FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
FRANKLIN ELECTRIC CO., INC.
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(Exact name of registrant as specified in its charter)
Indiana 35-0827455
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(State of incorporation or organization) (I.R.S. Employer
Identification No.)
400 East Spring Street, Bluffton, Indiana 46714
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None Not Applicable
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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), 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), check the following box. [ X ]
Securities Act registration statement file number to which this
form relates: ___ (if applicable)
Securities to be registered pursuant to Section 12(g) of the Act:
Preference Stock Purchase Rights
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(Title of class)
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(Title of class)
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
On October 15, 1999, the Board of Directors (the "Board") of
Franklin Electric Co., Inc. (the "Corporation") declared a dividend
distribution of one right (each a "New Right") for each outstanding
share of the common stock, par value $0.10 per share, of the
Corporation ("Common Stock") to stockholders of record at the close of
business on the earlier of February 28, 2001, the date on which the
Rights Agreement, dated as of February 11, 1991, between the
Corporation and Lincoln National Bank & Trust Co. of Fort Wayne, a
national banking association, as rights agent (the "1991 Rights
Agreement"), expires, or the date on which the rights issued under the
1991 Rights Agreement (the "1991 Rights") are exchanged or redeemed
or are otherwise no longer outstanding in accordance with the provisions
of the 1991 Rights Agreement (such date being referred to as the "Record
Date"). Each New Right will entitle the registered holder to purchase
from the Corporation one one-hundredth of a share of Series I Junior
Participating Preference Stock, no par value (the "Preference Stock"),
of the Corporation at an exercise price of $300.00, subject to adjustment
(as adjusted from time to time, the "Purchase Price"). The description
and terms of the New Rights are set forth in a Rights Agreement, dated
as of October 15, 1999 (the "New Rights Agreement"), between the
Corporation and Illinois Stock Transfer Company, as Rights Agent.
The New Rights Agreement was adopted by the Board to replace the
1991 Rights Agreement upon the expiration or redemption of the 1991
Rights, which will occur no later than February 28, 2001. In no event
will both the 1991 Rights and the New Rights be exercisable.
Initially following the Record Date, the New Rights will be
attached to all certificates representing shares of Common Stock then
outstanding, and no separate Rights Certificates will be distributed.
Unless previously redeemed by the Board in accordance with the New
Rights Agreement, the New Rights will separate from the Common Stock
and a "Distribution Date" will occur upon the earlier of (i) 20 days
following the Stock Acquisition Date (as defined below) or (ii) 20
days (or such later date as the Board shall determine, provided that
under certain circumstances any decision to defer such date will
require the concurrence of a majority of the Continuing Directors (as
defined below)) after the date a tender or exchange offer that would
result in a person or group beneficially owning 15 % or more of the
outstanding shares of Common Stock is first published, sent or given
to the Corporation's stockholders.
The "Stock Acquisition Date" is defined as the earlier of (x) the
first date of public announcement by the Corporation that any person
or group (other than certain exempt persons or groups) has acquired,
or obtained the right to acquire, beneficial ownership of 15% or more
of the shares of Common Stock then outstanding or (y) the date on
which any Offering Person (as defined below) or any affiliate or
associate thereof enters into an agreement with the Corporation
providing for an Acquisition Transaction (as defined below), if such
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date is within 180 days after a majority of the Board is elected by
stockholder action by written consent or is comprised of persons who
were not nominated by the Board in office immediately prior to their
election (any person described in clause (x) or clause (y) above is
referred to as an "Acquiring Person"). Neither Patricia Schaefer nor
Diane D. Humphrey or any of their respective descendants or certain
related trusts or other entities (or a group comprised solely of such
persons) will be deemed to be an Acquiring Person as long as all such
persons beneficially own less than 20% of the outstanding shares of
Common Stock. An "Offering Person" is defined as any person (other
than the Corporation or any of its subsidiaries) who, at the time that
a majority of the Board is elected by stockholder action by written
consent or is comprised of persons who were not nominated by the Board
in office immediately prior to their election, (i) has commenced, or
has publicly announced its intent to commence, a tender or exchange
offer if upon consummation thereof such person, together with its
affiliates and associates, would beneficially own 15% or more of the
shares of Common Stock then outstanding, or (ii) has made by public
announcement or by written communication that is or becomes the
subject of a public announcement, or has publicly announced its intent
to make, a proposal to the Corporation or its stockholders for (x) a
merger, consolidation or similar transaction involving the Corporation
or any of its subsidiaries, (y) a purchase or other acquisition of all
or a substantial portion of the assets of the Corporation and its
subsidiaries, or (z) a purchase or other acquisition of securities
representing 15% or more of the shares of Common Stock then outstanding
(any transaction of the type described in clauses (x), (y) or (z) above,
an "Acquisition Transaction").
