination or reclassification, and/or the number and/or
kind of shares of capital stock issuable on such date upon
exercise of a Right, will be proportionately adjusted so
that the holder of any Right exercised after such time is
entitled to receive upon payment of the Purchase Price then
in effect 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 transfer books of
the Company for the Preferred Shares were open, the holder
of such Right would have owned upon such exercise (and, in
the case of a reclassification, would have retained after
giving effect to such reclassification) and would have been
entitled to receive by virtue of such dividend, subdivision,
combination or reclassification; provided, however, that in
no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value
of the shares of capital stock issuable upon exercise of one
Right. If an event occurs which would require an adjustment
both under this Section 11(a)(i) and Section 11(a)(ii) or
Section 13, the adjustment provided for in this Section
11(a)(i) will be in addition to, and will be made prior to,
any adjustment required pursuant to Section 11(a)(ii) or
Section 13.
(ii) Subject to the provisions of Section 24, if:
(A) any Person becomes an Acquiring Person; or
(B) any Acquiring Person or any Affiliate or Associate
of any Acquiring Person, directly or indirectly, (1) merges
into the Company or otherwise combines with the Company and
the Company is the continuing or surviving corporation of
such merger or combination (other than in a transaction
subject to Section 13), (2) merges or otherwise combines
with any Subsidiary of the Company, (3) in one or more
transactions (otherwise than in connection with the
exercise, exchange or conversion of securities exercisable
or exchangeable for or convertible into shares of any class
of capital stock of the Company or any of its Subsidiaries)
transfers cash, securities or any other property to the
Company or any of its Subsidiaries in exchange (in whole or
in part) for shares of any class of capital stock of the
Company or any of its Subsidiaries or for securities
exercisable or exchangeable for or convertible into shares
of any class of capital stock of the Company or any of its
Subsidiaries, or otherwise obtains from the Company or any
of its Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the
Company or any of its Subsidiaries or securities exercisable
or exchangeable for or convertible into shares of any class
of capital stock of the Company or any of its Subsidiaries
(otherwise than as part of a pro rata distribution to all
holders of shares of any class of capital stock of the
Company, or any of its Subsidiaries), (4) sells, purchases,
leases, exchanges, mortgages, pledges, transfers or
otherwise disposes (in one or more transactions) to, from,
with or of, as the case may be, the Company or any of its
Subsidiaries (otherwise than in a transaction subject to
Section 13) any property, including securities, on terms and
conditions less favorable to the Company than the Company
would be able to obtain in an arm's-length transaction with
an unaffiliated third party, (5) receives any compensation
from the Company or any of its Subsidiaries other than
compensation as a director or a regular full-time employee,
in either case at rates consistent with the Company's (or
its Subsidiaries') past practices, or (6) receives the
benefit, directly or indirectly,(except proportionately as a
stockholder) of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its
Subsidiaries; or
(C) during such time as there is an Acquiring Person,
there is any reclassification of securities of the Company
(including any reverse stock split), or any recapitalization
of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries, or any other
transaction or series of transactions involving the Company
or any of its Subsidiaries (whether or not with or into or
otherwise involving an Acquiring Person), other than a
transaction subject to Section 13, which has the effect,
directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class
of equity securities of the Company or any of its
Subsidiaries, or of securities exercisable or exchangeable
for or convertible into equity securities of the Company or
any of its Subsidiaries, of which an Acquiring Person, or
any Affiliate or Associate of any Acquiring Person, is the
Beneficial Owner;
then, and in each such case, proper provision will be made
so that each holder of a Right, except as provided below,
will thereafter have the right to receive, upon exercise
thereof in accordance with the terms of this Agreement at an
exercise price per Right equal to the product of the
then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the date of the occurrence
of such Flip-in Event (or, if any other Flip-In Event shall
have previously occurred, the product of the then-current
Purchase Price multiplied by the number of one one-hundredths
of a Preferred Share for which a Right was exercisable immediately
prior to the date of the first occurrence of a Flip-In Event), in
lieu of Preferred Shares, such number of Common Shares as equals the
result obtained by (x) multiplying the then-current Purchase Price
by the number of one one-hundredths of a Preferred Share for which
a Right was exercisable immediately prior to the date of the
occurrence of such Flip-in Event (or, if any other Flip-In
Event shall have previously occurred, the product of the
then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the date of the first
occurrence of a Flip-In Event), and dividing that product by
(y) 50% of the current per share market price of the Common
Shares (determined pursuant to Section 11(d)) on the date of
the occurrence of such Flip-in Event. Notwithstanding
anything in this Agreement to the contrary, from and after
the first occurrence of a Flip-in Event, any Rights that are
Beneficially Owned by (A) any Acquiring Person (or any
Affiliate or Associate of any Acquiring Person), (B) a
transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after the occurrence of
a Flip-in Event, or (C) a transferee of any Acquiring Person
(or any such Affiliate or Associate) who became a transferee
prior to or concurrently with the occurrence of a Flip-in
Event pursuant to either (1) a transfer from an Acquiring
Person to holders of its equity securities or to any Person
with whom it has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (2) a
transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding
which has the purpose or effect of avoiding the provisions
of this Section 11(a)(ii), and subsequent transferees of any
of such Persons, will be void without any further action and
any holder of such Rights will thereafter have no rights
whatsoever with respect to such Rights under any provision
of this Agreement. The Company will use all reasonable
efforts to ensure that the provisions of this
Section 11(a)(ii) are complied with, but will have no
liability to any holder of Right Certificates or any other
Person as a result of its failure to make any determinations
with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. Upon the occurrence of
a Flip-in Event, no Right Certificate that represents Rights
that are or have become void pursuant to the provisions of
this Section 11(a)(ii) will thereafter be issued pursuant to
Section 3 or Section 6, and any Right Certificate delivered
to the Rights Agent that represents Rights that are or have
become void pursuant to the provisions of this Section
11(a)(ii) will be canceled. Upon the occurrence of a
Flip-over Event, any Rights that shall not have been
previously exercised pursuant to this Section 11(a)(ii)
shall thereafter be exercisable only pursuant to Section 13
and not pursuant to this Section 11(a)(ii).
(iii) Upon the occurrence of a Flip-in Event, if there
are not sufficient Common Shares authorized but unissued or
issued but not outstanding to permit the issuance of all the
Common Shares issuable in accordance with Section 11(a)(ii)
upon the exercise of a Right, the Board of Directors of the
Company will use its best efforts promptly to authorize and,
subject to the provisions of Section 9(e), make available
for issuance additional Common Shares or other equity
securities of the Company having equivalent voting rights
and an equivalent value (as determined in good faith by the
Board of Directors of the Company) to the Common Shares (for
purposes of this Section 11(a)(iii), "equivalent common
shares"). In the event that equivalent common shares are so
authorized, upon the exercise of a Right in accordance with
the provisions of Section 7, the registered holder will be
entitled to receive (A) Common Shares, to the extent any are
available, and (B) a number of equivalent common shares,
which the Board of Directors of the Company has determined
in good faith to have a value equivalent to the excess of
(x) the aggregate current per share market value on the date
of the occurrence of the most recent Flip-in Event of all
the Common Shares issuable in accordance with Section
11(a)(ii) upon the exercise of a Right (the "Exercise
Value") over (y) the aggregate current per share market
value on the date of the occurrence of the most recent Flip-in
Event of any Common Shares available for issuance upon the exercise
of such Right; provided, however, that if at any time after 90
calendar days after the latest of the Share Acquisition Date, the
Distribution Date and the date of the occurrence of the most recent
Flip-in Event, there are not sufficient Common Shares and/or equivalent
common shares available for issuance upon the exercise of a Right,
then the Company will be obligated to deliver, upon the
surrender of such Right and without requiring payment of the
Purchase Price, Common Shares (to the extent available),
equivalent common shares (to the extent available) and then
cash (to the extent permitted by applicable law and any
agreements or instruments to which the Company is a party in
effect immediately prior to the Share Acquisition Date),
which securities and cash have an aggregate value equal to
the excess of (1) the Exercise Value over (2) the product of
the then-current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right
was exercisable immediately prior to the date of the
occurrence of the most recent Flip-In Event (or, if any
other Flip-In Event shall have previously occurred, the
product of the then-current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which
a Right would have been exercisable immediately prior to the
date of the occurrence of such Flip-In Event if no other
Flip-In Event had previously occurred). To the extent that
any legal or contractual restrictions prevent the Company
from paying the full amount of cash payable in accordance
with the foregoing sentence, the Company will pay to holders
of the Rights as to which such payments are being made all
amounts which are not then restricted on a pro rata basis
and shall continue to make payments on a pro rata basis as
promptly as funds become available until the full amount due
to each such Rights holder has been paid.
(b) In the event that the Company fixes a record date for
the issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or
purchase Preferred Shares (or securities having equivalent
rights, privileges and preferences as the Preferred Shares (for
purposes of this Section 11(b), "equivalent preferred shares"))
or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent
preferred shares) less than the current per share market price of
the Preferred Shares (determined pursuant to Section 11(d)) on
such record date, the Purchase Price to be in effect after such
record date will be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction,
the numerator of which is the number of Preferred Shares
outstanding on such record date plus the number of Preferred
Shares which the aggregate offering price of the total number of
Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
current per share market price and the denominator of which is
the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or
into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock
issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which is in a
form other than cash, the value of such consideration will be as
determined in good faith by the Board of Directors of the
Company, whose determination will be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held
for the account of the Company will not be deemed outstanding for
the purpose of any such computation. Such adjustment will be
made successively whenever such a record date is fixed, and in
the event that such rights, options or warrants are not so
issued, the Purchase Price will be adjusted to be the Purchase
Price which would then be in effect if such record date had not
been fixed.