"Continuing Director" means a director of the Corporation who (i)
either (a) was a member of the Board prior to the date of the New
Rights Agreement, or (b) subsequently became a director of the
Corporation and whose election or nomination for election subsequent
to such date was approved by a vote of a majority of the Continuing
Directors then on the Board and (ii) is not an Acquiring Person or an
affiliate or associate of an Acquiring Person or a representative of
an Acquiring Person or any such affiliate or associate.
Following the Record Date and until the Distribution Date, (i)
the New Rights will be evidenced by the Common Stock certificates and
will be transferred with and only with such Common Stock certificates,
(ii) new Common Stock certificates issued after the Record Date will
contain a notation incorporating the New Rights Agreement by reference
and (iii) the surrender for transfer of any certificate for Common
Stock outstanding will also constitute the transfer of the New Rights
associated with the Common Stock represented by such certificate.
The New Rights will not be exercisable until the Distribution
Date and will expire at the close of business on February 28, 2011,
unless earlier redeemed by the Corporation as described below.
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As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and, thereafter,
the separate Rights Certificates alone will represent the New Rights.
Except as otherwise determined by the Board, only shares of Common
Stock issued prior to the Distribution Date will be issued with New
Rights.
In the event (a "Flip-in Event") that any person, at any time
after the date of the New Rights Agreement, becomes an Acquiring
Person (except as a result of an acquisition of shares of Common Stock
made pursuant to an offer for all outstanding shares of Common Stock
which a majority of the members of the Board who are not officers of
the Corporation and who are Continuing Directors determine, after
receiving advice from the Board's financial advisor, to be fair to and
otherwise in the best interests of the Corporation and its
stockholders (a "Qualifying Offer")), each holder of a New Right
thereafter will have the right to receive, upon exercise thereof,
Common Stock (or, in certain circumstances, cash, property or other
securities of the Corporation) having a value equal to two times the
Purchase Price. Notwithstanding any of the foregoing, following the
occurrence of a Flip-in Event, all New Rights that are, or (under
certain circumstances specified in the New Rights Agreement) were,
beneficially owned by an Acquiring Person, any of its associates or
affiliates, and certain of its transferees, will be null and void.
Moreover, the New Rights will not be exercisable following the first
occurrence of a Flip-in Event until such time as the New Rights are no
longer redeemable by the Corporation as described below.
In the event that, at any time following the Stock Acquisition
Date, (i) the Corporation is acquired in a merger or other business
combination transaction in which the Corporation is not the surviving
corporation or in which the Corporation is the surviving entity but
the Common Stock is changed or exchanged, or (ii) 50% or more of the
Corporation's assets or earning power is sold or transferred (each, a
"Flip-over Event"), each holder of a New Right (except New Rights
which previously have been voided as described above) shall thereafter
have the right to receive, upon exercise thereof, common stock or
other securities of the acquiring company having a value equal to two
times the Purchase Price, provided that holders of New Rights will not
be entitled to such right to receive acquiring company common stock in
connection with any transaction described in this paragraph if such
transaction is consummated with a person who acquired shares of Common
Stock pursuant to a Qualifying Offer.
The Purchase Price payable, and the number of shares of
Preference Stock or other securities or property issuable, upon
exercise of the New Rights are subject to adjustment from time to time
in accordance with customary antidilution provisions. Following the
occurrence of a Flip-in Event or a Flip-over Event, the antidilution
provisions will apply to the Common Stock or other securities for
which the New Rights are then exercisable.