(c) In the event that the Company fixes a record date for
the making of a distribution to all holders of Preferred Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend), assets, stock (other than
a dividend payable in Preferred Shares) or subscription rights,
options or warrants (excluding those referred to in Section
11(b)), the Purchase Price to be in effect after such record date
will be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which is the current per share market price of the
Preferred Shares (as determined pursuant to Section 11(d)) on
such record date or, if earlier, the date on which Preferred
Shares begin to trade on an ex-dividend or when issued basis for
such distribution, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the
Rights Agent) of the portion of the evidences of indebtedness,
cash, assets or stock so to be distributed or of such
subscription rights, options or warrants applicable to one
Preferred Share, and the denominator of which is such current per
share market price of the Preferred Shares; provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock issuable upon exercise of one Right.
Such adjustments will be made successively whenever such a record
date is fixed; and in the event that such distribution is not so
made, the Purchase Price will again be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
(d) (i) For the purpose of any computation hereunder,
the "current per share market price" of Common Shares on any
date will be deemed to be the average of the daily closing
prices per share of such Common Shares for the 30
consecutive Trading Days immediately prior to such date;
provided, however, that in the event that the current per
share market price of the Common Shares is determined during
a period following the announcement by the issuer of such
Common Shares of (A) a dividend or distribution on such
Common Shares payable in such Common Shares or securities
convertible into such Common Shares (other than the Rights)
or (B) any subdivision, combination or reclassification of
such Common Shares, and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such
case, the current per share market price will be
appropriately adjusted to take into account ex-dividend
trading or to reflect the current per share market price per
Common Share equivalent. The closing price for each day
will be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common
Shares are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities
listed on the principal national securities exchange on
which the Common Shares are listed or admitted to trading
or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported
by Nasdaq or such other system then in use, or, if on any
such date the Common Shares 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 Common Shares selected by the Board of
Directors of the Company. If the Common Shares are not
publicly held or not so listed or traded, or are not the
subject of available bid and asked quotes, "current per
share market price" will mean the fair value per share as
determined in good faith by the Board of Directors of the
Company, whose determination will be described in a
statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares
will be determined in the same manner as set forth above for
Common Shares in Section 11(d)(i), other than the last
sentence thereof. If the current per share market price of
the Preferred Shares cannot be determined in the manner
provided above, the "current per share market price" of the
Preferred Shares will be conclusively deemed to be an amount
equal to the current per share market price of the Common
Shares multiplied by one hundred (as such number may be
appropriately adjusted to reflect events such as stock
splits, stock dividends, recapitalizations or similar
transactions relating to the Common Shares occurring after
the date of this Agreement). If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or
traded, or the subject of available bid and asked quotes,
"current per share market price" of the Preferred Shares
will mean the fair value per share as determined in good
faith by the Directors of the Company, whose determination
will be described in a statement filed with the Rights
Agent. For all purposes of this Agreement, the current per
share market price of one one-hundredth of a Preferred Share
will be equal to the current per share market price of one
Preferred Share divided by one hundred.
(e) Except as set forth below, an adjustment in the
Purchase Price will not be required unless such adjustment would
require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this
Section 11(e) are not required to be made will be carried forward
and taken into account in any subsequent adjustment. All
calculations under this Section 11 will be made to the nearest
cent or to the nearest one one-millionth of a Preferred Share or
one ten-thousandth of a Common Share or other security, as the
case may be. Notwithstanding the first sentence of this Section
11(e), any adjustment required by this Section 11 will be made no
later than the earlier of (i) three years from the date of the
transaction which requires such adjustment and (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a), the holder of any Right thereafter exercised
becomes entitled to receive any securities of the Company other
than Preferred Shares, thereafter the number and/or kind of such
other securities so receivable upon exercise of any Right (and/or
the Purchase Price in respect thereof) will 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 Shares (and the Purchase Price in respect thereof)
contained in this Section 11, and the provisions of Sections 7,
9, 10, 13 and 14 with respect to the Preferred Shares (and the
Purchase Price in respect thereof) will apply on like terms to
any such other securities (and the Purchase Price in respect
thereof).
(g) All Rights originally issued by the Company subsequent
to any adjustment made to the Purchase Price hereunder will
evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-hundredths of a Preferred Share issuable
from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company has exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase
Price pursuant to Section 11(b) or Section 11(c), each Right
outstanding immediately prior to the making of such adjustment
will thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of one one-hundredths of a Preferred
Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-hundredths
of a Preferred Share issuable upon exercise of a Right immediately
prior to such adjustment of the Purchase Price by (y) the Purchase Price
in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any
adjustment of the Purchase Price, to adjust the number of Rights
in substitution for any adjustment in the number of one one-hundredths
of a Preferred Share issuable upon the exercise of a Right. Each of
the Rights outstanding after such adjustment of the number of Rights
will be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company will make a public announcement of
its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. Such record date may be the
date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, will
be at least 10 calendar days later than the date of the public
announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this
Section 11(i), the Company will, as promptly as practicable,
cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing,
subject to the provisions of Section 14, the additional Rights to
which such holders are entitled as a result of such adjustment,
or, at the option of the Company, will cause to be distributed to
such holders of record in substitution and replacement for the
Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders are entitled after such adjustment. Right
Certificates so to be distributed will be issued, executed, and
countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and will
be registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j) Without respect to any adjustment or change in the
Purchase Price and/or the number and/or kind of securities
issuable upon the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express the
Purchase Price and the number and kind of securities which were
expressed in the initial Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-hundredths of the then
par value, if any, of the Preferred Shares or below the then par
value, if any, of any other securities of the Company issuable
upon exercise of the Rights, the Company will take any corporate
action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid
and nonassessable Preferred Shares or such other securities, as
the case may be, at such adjusted Purchase Price.
(l) In any case in which this Section 11 otherwise requires
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the number
of Preferred Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of
Preferred Shares or other securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the
Company delivers to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such
additional Preferred Shares or other securities upon the
occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the
contrary, the Company will 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 its
good faith judgment the Board of Directors of the Company
determines to be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly for
cash of Preferred Shares at less than the current per share
market price therefor, (iii) issuance wholly for cash of
Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares, (iv) stock
dividends, or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to
holders of its Preferred Shares is not taxable to such
stockholders.
(n) Notwithstanding anything in this Agreement to the
contrary, in the event that the Company at any time after the
Record Date prior to the Distribution Date (i) pays a dividend on
the outstanding Common Shares payable in Common Shares, (ii)
subdivides the outstanding Common Shares, (iii) combines the
outstanding Common Shares into a smaller number of shares, or
(iv) issues any shares of its capital stock in a reclassification
of the outstanding Common Shares (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 Common Share then
outstanding, or issued or delivered thereafter but prior to the
Distribution Date, will be proportionately adjusted so that the
number of Rights thereafter associated with each Common Share
following any such event equals the result obtained by
multiplying the number of Rights associated with each Common
Share immediately prior to such event by a fraction the numerator
of which is the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the
denominator of which is the total number of Common Shares
outstanding immediately following the occurrence of such event.
The adjustments provided for in this Section 11(n) will be made
successively whenever such a dividend is paid or such a
subdivision, combination or reclassification is effected.
12. Certificate of Adjusted Purchase Price or Number of
Securities. Whenever an adjustment is made as provided in
Section 11 or Section 13, the Company will promptly (a) prepare a
certificate setting forth such adjustment and a brief statement
of the facts accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Preferred
Shares and the Common Shares (if different from the Rights Agent)
a copy of such certificate, and (c) if such adjustment is made
after the Distribution Date, mail a brief summary of such
adjustment to each holder of a Right Certificate in accordance
with Section 26.
13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that:
(i) at any time after a Person has become an Acquiring
Person, the Company consolidates with, or merges with or
into, any other Person and the Company is not the continuing
or surviving corporation of such consolidation or merger; or
(ii) at any time after a Person has become an Acquiring
Person, any Person consolidates with the Company, or merges
with or into the Company, and the Company is the continuing
or surviving corporation of such merger or consolidation
and, in connection with such merger or consolidation, all or
part of the Common Shares is changed into or exchanged for
stock or other securities of any other Person or cash or any
other property; or
(iii) at any time after a Person has become an Acquiring
Person, the Company, directly or indirectly, sells or
otherwise transfers (or one or more of its Subsidiaries
sells or otherwise transfers), in one or more transactions,
assets or earning power (including without limitation
securities creating any obligation on the part of the
Company and/or any of its Subsidiaries) representing in the
aggregate more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any
Person or Persons other than the Company or one or more of
its wholly owned Subsidiaries;
then, and in each such case, proper provision will be made so
that (A) each holder of a Right thereafter has the right to
receive, upon the exercise thereof in accordance with the terms
of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to the Share Acquisition
Date, such number of duly authorized, validly issued, fully paid,
nonassessable and freely tradeable Common Shares of the Issuer,
free and clear of any liens, encumbrances and other adverse
claims and not subject to any rights of call or first refusal, as
equals the result obtained by (x) multiplying the then-current
Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to the
Share Acquisition Date and dividing that product by (y) 50% of
the current per share market price of the Common Shares of the
Issuer (determined pursuant to Section 11(d)), on the date of the
occurrence of such Flip-over Event; (B) the Issuer will
thereafter be liable for, and will assume, by virtue of the
occurrence of such Flip-over Event, all the obligations and
duties of the Company pursuant to this Agreement; (C) the term
"Company" will thereafter be deemed to refer to the Issuer; and
(D) the Issuer will take such steps (including without limitation
the reservation of a sufficient number of its Common Shares to
permit the exercise of all outstanding Rights) in connection with
such consummation as may be necessary to assure that the
provisions hereof are thereafter applicable, as nearly as
reasonably may be possible, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights.
(b) For purposes of this Section 13, "Issuer" means (i) in
the case of any Flip-over Event described in Sections 13(a)(i) or
(ii) above, the Person that is the continuing, surviving,
resulting or acquiring Person (including the Company as the
continuing or surviving corporation of a transaction described in
Section 13(a)(ii) above), and (ii) in the case of any Flip-over
Event described in Section 13(a)(iii) above, the Person that is
the party receiving the greatest portion of the assets or earning
power (including without limitation securities creating any
obligation on the part of the Company and/or any of its
Subsidiaries) transferred pursuant to such transaction or
transactions; provided, however, that, in any such case, (A) if
(1) no class of equity security of such Person is, at the time of
such merger, consolidation or transaction and has been
continuously over the preceding 12-month period, registered
pursuant to Section 12 of the Exchange Act, and (2) such Person
is a Subsidiary, directly or indirectly, of another Person, a
class of equity security of which is and has been so registered,
the term "Issuer" means such other Person; and (B) in case such
Person is a Subsidiary, directly or indirectly, of more than one
Person, a class of equity security of two or more of which are
and have been so registered, the term "Issuer" means whichever of
such Persons is the issuer of the equity security having the
greatest aggregate market value. Notwithstanding the foregoing,
if the Issuer in any of the Flip-over Events listed above is not
a corporation or other legal entity having outstanding equity
securities, then, and in each such case, (x) if the Issuer is
directly or indirectly wholly owned by a corporation or other
legal entity having outstanding equity securities, then all
references to Common Shares of the Issuer will be deemed to be
references to the Common Shares of the corporation or other legal
entity having outstanding equity securities which ultimately
controls the Issuer, and (y) if there is no such corporation or
other legal entity having outstanding equity securities, (I)
proper provision will be made so that the Issuer creates or
otherwise makes available for purposes of the exercise of the
Rights in accordance with the terms of this Agreement, a kind or
kinds of security or securities having a fair market value at
least equal to the economic value of the Common Shares which each
holder of a Right would have been entitled to receive if the
Issuer had been a corporation or other legal entity having
outstanding equity securities; and (II) all other provisions of
this Agreement will apply to the issuer of such securities as if
such securities were Common Shares.
(c) The Company will not consummate any Flip-over Event if,
(i) at the time of or immediately after such Flip-over Event,
there are or would be any rights, warrants, instruments or
securities outstanding or any agreements or arrangements in
effect which would eliminate or substantially diminish the
benefits intended to be afforded by the Rights, (ii) prior to,
simultaneously with or immediately after such Flip-over Event,
the stockholders of the Person who constitutes, or would
constitute, the Issuer for purposes of Section 13(a) shall have
received a distribution of Rights previously owned by such Person
or any of its Affiliates or Associates, or (iii) the form or
nature of the organization of the Issuer would preclude or limit
the exercisability of the Rights. In addition, the Company will
not consummate any Flip-over Event unless the Issuer has a
sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) 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 to such consummation the Company and the Issuer have
executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in subsections (a)
and (b) of this Section 13 and further providing that as promptly
as practicable after the consummation of any Flip-over Event, the
Issuer will:
(A) prepare and file a registration statement under
the Securities Act with respect to the Rights and the
securities issuable upon exercise of the Rights on an
appropriate form, and use its best efforts to cause such
registration statement to (1) become effective as soon as
practicable after such filing and (2) remain effective (with
a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date;
(B) take all 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; and
(C) deliver to holders of the Rights historical
financial statements for the Issuer and each of its
Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange
Act.
(d) The provisions of this Section 13 will similarly apply
to successive mergers or consolidations or sales or other
transfers. In the event that a Flip-over Event occurs at any
time after the occurrence of a Flip-in Event, except for Rights
that have become void pursuant to Section 11(a)(ii), Rights that
shall not have been previously exercised will cease to be
exercisable in the manner provided in Section 11(a)(ii) and will
thereafter be exercisable in the manner provided in
Section 13(a).
14. Fractional Rights and Fractional Securities. (a) The
Company will not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, the Company will pay as
promptly as practicable to the registered holders of the Right
Certificates with regard to which such fractional Rights
otherwise would be issuable, an amount in cash equal to the same
fraction of the current market value of one Right. For the
purposes of this Section 14(a), the current market value of one
Right is the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights
otherwise would have been issuable. The closing price for any
day is the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by Nasdaq or such other system then in use, or, if
on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of
Directors of the Company. If the Rights are not publicly held or are not
so listed or traded, or are not the subject of available bid and
asked quotes, the current market value of one Right will mean the
fair value thereof as determined in good faith by the Board of
Directors of the Company, whose determination will be described
in a statement filed with the Rights Agent.
(b) The Company will not be required to issue fractions of
Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share) upon
exercise of the Rights or to distribute certificates which
evidence fractional Preferred Shares (other than fractions which
are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of
one one-hundredth of a Preferred Share may, at the election of
the Company, be evidenced by depositary receipts pursuant to an
appropriate agreement between the Company and a depositary
selected by it, provided that such agreement provides that the
holders of such depositary receipts have all the rights,
privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that
are not integral multiples of one one-hundredth of a Preferred
Share, the Company may pay to any Person to whom or which such
fractional Preferred Shares would otherwise be issuable an amount
in cash equal to the same fraction of the current market value of
one Preferred Share. For purposes of this Section 14(b), the
current market value of one Preferred Share is the closing price
of the Preferred Shares (as determined in the same manner as set
forth for Common Shares in the second sentence of Section
11(d)(i)) for the Trading Day immediately prior to the date of
such exercise; provided, however, that if the closing price of
the Preferred Shares cannot be so determined, the closing price
of the Preferred Shares for such Trading Day will be conclusively
deemed to be an amount equal to the closing price of the Common
Shares (determined pursuant to the second sentence of Section
11(d)(i)) for such Trading Day multiplied by one hundred (as such
number may be appropriately adjusted to reflect events such as
stock splits, stock dividends, recapitalizations or similar
transactions relating to the Common Shares occurring after the
date of this Agreement); provided further, however, that if
neither the Common Shares nor the Preferred Shares are publicly
held or listed or admitted to trading on any national securities
exchange, or the subject of available bid and asked quotes, the
current market value of one Preferred Share will mean the fair
value thereof as determined in good faith by the Directors of the
Company, whose determination will be described in a statement
filed with the Rights Agent.
(c) Following the occurrence of a Triggering Event, the
Company will not be required to issue fractions of Common Shares
or other securities issuable upon exercise or exchange of the
Rights or to distribute certificates which evidence any such
fractional securities. In lieu of issuing any such fractional
securities, the Company may pay to any Person to whom or which
such fractional securities would otherwise be issuable an amount
in cash equal to the same fraction of the current market value of
one such security. For purposes of this Section 14(c), the
current market value of one Common Share or other security
issuable upon the exercise or exchange of Rights is the closing
price thereof (as determined in the same manner as set forth for
Common Shares in the second sentence of Section 11(d)(i)) for the
Trading Day immediately prior to the date of such exercise or
exchange; provided, however, that if neither the Common Shares
nor any such other securities are publicly held or listed or
admitted to trading on any national securities exchange, or the
subject of available bid and asked quotes, the current market
value of one Common Share or such other security will mean the
fair value thereof as determined in good faith by the Board of
Directors of the Company, whose determination will mean the fair
value thereof as will be described in a statement filed with the
Rights Agent.
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 Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent
of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Distribution Date, of the holder of
any Common Shares), may in his own behalf and for his own benefit
enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in
respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right
Certificate and in this Agreement. 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 therefore be entitled to specific performance of the
obligations under this Agreement, 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 are
transferable only in connection with the transfer of the
Common Shares;
(b) After the Distribution Date, the Right
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the principal office of
the Rights Agent designated for such purpose, duly endorsed
or accompanied by a proper instrument of transfer;
(c) The Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Share
certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate
or the associated Common Share certificate made by anyone
other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent
will be affected by any notice to the contrary;
(d) Such holder expressly waives any right to receive
any fractional Rights and any fractional securities upon
exercise or exchange of a Right, except as otherwise
provided in Section 14.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent will have
any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation;
provided, however, that the Company will use its best
efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
17. Right Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Right Certificate will be entitled to
vote, receive dividends, or be deemed for any purpose the holder
of Preferred Shares or any other securities of the Company which
may at any time be issuable upon the exercise of the Rights
represented thereby, nor will anything contained herein or in any
Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of Directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25), or to receive
dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions of this Agreement or
exchanged pursuant to the provisions of Section 24.