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With certain exceptions, no adjustment to the Purchase Price will
be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional shares will be issued, other than
fractional shares of Preference Stock that are integral multiples of
one one-hundredth of a share, and a cash payment will be made in lieu
thereof based on the market price of the Preference or Common Stock on
the last trading day prior to the date of exercise.
At any time after the New Rights become exercisable for Common
Stock, the Board may exchange the unexercised New Rights (other then
New Rights owned by any Acquiring Person which have become void), in
whole or in part, at an exchange ratio of one share of Common Stock,
or one one-hundredth of a share of Preference Stock (or of a share of
a class or series of the Corporation's preference stock having
equivalent rights, preferences and privileges), per New Right (subject
to adjustment). Under certain circumstances, authorization of any such
exchange must be by a majority of the Continuing Directors then in
office.
The Board is empowered to redeem the New Rights in whole, but not
in part, at a price of $0.01 per New Right (the "Redemption Price") at
any time before the earlier of (i) the expiration of twenty days
following the Stock Acquisition Date or (ii) the final expiration date
of the New Rights. Notwithstanding the foregoing, in the event that a
majority of the Board is elected by stockholder action by written
consent, or is comprised of persons who were not nominated by the
Board in office immediately prior to their election, then (i) for a
period of 180 days following the effectiveness of such election the
New Rights may not be redeemed, and (ii) thereafter redemption may
only be authorized with the concurrence of a majority of the
Continuing Directors. Immediately upon the action of the Board
ordering redemption of the New Rights the New Rights will terminate
and the only right of the holders of New Rights will be to receive the
Redemption Price.
Until a New Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Corporation, including, without
limitation, the right to vote or to receive dividends. While the
distribution of the New Rights will not be taxable to stockholders or
to the Corporation, stockholders may, depending upon the
circumstances, recognize taxable income in the event that the New
Rights become exercisable for Common Stock (or other consideration) or
for common stock of an acquiring company as set forth above.
The Rights Agreement may be amended by the Board (a) prior to the
Distribution Date, in any manner (other than an amendment to the
Redemption Price or the number of one one-hundredths' of a share of
Preference Stock purchasable upon exercise of a New Right) and (b)
after the Distribution Date, in order to (i) cure any ambiguity, (ii)
correct or supplement provisions which may be defective or
inconsistent, (iii) make changes which do not adversely affect the
interests of holders of New Rights (other than those held by an
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Acquiring Person or certain related persons) or (iv) shorten or
lengthen any time period under the New Rights Agreement (including the
time period governing redemption), provided that no extension or
amendment to adjust the time period for redemption may be made at such
time as the New Rights are nonredeemable. Notwithstanding the
foregoing, in the event that a majority of the Board is elected by
stockholder action by written consent, or is comprised of persons who
were not nominated by the Board in office immediately prior to their
election, then (i) for a period of 180 days following the
effectiveness of such election, the New Rights Agreement may not be
amended, and (ii) thereafter the New Rights Agreement may only be
amended with the concurrence of a majority of the Continuing
Directors.
The New Rights Agreement is filed herewith as Exhibit 4.1 and is
incorporated herein by reference. The foregoing summary description of
the New Rights does not purport to be complete and is qualified in its
entirety by reference to the full text of the New Rights Agreement.
ITEM 2. EXHIBITS
The following exhibit is filed as a part of this
Registration Statement.
EXHIBIT NO. DESCRIPTION
4.1 Rights Agreement, dated as of October 15, 1999, between
Franklin Electric Co., Inc. and Illinois Stock Transfer
Company, as Rights Agent
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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 hereunto duly
authorized.
FRANKLIN ELECTRIC CO., INC.
By: /s/ Gregg C. Sengstack
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Name: Gregg C. Sengstack
Title: Chief Financial Officer
Dated: October 18, 1999
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
4.1 Rights Agreement, dated as of October 15, 1999, between
Franklin Electric Co., Inc. and Illinois Stock Transfer
Company, as Rights Agent
EXHIBIT 4.1
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FRANKLIN ELECTRIC CO., INC.
and
ILLINOIS STOCK TRANSFER COMPANY
Rights Agent
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Rights Agreement
Dated as of October 15, 1999
TABLE OF CONTENTS
Page
1. CERTAIN DEFINITIONS. . . . . . . . . . . . . . . . 2
2. APPOINTMENT OF RIGHTS AGENT. . . . . . . . . . . . 8
3. ISSUANCE OF RIGHTS CERTIFICATES. . . . . . . . . . 8
4. FORM OF RIGHTS CERTIFICATES. . . . . . . . . . . . 10
5. Countersignature and Registration. . . . . . . . . 11
6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates. . . . . . . . . . . . 12
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION
DATE OF RIGHTS . . . . . . . . . . . . . . . . . . 13
8. Cancellation and Destruction of Rights
Certificates. . . . . . . . . . . . . . . . . . . 15
9. Reservation and Availability of Capital Stock. . . 16
10. PREFERENCE STOCK RECORD DATE. . . . . . . . . . . 17
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
SHARES OR NUMBER OF RIGHTS. . . . . . . . . . . . 18
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER
OF SHARES. . . . . . . . . . . . . . . . . . . . 27
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
ASSETS OR EARNING POWER. . . . . . . . . . . . . . 28
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. . . . . . 31
15. RIGHTS OF ACTION. . . . . . . . . . . . . . . . . 32
16. AGREEMENT OF RIGHTS HOLDERS. . . . . . . . . . . . 32
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. . . . . . . . . . . . . . . . . . . . 33
18. CONCERNING THE RIGHTS AGENT. . . . . . . . . . . . 34
19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF
RIGHTS AGENT. . . . . . . . . . . . . . . . . . . 34
20. DUTIES OF RIGHTS AGENT. . . . . . . . . . . . . . 35
21. CHANGE OF RIGHTS AGENT. . . . . . . . . . . . . . 37
22. ISSUANCE OF NEW RIGHTS CERTIFICATES. . . . . . . . 38
23. REDEMPTION AND TERMINATION. . . . . . . . . . . . 39
24. EXCHANGE. . . . . . . . . . . . . . . . . . . . . 40
25. NOTICE OF CERTAIN EVENTS. . . . . . . . . . . . . 41
26. NOTICES. . . . . . . . . . . . . . . . . . . . . . 42
27. SUPPLEMENTS AND AMENDMENTS. . . . . . . . . . . . 43
28. SUCCESSORS. . . . . . . . . . . . . . . . . . . . 44
29. DETERMINATIONS AND ACTIONS BY THE BOARD OF
DIRECTORS, ETC. . . . . . . . . . . . . . . . . . 44
30. BENEFITS OF THIS AGREEMENT. . . . . . . . . . . . 45
31. SEVERABILITY. . . . . . . . . . . . . . . . . . . 45
32. GOVERNING LAW. . . . . . . . . . . . . . . . . . . 45
33. COUNTERPARTS. . . . . . . . . . . . . . . . . . . 45
34. DESCRIPTIVE HEADINGS. . . . . . . . . . . . . . . 45
EXHIBIT
Exhibit A - Form of Rights Certificates
ii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 15, 1999 (the
"Agreement"), between Franklin Electric Co., Inc., an Indiana
corporation (the "Company"), and Illinois Stock Transfer Company, an
Illinois corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on February 11, 1991, the Board of Directors of the
Company (the "Board") (i) approved, adopted and executed a Rights
Agreement, dated as of February 11, 1991 (which Rights Agreement is
referred to herein as the "1991 Rights Agreement"), between the
Company and the rights agent thereunder, (ii) authorized and declared
a dividend distribution of one right (a "1991 Right") for each share
of common stock, par value $0.10 per share, of the Company (the
"Common Stock") outstanding at the close of business on February 28,
1991 (the "1991 Record Date"), and (iii) authorized the issuance of
one 1991 Right (as such number may have been adjusted pursuant to the
provisions of the 1991 Rights Agreement) for each share of Common
Stock issued after the 1991 Record Date (whether originally issued or
delivered from the Company's treasury) and prior to the "Distribution
Date" (as such term is defined in the 1991 Rights Agreement);
WHEREAS, pursuant to Section 7(a) of the 1991 Rights
Agreement, the 1991 Rights will expire not later than February 28,
2001;
WHEREAS, on October 15, 1999, the Board determined it
desirable and in the best interests of the Company and its
stockholders for the Company to extend the benefits afforded by the
1991 Rights Agreement and to implement such extension by executing
this Agreement and declaring the distribution referred to in the
following recital clause;
WHEREAS, on October 15, 1999 (the "Rights Dividend
Declaration Date"), the Board authorized and declared a dividend
distribution of one Right (as hereinafter defined) for each share of
Common Stock outstanding at the close of business on the earliest date
upon which all of the 1991 Rights shall have expired or shall have