18. Concerning the Rights Agent. (a) The Company will pay
to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company will also indemnify the Rights Agent for,
and hold it harmless against, any loss, gross liability, suit,
action, proceeding or expense, incurred without gross negligence,
bad faith, or willful misconduct on the part of the Rights Agent,
for anything done or omitted to be done by the Rights Agent in
connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against
any claim of liability arising therefrom, directly or indirectly.
(b) The Rights Agent will be protected and will incur no
liability for or in respect of any action taken, suffered, or
omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate
evidencing Preferred Shares or Common Shares or 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.
19. Merger or Consolidation or Change of Name of Rights
Agent. (a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the corporate
trust business of the Rights Agent or any successor Rights Agent,
will be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. If, at the time
such successor Rights Agent succeeds to the agency created by
this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent
and deliver such Right Certificates so countersigned; and if at
that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all
such cases such Right Certificates will have the full force
provided in the Right Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent changes and
at such time any of the Right Certificates have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right
Certificates so countersigned; and if at that time any of the
Right Certificates have not been countersigned, the Rights Agent
may countersign such Right Certificates either in its prior name
or in its changed name; and in all such cases such Right
Certificates will have the full force provided in the Right
Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and
the holders of Right Certificates, by their acceptance thereof,
will be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion
of such counsel will be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent deems it necessary or
desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board,
the President, any Vice President, the Secretary or the
Treasurer of the Company and delivered to the Rights Agent,
and such certificate will be full authorization to the
Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent will be liable hereunder only for
its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by
reason of any of the statements of fact or recitals
contained in this Agreement or in the Right Certificates
(except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are
and will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any
responsibility in respect of the validity of this Agreement
or the execution and delivery hereof (except the due
execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor will
it be responsible for any breach by the Company of any
covenant contained in this Agreement or in any Right
Certificate; nor will it be responsible for any adjustment
required under the provisions of Sections 11 or 13
(including any adjustment which results in Rights becoming
void) or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right
Certificates after actual notice of any such adjustment);
nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization or
reservation of any shares of stock or other securities to be
issued pursuant to this Agreement or any Right Certificate
or as to whether any shares of stock or other securities
will, when issued, be duly authorized, validly issued, fully
paid and nonassessable.
(f) The Company 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 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 will not be liable for any action taken or suffered
to be taken by it in good faith in accordance with
instructions of any such officer.
(h) The Rights Agent and any stockholder, director,
officer, or employee of the Rights Agent may buy, sell, or
deal in any of the Rights or other securities of the Company
or become 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 precludes 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 will not be answerable or
accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and
continued employment thereof. The Rights Agent will not be
under any duty or responsibility to ensure compliance with
any applicable federal or state securities laws in
connection with the issuance, transfer or exchange of Right
Certificates.
(j) If, with respect to any Right Certificate
surrendered to the Rights Agent for exercise, transfer,
split up, combination or exchange, either (i) 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 or 2 thereof, or (ii) any other actual or suspected
irregularity exists, the Rights Agent will not take any
further action with respect to such requested exercise,
transfer, split up, combination or exchange without first
consulting with the Company, and will thereafter take
further action with respect thereto only in accordance with
the Company's written instructions.
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 calendar days' notice in
writing mailed to the Company and to each transfer agent of the
Preferred Shares or the Common Shares by registered or certified
mail, and to the holders of the Right Certificates by first class
mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 calendar 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 Preferred Shares or the Common
Shares (who is not also the Rights Agent or successor Rights
Agent, as the case may be) by registered or certified mail, and
to the holders of the Right Certificates by first class mail. If
the Rights Agent resigns or is removed or otherwise becomes
incapable of acting, the Company will appoint a successor to the
Rights Agent. If the Company fails to make such appointment
within a period of 30 calendar days after giving notice of such
removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who will,
with such notice, submit his Right Certificate for inspection by
the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent,
whether appointed by the Company or by such a court, will be a
corporation or other legal entity organized and doing business
under the laws of the United States or of the State of New York
(or of any other state of the United States so long as such
corporation is authorized to do business as a banking institution
in the State of New York), in good standing, having a principal
office in the State of New York, which is authorized under such
laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights
Agent a combined capital and surplus of at least $50 million.
After appointment, the successor Rights Agent will 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 will 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 will
file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Preferred Shares or the Common
Shares (who is not also the successor Rights Agent), and mail a
notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, will 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 Right Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by
its Board of Directors to reflect any adjustment or change in the
Purchase Price per share and the number or kind of securities
issuable upon exercise of the Rights made in accordance with the
provisions of this Agreement. In addition, in connection with
the issuance or sale by the Company of Common Shares following
the Distribution Date and prior to the Expiration Date, the
Company (a) will, with respect to Common Shares so issued or sold
pursuant to the exercise, exchange or conversion of securities
(other than Rights) issued prior to the Distribution Date which
are exercisable or exchangeable for, or convertible into Common
Shares, and (b) may, in any other case, if deemed necessary,
appropriate or desirable by the Board of Directors of the
Company, issue Right Certificates representing an equivalent
number of Rights as would have been issued in respect of such
Common Shares if they had been issued or sold prior to the
Distribution Date, as appropriately adjusted as provided herein
as if they had been so issued or sold; provided, however, that
(i) no such Right Certificate will be issued if, and to the
extent that, in its good faith judgment the Board of Directors of
the Company determines that the issuance of such Right
Certificate could have a material adverse tax consequence to the
Company or to the Person to whom or which such Right Certificate
otherwise would be issued and (ii) no such Right Certificate will
be issued if, and to the extent that, appropriate adjustment
otherwise has been made in lieu of the issuance thereof.
23. Redemption. (a) Prior to the Expiration Date, the
Board of Directors of the Company may, at its option, redeem all
but not less than all of the then-outstanding Rights at the
Redemption Price at any time prior to the Close of Business on
the Share Acquisition Date (such time period, the "Redemption
Period"); provided, however, that, notwithstanding any provision
in this Agreement to the contrary, the Board of Directors of the
Company may not authorize the redemption of the Rights or a
change in the Redemption Period simultaneously with or for a
period of one calendar year following the occurrence of either of
the events set forth in clause (A) or (B) below unless there are
Continuing Directors in office at the time of such authorization
and a majority of the Continuing Directors concur in such
authorization: (A) a Person becomes an Acquiring Person or (B) a
change (resulting from a proxy or consent solicitation or from a
vote or written consent(s)) in a majority of the directors of the
Company in office at the commencement of such solicitation, or
prior to such vote or consent(s), if any Person who is a
participant in such solicitation, vote or consent(s) has stated
(or if a majority of the directors in office at the commencement
of such solicitation or prior to such vote or consent(s) has
determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take, or may consider
taking, any action which would result in such Person becoming an
Acquiring Person or which would cause the occurrence of a
Triggering Event. Any redemption pursuant to the preceding
sentence of this Section 23(a) will be effective immediately upon
the action of the Board of Directors of the Company ordering the
same, unless such action of the Board of Directors of the Company
expressly provides that such redemption will be effective at a
subsequent time or upon the occurrence or nonoccurrence of one or
more specified events (in which case such redemption will be
effective in accordance with the provisions of such action of the
Board of Directors of the Company).
(b) Immediately upon the effectiveness of the redemption of
the Rights as provided in Section 23(a), 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 will be to receive the Redemption Price, without interest
thereon. Promptly after the effectiveness of the redemption of
the Rights as provided in Section 23(a), the Company will
publicly announce such redemption and, within 10 calendar days
thereafter, will give notice of such redemption to the holders of
the then-outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry
books of the Company; provided, however, that the failure to
give, or any defect in, any such notice will not affect the
validity of the redemption of the Rights. Any notice that is
mailed in the manner herein provided will be deemed given,
whether or not the holder receives the notice. The notice of
redemption mailed to the holders of Rights 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,
Common Shares (based upon the current per share market price of
the Common Shares (determined pursuant to Section 11(d)) at the
time of redemption), or any other form of consideration deemed
appropriate by the Board of Directors of the Company (based upon
the fair market value of such other consideration, determined by
the Board of Directors of the Company in good faith) or any
combination thereof. The Company may, at its option, combine the
payment of the Redemption Price with any other payment being made
concurrently to holders of Common Shares and, to the extent that
any such other payment is discretionary, may reduce the amount
thereof on account of the concurrent payment of the Redemption
Price. If legal or contractual restrictions prevent the Company
from paying the Redemption Price (in the form of consideration
deemed appropriate by the Board of Directors) at the time of
redemption, the Company shall pay the Redemption Price, without
interest, promptly after such time as the Company ceases to be so
prevented from paying the Redemption Price.
(c) At any time following the Share Acquisition Date, the
Board of Directors of the Company may relinquish the right to
redeem the Rights under this Section 23 by duly adopting a
resolution to that effect. Immediately upon adoption of such
resolution, the rights of the Board of Directors of the Company
to redeem the Rights will terminate without further action and
without any notice. Promptly after adoption of such a
resolution, the Company will publicly announce such action;
provided, however, that the failure to give, or any defect in,
any such notice will not affect the validity of the action of the
Board of Directors of the Company.
24. Exchange. (a) The Board of Directors of the Company
may, at its option, at any time after the later of the Share
Acquisition Date and the Distribution Date, exchange all or part
of the then-outstanding and exercisable Rights (which will not
include Rights that have become void pursuant to the provisions
of Section 11(a)(ii)) for Common Shares at an exchange ratio of
one Common Share per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring
after the Record Date (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Any such exchange will be
effective immediately upon the action of the Board of Directors
of the Company ordering the same, unless such action of the Board
of Directors of the Company expressly provides that such exchange
will be effective at a subsequent time or upon the occurrence or
nonoccurrence of one or more specified events (in which case such
exchange will be effective in accordance with the provisions of
such action of the Board of Directors of the Company).
Notwithstanding the foregoing, (i) the Board of Directors of the
Company will not be empowered to effect such exchange at any time
after any Person (other than the Company or any Related Person),
who or which, together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the
then-outstanding Common Shares and (ii) no such exchange shall be
effected in the circumstances set forth in clauses (A) or (B) of
the proviso to Section 23 unless there are Continuing Directors
then in office and such exchange is approved by a majority of
such Continuing Directors.
(b) Immediately upon the effectiveness of the exchange of
any Rights as provided in Section 24(a), and without any further
action and without any notice, the right to exercise such Rights
will terminate and the only right with respect to such Rights
thereafter of the holder of such Rights will be to receive that
number of Common Shares equal to the number of such Rights held
by such holder multiplied by the Exchange Ratio. Promptly after
the effectiveness of the exchange of any Rights as provided in
Section 24(a), the Company will publicly announce such exchange
and, within 10 calendar days thereafter, will give notice of such
exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights
Agent; provided, however, that the failure to give, or any defect
in, such notice will not affect the validity of such exchange.
Any notice that is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected and, in
the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange will be effected pro
rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11(a)(ii)) held
by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute for any Common Share
exchangeable for a Right (i) equivalent common shares (as such
term is used in Section 11(a)(iii)), (ii) cash, (iii) debt
securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate
value, as determined in good faith by the Board of Directors of
the Company (whose determination will be described in a statement
filed with the Rights Agent), equal to the current market value
of one Common Share (determined pursuant to Section 11(d)) on the
Trading Day immediately preceding the date of the effectiveness
of the exchange pursuant to this Section 24.
25. Notice of Certain Events. (a) If, after the
Distribution Date, the Company proposes (i) to pay any dividend
payable in stock of any class to the holders of Preferred Shares
or to make any other distribution to the holders of Preferred
Shares (other than a regular periodic cash dividend), (ii) to
offer to the holders of Preferred Shares rights, options or
warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities,
rights, or options, (iii) to effect any subdivision, combination
or reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding
Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of assets or
earning power (including without limitation securities creating
any obligation on the part of the Company and/or any of its
Subsidiaries) representing more than 50% of the assets and
earning power of the Company and its Subsidiaries, taken as a
whole, to any other Person or Persons other than the Company or
one or more of its wholly owned Subsidiaries, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in
Common Shares or to effect a subdivision, combination or
reclassification of the Common Shares, then, in each such case,
the Company will give to each holder of a Right Certificate, to
the extent feasible and in accordance with Section 26, a notice
of such proposed action, which specifies the record date for the
purposes of such stock dividend, distribution or offering of
rights, options or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of the Common Shares
and/or Preferred Shares, if any such date is to be fixed, and
such notice will be so given, in the case of any action covered
by clause (i) or (ii) above, at least 10 calendar days prior to
the record date for determining holders of the Preferred Shares
for purposes of such action, and, in the case of any such other
action, at least 10 calendar days prior to the date of the taking
of such proposed action or the date of participation therein by
the holders of the Common Shares and/or Preferred Shares,
whichever is the earlier.
(b) In case any Triggering Event occurs, then, in any such
case, the Company will as soon as practicable thereafter give to
the Rights Agent and each holder of a Right Certificate, in
accordance with Section 26, a notice of the occurrence of such
event, which specifies the event and the consequences of the
event to holders of Rights.
26. Notices. (a) Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company will 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:
CTS Corporation
905 West Boulevard North
Elkhart, Indiana 46514
Attention: Joseph P. Walker
(b) Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Agreement to be given or made
by the Company or by the holder of any Right Certificate to or on
the Rights Agent will 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:
State Street Bank and Trust Company
c/o Boston EquiServe Limited Partnership
150 Royall Street
Canton, Massachusetts 02021
Attention: Client Administration
(c) Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holder of
any Right Certificate (or, if prior the Distribution Date, to the
holder of any certificate evidencing Common Shares) will 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.
27. Supplements and Amendments. Prior to the time at which
the Rights cease to be redeemable pursuant to Section 23, and
subject to the last sentence of this Section 27, the Company may
in its sole and absolute discretion, and the Rights Agent will if
the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of
Rights or Common Shares. From and after the time at which the
Rights cease to be redeemable pursuant to Section 23, and subject
to the last sentence of this Section 27, the Company may, and the
Rights Agent will if the Company so directs, supplement or amend
this Agreement without the approval of any holders of Rights or
Common Shares 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 provision herein, (iii)
to shorten or lengthen any time period hereunder, or (iv) to
supplement or amend the provisions hereunder in any manner which
the Company may deem desirable; provided that no such supplement
or amendment shall adversely affect the interests of the holders
of Rights as such (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person), and no such supplement or
amendment shall cause the Rights again to become redeemable or
cause this Agreement again to become supplementable or amendable
otherwise than in accordance with the provisions of this
sentence. Without limiting the generality or effect of the
foregoing, this Agreement may be supplemented or amended to
provide for such voting powers for the Rights and such procedures
for the exercise thereof, if any, as the Board of Directors of
the Company may determine to be appropriate and permissible under
applicable law. Upon the delivery of a certificate from an
officer of the Company which states that the proposed supplement
or amendment is in compliance with the terms of this Section 27,
the Rights Agent will execute such supplement or amendment;
provided, however, that the failure or refusal of the Rights
Agent to execute such supplement or amendment will not affect the
validity of any supplement or amendment adopted by the Board of
Directors of the Company, any of which will be effective in
accordance with the terms thereof. Notwithstanding anything in
this Agreement to the contrary, no supplement or amendment may be
made (a) which decreases the stated Redemption Price to an amount
less than $0.01 per Right or (b) simultaneously with or for a
period of one year following the occurrence of either of the
events set forth in clause (A) or (B) of the proviso to Section
23 unless there are Continuing Directors then in office at the
time of the authorization of such supplement or amendment and the
authorization of such supplement or amendment, as the case may
be, is concurred in by a majority of such Continuing Directors.
28. Successors; Certain Covenants. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent will be binding on and inure to the benefit
of their respective successors and assigns hereunder.
29. Benefits of This Agreement. Nothing in this Agreement
will be construed to give to any Person other than the Company,
the Rights Agent, and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common
Shares) any legal or equitable right, remedy or claim under this
Agreement. This Agreement will be for the sole and exclusive
benefit of the Company, the Rights Agent, and the registered
holders of the Right Certificates (or prior to the Distribution
Date, the Common Shares).
30. Governing Law. This Agreement, each Right and each
Right Certificate issued hereunder will be deemed to be a
contract made under the internal substantive laws of the State of
Indiana and for all purposes will be governed by and construed in
accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within
such State.
31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement will remain in full force and
effect and will in no way be affected, impaired or invalidated;
provided, however, that nothing contained in this Section 31 will
affect the ability of the Company under the provisions of
Section 27 to supplement or amend this Agreement to replace such
invalid, void or unenforceable term, provision, covenant or
restriction with a legal, valid and enforceable term, provision,
covenant or restriction.
32. Descriptive Headings, Etc. Descriptive headings of the
several Sections of this Agreement are inserted for convenience
only and will not control or affect the meaning or construction
of any of the provisions hereof. Unless otherwise expressly
provided, references herein to paragraphs, Sections and Exhibits
are to paragraphs and Sections of, and Exhibits to, this
Agreement.
33. Determinations and Actions by the Board. For all
purposes of this Agreement, any calculation of the number of
Common Shares outstanding at any particular time, including for
purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial
Owner, will 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. Except as otherwise set forth herein, the Board of
Directors of the Company will 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 (including
any determination as to whether particular Rights shall have
become void). All such actions, calculations, interpretations
and determinations (including, for purposes of clause (y) below,
any omission with respect to any of the foregoing) which are done
or made by the Board of Directors of the Company in good faith
will (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties and
(y) not subject the Board of Directors of the Company to any
liability to any Person, including, without limitation, the
Rights Agent and the holders of the Rights.
34. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts will for all
purposes be deemed to be an original, and all such counterparts
will together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
[SEAL]
Attest: CTS CORPORATION
By:
Jeannine M. Davis Joseph P. Walker
Secretary Chairman of the Board,
President and Chief
Executive Officer
[SEAL]
Attest: STATE STREET BANK AND TRUST
COMPANY
By:
Name: Name:
Title: Title:
EXHIBIT A
FORM OF
CERTIFICATE OF ADOPTION
OF AMENDMENT
TO AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
CTS CORPORATION
We, Joseph P. Walker, Chairman, President and Chief Executive
Officer, and Jeannine M. Davis, Secretary, of CTS Corporation, an
Indiana corporation (the "Company"), do hereby certify that pursuant
to the authority conferred upon the Directors of the Company (the
"Directors") by the Amended and Restated Articles of Incorporation of
the Company, the Directors at a meeting duly called and held on
August 28, 1998 at which a quorum was present and acting throughout,
adopted the following resolution to amend the Amended and Restated
Articles of Incorporation of the Company pursuant to Section 23-1-25-2
of the Indiana Business Corporation Law to create a series of Serial
Preferred Stock designated as Series A Junior Participating Preferred
Stock:
RESOLVED, that Article VI of the Amended Articles of
Incorporation of this Company be, and it hereby is, amended by adding
after paragraph (a) of Article VI of the Amended Articles of
Incorporation a new paragraph as set forth below:
(a-1) SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
Section 1. There is established hereby a series of Serial
Preferred Stock that shall be designated Series A Junior
Participating Preferred Stock (hereinafter sometimes called this
"Series" or the "Series A Junior Participating Preferred Shares") and
that shall have the terms set forth in this paragraph (a-1).
Section 2. The number of shares of this Series shall be
750,000.
Section 3. (a) The holders of record of Series A Junior
Participating Preferred Shares shall be entitled to receive, when and
as declared by the Directors in accordance with the terms hereof, out
of funds legally available for the purpose, cumulative quarterly
dividends payable in cash on the first day of January, April, July
and October in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a Series
A Junior Participating Preferred Share or fraction of a Series A
Junior Participating Preferred Share in an amount per share (rounded
to the nearest cent) equal to the greater of (i) $1.00 per share or
(ii) subject to the provision for adjustment hereinafter set forth,
100 times the aggregate per share amount of all cash dividends, and
100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions (other than a dividend
payable in shares or Common Stock, or a subdivision of the
outstanding Common Stock (by reclassification or otherwise)),
declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any
Series A Junior Participating Preferred Share or fraction of a Series
A Junior Participating Preferred Share. In the event the Company
shall at any time declare or pay any dividend on the Common Stock
payable in Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common
Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of Series A Junior
Participating Preferred Shares were entitled immediately prior to
such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such
event.
(b) Dividends shall begin to accrue and be cumulative on
outstanding Series A Junior Participating Preferred Shares from the
Quarterly Dividend Payment Date next preceding the date of issue of
such Series A Junior Participating Preferred Shares, unless the date
of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares,
or unless the date of issues is a Quarterly Dividend Payment Date or
is a date after the record date for the determination of holders of
shares of Series A Junior Participating Preferred Shares entitled to
receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. No dividends
shall be paid upon or declared and set apart for any Series A Junior
Participating Preferred Shares for any dividend period unless at the
same time a dividend for the same dividend period, ratably in
proportion to the respective annual dividend rates fixed therefor,
shall be paid upon or declared and set apart for all Serial Preferred
Stock of all series then outstanding and entitled to receive such
dividend. The Directors may fix a record date for the determination
of holders of Series A Junior Participating Preferred Shares entitled
to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 40 days prior to the date
fixed for the payment thereof.
Section 4. The Series A Junior Participating Preferred
Shares are not redeemable.
Section 5. (a) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of
the Company (hereinafter referred to as a "Liquidation"), no
distribution shall be made to the holders of shares of stock ranking
junior (either as to dividends or upon Liquidation) to the Series A
Junior Participating Preferred Shares, unless, prior thereto, the
holders of Series A Junior Participating Preferred Shares shall have
received at least an amount per share equal to one hundred times the
then applicable Purchase Price as defined in the Rights Agreement, as
the same may be from time to time amended in accordance with its
terms (which Purchase Price is $125.00 as of August 28, 1998),
subject to adjustment from time to time as provided in the Rights
Agreement, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not earned or declared, to the date
of such payment, provided that the holders of shares of Series A
Junior Participating Preferred Shares shall be entitled to receive at
least an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed per share to holders of Common Stock (the
"Series A Junior Participating Preferred Shares Liquidation
Preference").
(b) In the event, however, that the net assets of the
Company are not sufficient to pay in full the amount of the Series A
Junior Participating Preferred Shares Liquidation Preference and the
liquidation preferences of all other series of Serial Preferred
Stock, if any, which rank on a parity with the Series A Junior
Participating Preferred Shares as to distribution of assets in
Liquidation, all shares of this Series and of such other series of
Serial Preferred Stock shall share ratably in the distribution of
assets (or proceeds thereof) in Liquidation in proportion to the full
amounts to which they are respectively entitled.
(c) In the event the Company shall at any time declare or
pay any dividend on the Common Stock payable in consolidation of the
outstanding Common Stock (by reclassification or otherwise than by
payment of a dividend in Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount
to which holders of Series A Junior Participating Preferred Shares
were entitled immediately prior to such event pursuant to the proviso
set forth in paragraph (a) above, shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(d) The merger or consolidation of the Company into or
with any other corporation, or the merger of any other corporation
into it, or the sale, lease or conveyance of all or substantially all
the property or business of the Company, shall not be deemed to be a
Liquidation for the purpose of this Section 5.
Section 6. The Series A Junior Participating Preferred
Shares shall not be convertible into Common Stock.
IN WITNESS WHEREOF, Joseph P. Walker, Chairman, President
and Chief Executive Officer and Jeannine M. Davis, Secretary, of CTS
Corporation, acting for and on behalf of the Company, have hereunto
subscribed their names this 28th day of August, 1998.
Joseph P. Walker
Chairman, President and
Chief Executive Officer
Jeannine M. Davis
Secretary
EXHIBIT B
FORM OF RIGHT CERTIFICATE
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER AUGUST 27, 2008 (SUBJECT TO POSSIBLE
EXTENSION AT THE OPTION OF THE COMPANY) OR EARLIER IF
REDEEMED, EXCHANGED OR AMENDED. THE RIGHTS ARE SUBJECT TO
REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS
AGREEMENT, RIGHTS THAT ARE OR WERE BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) OR A TRANSFEREE THEREOF MAY BECOME NULL AND
VOID.
Right Certificate
CTS CORPORATION
This certifies that _______________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions,
and conditions of the Rights Agreement, dated as of August 28, 1998
(the "Rights Agreement"), between CTS Corporation, an Indiana
corporation (the "Company"), and State Street Bank and Trust Company
(the "Rights Agent"), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Eastern time) on the Expiration
Date (as such term is defined in the Rights Agreement) at the
principal office or offices of the Rights Agent designated for such
purpose, one one-hundredth of a fully paid nonassessable share of
Series A Junior Participating Preferred Stock, without par value, of
the Company (the "Preferred Shares"), at a purchase price (the
"Purchase Price") of $125.00 per one one-hundredth of a Preferred
Share, upon presentation and surrender of this Right Certificate with
the Form of Election to Purchase and related Certificate duly
executed. If this Right Certificate is exercised in part, the holder
will be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not
exercised. The number of Rights evidenced by this Right Certificate
(and the number of one one-hundredths of a Preferred Share which may
be purchased upon exercise thereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of the
date of the Rights Agreement, based on the Preferred Shares as
constituted at such date.
As provided in the Rights Agreement, the Purchase Price and/or
the number and/or kind of securities issuable upon the exercise of
the Rights evidenced by this Right Certificate are subject to
adjustment upon the occurrence of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference
and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities of the Rights Agent, the
Company and the holders of the Right Certificates, which limitations
of rights include the temporary suspension of the exercisability of
the Rights under the circumstances specified in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned
office of the Rights Agent and can be obtained from the Company
without charge upon written request therefor. Terms used herein with
initial capital letters and not defined herein are used herein with
the meanings ascribed thereto in the Rights Agreement.
Pursuant to the Rights Agreement, from and after the occurrence
of a Flip-in Event, any Rights that are Beneficially Owned by (i) any
Acquiring Person (or any Affiliate or Associate of any Acquiring
Person), (ii) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the occurrence
of a Flip-in Event, or (iii) a transferee of any Acquiring Person (or
any such Affiliate or Associate) who became a transferee prior to or
concurrently with the occurrence of a Flip-in Event pursuant to
either (a) a transfer from an Acquiring Person to holders of its
equity securities or to any Person with whom it has any continuing
agreement, arrangement or understanding regarding the transferred
Rights or (b) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding which
has the purpose or effect of avoiding certain provisions of the
Rights Agreement, and subsequent transferees of any of such Persons,
will be void without any further action and any holder of such Rights
will thereafter have no rights whatsoever with respect to such Rights
under any provision of the Rights Agreement. From and after the
occurrence of a Flip-in Event, no Right Certificate will be issued
that represents Rights that are or have become void pursuant to the
provisions of the Rights Agreement, and any Right Certificate
delivered to the Rights Agent that represents Rights that are or have
become void pursuant to the provisions of the Rights Agreement will
be canceled.
This Right Certificate, with or without other Right
Certificates, may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates entitling the holder
to purchase a like number of one one-hundredths of a Preferred Share
(or other securities, as the case may be) as the Right Certificate or
Right Certificates surrendered entitled such holder (or former holder
in the case of a transfer) to purchase, upon presentation and
surrender of this Right Certificate at the principal office of the
Rights Agent designated for such purpose, with the Form of Assignment
(if appropriate) and the related Certificate duly executed.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its
option at a redemption price of $.01 per Right or may be exchanged in
whole or in part. The Rights Agreement may be supplemented and
amended by the Company, as provided therein.