been redeemed or exchanged or are otherwise no longer outstanding in
accordance with the terms of the 1991 Rights Agreement (such date, the
"Record Date"), and has authorized the issuance of one Right (as such
number may hereafter be adjusted pursuant to the provisions of Section
11(i) or Section 11(p) hereof) for each share of Common Stock issued
between the Record Date (whether originally issued or delivered from
the Company's treasury) and the Distribution Date (as hereinafter
defined), and under certain circumstances thereafter, each Right
initially representing the right to purchase one one-hundredth of a
share of Series I Junior Participating Preference Stock, no par value,
of the Company, having the rights, powers and preferences set forth in
the Company's Restated Articles of Incorporation, as amended (the
"Restated Articles of Incorporation"), upon the terms and subject to
the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
a. "Acquiring Person" shall mean (x) any Person who
or which, together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, but shall not include (i) the Company; (ii)
any Subsidiary of the Company; (iii) any employee benefit plan of the
Company, or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to
the terms of any such plan; (iv) any Person who becomes the Beneficial
Owner of fifteen percent 15% or more of the shares of Common Stock
then outstanding (or, in the case of a Person described in subclauses
(A) through (F) of the following clause (vi), 20% or more of the
shares of Common Stock then outstanding) as a result of a reduction in
the number of shares of Common Stock outstanding due to the repurchase
of shares of Common Stock by the Company unless and until such Person,
after becoming aware that such Person has become the Beneficial Owner
of fifteen percent 15% or more of the then outstanding shares of
Common Stock (or, in the case of a Person described in subclauses (A)
through (F) of the following clause (vi), 20% or more of the then
outstanding shares of Common Stock), acquires beneficial ownership of
additional shares of Common Stock constituting one percent (1%) or
more of the shares of Common Stock then outstanding; (v) any such
Person who has reported or is required to report such ownership (but
less than 20%) on Schedule 13G under the Securities Exchange Act of
1934, as amended (the "Exchange Act") and in effect on the date of
this Agreement (or any comparable or successor report) or on Schedule
13D under the Exchange Act (or any comparable or successor report)
which Schedule 13D does not state any intention to or reserve the
right to control or influence the management or policies of the
Company or engage in any of the actions specified in Item 4 of such
schedule (other than the disposition of the Common Stock) and, within
ten Business Days of being requested by the Company to advise it
regarding the same, certifies to the Company that such Person acquired
shares of Common Stock in excess of 14.9% inadvertently or without
knowledge of the terms of the Rights and who, together with all
Affiliates and Associates, thereafter does not acquire additional
shares of Common Stock while the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding; provided, however, that
if the Person requested to so certify fails to do so within ten
Business Days, then such Person shall become an Acquiring Person
immediately after such ten-Business-Day period; or (vi) any of the
Persons described in the following subclauses (A) through (F) (or any
group comprised solely of such Persons) who or which would be an
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Acquiring Person but for this proviso if but only if all securities of
the Company beneficially owned by all such Persons in the aggregate
shall constitute less than 20% of the then outstanding shares of
Common Stock: (A) Patricia Schaefer, any descendant of Patricia
Schaefer (including descendants by adoption and their descendants), or
any spouse, former spouse or surviving spouse of Patricia Schaefer or
any such descendants; (B) Diane D. Humphrey, any descendant of Diane
D. Humphrey (including descendants by adoption and their descendants),
or any spouse, former spouse or surviving spouse of Diane D. Humphrey
or any such descendants (such Persons together with the Persons
described in clause (A) being collectively referred to as the "Family
Members"); (C) any trust which is in existence on the date of this
Agreement and which has been established by one or more Family Members
and any estate of a Family Member who died on or before the date of
this Agreement (collectively defined as "Family Entities"); (D) any
estate of a Family Member who dies after the date hereof, or any trust
established after the date hereof by one or more Family Members or
Family Entities, provided that one or more Family Members or Family
Entities or charitable organizations which qualify as exempt