The Company is not required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one
one-hundredth of a Preferred Share, which may, at the option of the
Company, be evidenced by depositary receipts) or other securities
issuable upon the exercise of any Right or Rights evidenced hereby.
In lieu of issuing such fractional Preferred Shares or other
securities, the Company may make a cash payment, as provided in the
Rights Agreement.
No holder of this Right Certificate, as such, will be entitled
to vote or receive dividends or be deemed for any purpose the holder
of the Preferred Shares or of any other securities of the Company
which may at any time be issuable upon the exercise of the Right or
Rights represented hereby, nor will anything contained herein or in
the Rights Agreement be construed to confer upon the holder hereof,
as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided
in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate have been exercised in accordance with the
provisions of the Rights Agreement.
This Right Certificate will not be valid or obligatory for any
purpose until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of __________, ____.
[SEAL]
ATTEST: CTS CORPORATION
By:
Secretary Name:
Title:
Countersigned:
STATE STREET BANK & TRUST COMPANY
By:
Authorized Signature
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED, _______________ hereby sells, assigns and
transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_______________ Attorney, to transfer the within Right Certificate on
the books of the within-named Company, with full power of
substitution.
Dated: __________, ____
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are
[ ] are not being sold, assigned, transferred, split up, combined or
exchanged by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms
are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: __________, ____
Signature
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To CTS Corporation:
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Right Certificate to purchase the one
one-hundredths of a Preferred Share or other securities issuable upon the
exercise of such Rights and requests that certificates for such
securities be issued in the name of and delivered to:
Please insert social security
or other identifying number:
(Please print name and address)
If such number of Rights is not all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining
of such Rights will be registered in the name of and delivered to:
Please insert social security
or other identifying number:
(Please print name and address)
Dated: __________, ____
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are
[ ] are not being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such
Person (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by
this Right Certificate from any Person who is, was, or became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: __________, ____
Signature
NOTICE
Signatures on the foregoing Form of Assignment and Form of
Election to Purchase and in the related Certificates must correspond
to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change
whatsoever.
Signatures must be guaranteed by an eligible guarantor
institution (banks, stockbrokers, savings and loan associations and
credit unions with membership in an approved medallion signature
program) pursuant to Rule 17Ad-15 under the Securities Exchange Act
of 1934, as amended.
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES
The Board of Directors (the "Board") of CTS Corporation (the
"Company") has declared a dividend distribution of one right (a
"Right") for each outstanding common share, without par value, of the
Company (all such common shares of the Company, collectively the
"Common Shares"). The distribution is payable on September 10, 1998
(the "Record Date") to the shareholders of record as of the close of
business on the Record Date. Each Right entitles the registered
holder thereof to purchase from the Company one one-hundredth of a
share of Series A Junior Participating Preferred Stock ("Preferred
Shares"), without par value, of the Company at a price (the "Purchase
Price") of $125.00 per one one-hundredth of a Preferred Share,
subject to adjustment from time to time. The description and terms
of the Rights are set forth in a Rights Agreement, dated as of
August 28, 1998 (the "Rights Agreement"), between the Company and
State Street Bank and Trust Company, as Rights Agent (the "Rights
Agent").
Under the Rights Agreement, the Rights will be evidenced by the
certificates evidencing Common Shares until the earlier to occur of
(the "Distribution Date"): (i) the close of business on the tenth
calendar day following the first date (the "Share Acquisition Date")
of public announcement that a person or group of persons (other than
the Company, a subsidiary of the Company, any employee benefit or
stock ownership plan of the Company or any subsidiary of the Company
or any entity holding Common Shares for or pursuant to the terms of
any such plan) has attained the status of an Acquiring Person (as
described below) or (ii) the close of business on the tenth business
day (or such later date as may be specified by the Board) following
the commencement of a tender offer or exchange offer by a person or
group of persons (other than the Company, a subsidiary of the
Company, any employee benefit or stock ownership plan of the Company
or any subsidiary of the Company or any entity holding Common Shares
for or pursuant to the terms of any such plan), the consummation of
which would result in beneficial ownership by such person or group of
15% or more of the then-outstanding Common Shares.
The term "Acquiring Person" is defined in the Rights Agreement
to mean any person (other than the Company, any subsidiary of the
Company, any employee benefit or stock ownership plan of the Company
or any subsidiary or any entity holding Common Shares for or pursuant
to the terms of any such plan) who, together with all such person's
affiliates and associates, is the beneficial owner of 15% or more of
the then-outstanding Common Shares.
The Rights Agreement provides that, until the Distribution Date,
the Rights may be transferred with and only with the Common Shares.
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), any certificate evidencing Common Shares
of the Company issued upon transfer or new issuance of the Common
Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer of
any certificates evidencing Common Shares will also constitute the
transfer of the Rights associated with such certificates. As soon as
practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to
holders of record of Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will
evidence the Rights. No Right is exercisable at any time prior to
the Distribution Date. The Rights will expire on August 27, 2008
(the "Final Expiration Date") unless earlier redeemed, exchanged or
amended by the Company as described below. Until a Right is
exercised, the holder thereof, as such, will have no rights as a
shareholder of the Company. Accordingly, the holder of a Right will
not have the right to vote or to receive dividends until the Right is
exercised for the Preferred Shares.
The Purchase Price payable, and the number of the Preferred
Shares or other securities issuable, upon exercise of the Rights will
be subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to
holders of Preferred Shares of certain rights, options or warrants to
subscribe for or purchase the Preferred Shares at a price, or
securities convertible into the Preferred Shares with a conversion
price, less than the then-current market price of the Preferred
Shares, or (iii) upon the distribution to holders of the Preferred
Shares of evidences of indebtedness, cash (excluding regular periodic
cash dividends), assets, stock (excluding dividends payable in the
Preferred Shares) or subscription rights, options or warrants (other
than those referred to above). The number of outstanding Rights and
the number of one one-hundredths of the Preferred Shares issuable
upon exercise of each Right will be subject to adjustment in the
event of a stock dividend on the Common Shares payable in Common
Shares or a subdivision, combination or reclassification of Common
Shares occurring, in any such case, prior to the Distribution Date.
The Preferred Shares issuable upon exercise of the Rights will
not be redeemable. Each Preferred Share will be entitled, in
connection with the declaration of a dividend on the Common Shares,
to a preferential dividend payment equal to the greater of (i) $1.00
per share and (ii) an amount equal to 100 times the related dividend
declared per Common Share. Subject to customary anti-dilution
provisions, in the event of liquidation, the holders of Preferred
Shares will be entitled to a preferential liquidation payment equal
to the greater of (a) $100 per share and (b) an amount equal to 100
times the liquidation payment made per Common Share. Because of the
nature of the Preferred Shares' dividend, voting and liquidation
rights, the value of the one one-hundredth interest in a Preferred
Share purchasable upon exercise of a Right should approximate the
value of one Common Share.
Rights will be exercisable to purchase Preferred Shares only
after the Distribution Date occurs and prior to the occurrence of a
Flip-in Event as described below. A Distribution Date resulting from
the commencement of a tender offer or exchange offer described in
clause (ii) of the second paragraph of this summary could precede the
occurrence of a Flip-in Event and thus result in the Rights being
exercisable to purchase Preferred Shares. A Distribution Date
resulting from any occurrence described in clause (i) of the second
paragraph of this summary would necessarily follow the occurrence of
a Flip-in Event and thus result in the Rights being exercisable to
purchase Common Shares or other securities as described below.
Under the Rights Agreement, in the event ( a "Flip-in Event")
that (i) any person or group becomes an Acquiring Person, (ii) any
Acquiring Person or any affiliate or associate thereof, directly or
indirectly, merges into or combines with the Company and the Company
is the continuing or surviving corporation or merges or combines with
any subsidiary of the Company, (iii) any Acquiring Person or any
affiliate or associate thereof effects certain other transactions
with the Company, or (iv) during such time as there is an Acquiring
Person the Company effects certain transactions, in each case as
described in the Rights Agreement, then, in each such case, proper
provision will be made so that each holder of a Right, other than
Rights that are or were owned beneficially by an Acquiring Person or
any affiliate or associate of the Acquiring Person (which, from and
after the date of a Flip-in Event, will be void), will have the right
to receive, upon exercise thereof at the then-current exercise price
of the Right, that number of Common Shares (or, under certain
circumstances, an economically equivalent security or securities of
the Company) that at the time of such Flip-in Event have a market
value of two times the Purchase Price.
In the event (a "Flip-over Event") that, at any time after any
person or group becomes an Acquiring Person, (i) the Company
consolidates with or merges with or into any person and the Company
is not the continuing or surviving corporation, (ii) any person
consolidates with or merges with or into the Company and the Company
is the continuing or surviving corporation, but all or part of the
Common Shares are changed or exchanged for stock or other securities
of any other person or cash or any other property, or (iii) 50% or
more of the assets or earning power of the Company and its
subsidiaries (taken as a whole), including securities creating
obligations of the Company, are sold or otherwise transferred, to any
person (other than the Company or one or more of its wholly owned
subsidiaries), in each case as described in the Rights Agreement,
then, in each such case, proper provision will be made so that each
holder of a Right, other than Rights which have become void, will
have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of
common stock (or, under certain circumstances, an economically
equivalent security or securities) of such other person that at the
time of such Flip-over Event have a market value of two times the
Purchase Price.
In addition, at any time after the later of the Share
Acquisition Date and the Distribution Date and prior to the
acquisition by any person or group of affiliated or associated
persons of 50% or more of the outstanding Common Shares, the Company
may exchange all or a portion of the Rights (other than any Rights
that have become void) at an exchange ratio of one Common Share per
Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment
in the Purchase Price of at least 1%. The Company will not be
required to issue fractional Preferred Shares (other than fractions
that are integral multiples of one one-hundredth of a Preferred
Share, which may, at the option of the Company, be evidenced by
depositary receipts) or fractional Common Shares or other securities
issuable upon the exercise of Rights. In lieu of issuing such
securities, the Company may make a cash payment, as provided in the
Rights Agreement.
The Company may, at its option, redeem all (but not less than
all) of the Rights at a price of $.01 per Right, subject to
adjustment (the "Redemption Price"), at any time prior to the close
of business on the Share Acquisition Date. Immediately upon the
effective date of any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price. Notwithstanding the
foregoing, a majority of the continuing directors on the Board
(defined to include incumbent Directors of the Company and their
successors who are nominated for election by a majority of the
incumbent Directors, but specifically excluding representatives of
Acquiring Persons) must concur with the redemption of any of the
Rights on or for a period of one year following the date (i) a person
becomes an Acquiring Person or (ii) a majority of the Board is
replaced due to the actions of any person or persons who may become
an Acquiring Person or who may cause a Flip-in Event or Flip-over
Event.
The Rights Agreement may be amended by the Company without the
approval of any holders of Rights Certificates, including amendments
that increase or decrease the Purchase Price, that add other events
requiring adjustment to the Purchase Price payable and the number of
the Preferred Shares or other securities issuable upon the exercise
of the Rights or that modify procedures relating to the redemption of
the Rights, except that no amendment may be made that decreases the
stated Redemption Price to an amount less than $.01 per Right.
Notwithstanding the foregoing, a majority of the continuing directors
on the Board must concur with any amendment of the Rights Agreement
on or for a period of one year following the date (i) a person
becomes an Acquiring Person or (ii) a majority of the Board is
replaced due to the actions of any person or persons who may become
an Acquiring Person or who may cause a Flip-in Event or Flip-over
Event.
The Board will have the exclusive power and authority to
administer the Rights Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company therein, or as
may be necessary or advisable in the administration of the Rights
Agreement, including without limitation the right and power to
interpret the provisions of the Rights Agreement and to make all
determinations deemed necessary or advisable for the administration
of the Rights Agreement (including any determination to redeem or not
redeem the Rights or to amend or not amend the Rights Agreement).
All such actions, calculations, interpretations and determinations
(including any omission with respect to any of the foregoing) that
are done or made by the Board in good faith will be final, conclusive
and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties and will not subject the Board to any
liability to any person, including without limitation the Rights
Agent and the holders of the Rights.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an exhibit to a Registration
Statement on Form 8-A. A copy of the Rights Agreement is available
free of charge from the Company.
This summary description of the Rights is as of the Record Date,
does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by
this reference.
September 10, 1998
To Our Shareholders:
We are pleased to inform you that CTS Corporation has adopted a
share purchase rights plan.
The plan is intended to protect the Company and its shareholders
from potentially coercive takeover practices or takeover bids which are
inconsistent with the interests of the Company and its shareholders.
The plan is not intended to deter unsolicited offers that would provide
superior long-term value to all of the Company's shareholders. The
adoption of a share purchase rights plan has become common practice in
major American companies and a well accepted approach to ensuring that
all shareholders receive a fair price and are treated equally in the
event of a takeover.
This action was taken after careful study and not in response to
any pending unsolicited attempt to take control of the Company. Of
course, the Company from time to time explores possibilities for
strategic alliances, business combinations or other substantive
transactions as part of its ongoing assessment of its business and
strategies.
In adopting the plan, the Board of Directors expressed their
intent to review the plan prior to the fifth anniversary of its
adoption to determine whether continuing the plan is appropriate given
the Company's situation at that time.
To effect the plan, the Board of Directors declared a dividend of
one share purchase right for each outstanding share of the Company's
common stock. The distribution is being made to shareholders of record
as of the close of business on September 10, 1998.
Under the plan, the rights will initially trade together with the
Company's common stock and will not be exercisable. In the absence of
further board action, the rights generally will become exercisable and
allow the holder to acquire the Company's common stock at a discounted
price if any person or group acquires 15 percent or more of the
Company's common stock. Rights held by persons who exceed the
applicable threshold will be void. Under certain circumstances, the
rights will entitle the holder to buy shares in an acquiring entity at
a discounted price.
The plan also includes an exchange option. In general, after the
rights become exercisable, the Board of Directors may, at its option,
effect an exchange of part or all of the rights (other than rights that
have become void) for shares of the Company's common stock. A majority
of independent Board members (or their approved successors), however,
must concur with the exchange on and for a period of one year following
the date a person or group acquires 15 percent or more of the Company's
common stock or the date a majority of the Board is replaced due to the
actions of any person or group who may become a 15 percent shareholder.
Under this exchange option, the Company would issue one share of common
stock for each right, subject to adjustment in certain circumstances.
The Company's Board of Directors may, at its option, redeem all
rights for $.01 per right, generally at any time prior to the rights
becoming exercisable. A majority of continuing Board members (defined
to include incumbent Board members or their approved successors),
however, must concur with the redemption of any of the rights on and
for a period of one year following the date the person or group
acquires 15 percent or more of the Company's common stock or the date
a majority of the Board is replaced due to the actions of any person or
group who may become a 15 percent shareholder. The rights will expire
on August 27, 2008, unless earlier redeemed, exchanged or amended by
the Board of Directors.
The issuance of the rights is not a taxable event, will not affect
the Company's reported financial condition or results of operations
(including earnings per share), should not interfere with the Company's
operating, financing or investing activities and will not change the
way in which the Company's common stock is currently traded.
A summary of the share purchase rights plan (which explains the
terms and nature of the rights) is enclosed. Shareholders are urged to
review the summary carefully and retain it with their permanent
records.
In adopting the share purchase rights plan, the Board has
expressed its confidence in the Company's future and its determination
that you, our shareholders, be given every opportunity to participate
fully in that future.
On Behalf of the Board of Directors,
Joseph P. Walker
Chairman, President and
Chief Executive Officer
August 28, 1998
FOR RELEASE: Immediately
CTS CORPORATION ANNOUNCES
SHARE PURCHASE RIGHTS PLAN
Elkhart, Indiana... CTS Corporation (NYSE: CTS) announced today board
action adopting a share purchase rights plan that provides for rights
to be issued to shareholders of record on September 10, 1998. The
share purchase rights plan will be effective as of August 28, 1998.
According to Joseph P. Walker, CTS' Chairman, President and Chief
Executive Officer, "The rights plan adopted today is similar to the
shareholder rights plans, adopted by literally hundreds of other
companies in an effort to deter coercive takeover practices or takeover
bids that are inconsistent with the interests of the company and its
other constituents. The rights plan is intended to assure that CTS
shareholders receive fair and equal treatment if efforts are made to
gain control of the Company without paying all shareholders a premium
value."
Under the plan, the rights will initially trade together with CTS
common stock and will not be exercisable. In the absence of further
board action, the rights generally will become exercisable and allow
the holder to acquire CTS common stock at a discounted price if a
person or group acquires 15 percent or more of the outstanding shares
of CTS common stock. Rights held by persons who exceed the applicable
threshold will be void. Under certain circumstances, the rights will
entitle the holder to buy shares in an acquiring entity at a discounted
price.
The plan also includes an exchange option. In general, after the
rights become exercisable, the Board of Directors may, at its option,
effect an exchange of part or all of the rights -- other than rights
that have become void -- for shares of CTS common stock. A majority of
continuing Board members (or their approved successors) who are not
affiliated with a 15% shareholder must concur with the exchange for a
period of one year following the date a person or group acquires 15
percent or more of the outstanding shares of CTS common stock or the
date a majority of the Board is replaced due to the actions of any
person or group who may become a 15 percent shareholder. Under this
exchange option, CTS would issue one share of common stock for each
right.
CTS' Board of Directors may, at its option, redeem all rights for $.01
per right, generally at any time prior to the rights becoming
exercisable. A majority of the continuing unaffiliated directors is
also required for any such redemption if the redemption is within one
year following the date the person or group acquires 15 percent or more
of the outstanding shares of CTS common stock or the date a majority of
the Board is replaced due to the actions of any person or group who may
become a 15 percent shareholder. The rights will expire on August 27,
2008, unless earlier redeemed, exchanged or amended by the Board of
Directors.
The issuance of the rights is not a taxable event, will not affect CTS'
reported financial condition or results of operations (including
earnings per share) and will not change the way in which CTS common
stock is currently traded.
# # #
CTS Corporation, listed on the New York Stock Exchange, (Ticker: CTS),
is primarily a diversified manufacturer of electronic components
principally for the automotive, computer equipment and communications
equipment markets. The Company, headquartered in Elkhart, Indiana,
operates manufacturing plants in the United States and abroad.
Released by: CTS Corporation
905 West Boulevard North
Elkhart, IN 46514
Telephone: (219) 293-7511
FAX: (219) 293-6146
Contact: Gary N. Hoipkemier, Treasurer