organizations under Section 501(c) of the Internal Revenue Code of
1986, as amended ("Charitable Organizations"), collectively, are the
beneficiaries of at least 50% of the actuarially-determined beneficial
interests in such estate or trust; (E) any Charitable Organization
which is established by one or more Family Members or Family Entities
(a "Family Charitable Organization"); (F) any corporation of which a
majority of the voting power is held, directly or indirectly, by or
for the benefit of one or more Family Members, Family Entities,
estates or trusts described in clause (D) above, or Family Charitable
Organizations; and (G) any partnership or other entity or arrangement
of which a majority of the voting interest is held, directly or
indirectly, by or for the benefit of one or more Family Members,
Family Entities, estates or trusts described in clause (C) or (D)
above or Family Charitable Organizations; or (y) any Offering Person
and any Affiliate or Associate of such Offering Person, if such
Offering Person or any Affiliate or Associate thereof has entered,
into any agreement or arrangement providing for an Acquisition
Transaction (as defined in Section 1(r) hereof) within 180 days after
the time of the first occurrence of the circumstances described in
clauses (i) or (ii) of Section 23(c).
b. "Act" shall mean the Securities Act of 1933, as
amended.
c. "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
d. A Person shall be deemed the "Beneficial Owner"
of, and shall be deemed to "beneficially own," any securities:
i. which such Person or any of such
Person's Affiliates or Associates, directly or indirectly,
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owns or 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, rights, warrants or
options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a
tender or exchange offer made by 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 (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event (as
hereinafter defined), or (C) securities issuable upon
exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person
or any of such Person's Affiliates or Associates prior to
the Distribution Date (as hereinafter defined) or pursuant
to Section 3(a) or Section 22 hereof (the "Original Rights")
or pursuant to Section 11(i) or Section 11(p) hereof in
connection with an adjustment made with respect to any
Original Rights;
ii. which such Person or any of such
Person's Affiliates or Associates, directly or indirectly,
has the right to vote or dispose of or has "beneficial
ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," any security under this
subparagraph (ii) as a result of an agreement, arrangement
or understanding (whether or not in writing) to vote such
security if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable
provisions of the General Rules and Regulations under the
Exchange Act, and (B) is not also then reportable by such
Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
iii. which are beneficially owned, directly
or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person's Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (d)) or disposing of any
voting securities of the Company; provided, however, that
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nothing in this paragraph (d) shall cause a Person engaged
in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any
securities acquired or which such Person has the right to
acquire through such Person's participation in good faith in
a firm commitment underwriting until the expiration of forty
days after the date of such acquisition.
e. "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the State
of Indiana are authorized or obligated by law or executive order to
close.
f. "Close of business" on any given date shall mean
5:00 P.M., Fort Wayne, Indiana time, on such date; provided, however,
that if such date is not a Business Day, it shall mean 5:00 P.M., Fort
Wayne, Indiana time, on the next succeeding Business Day.
g. "Common Stock" shall mean the common stock, par
value $0.10 per share, of the Company, except that "Common Stock" when
used with reference to any Person other than the Company shall mean
the capital stock of such Person with the greatest voting power, or
the equity securities or other equity interest having power to control
or direct the management, of such Person.
h. "Common Stock Equivalents" shall have the meaning
set forth in Section 11(a) (iii) hereof.
i. "Continuing Director" shall mean (i) any member of
the Board, while such Person is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
or a representative of an Acquiring Person or of any such Affiliate or
Associate, and who was a member of the Board prior to the date of this
Agreement, or (ii) any Person who subsequently becomes a member of the
Board, while such Person is a member of the Board, who is not an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person,
or a representative of an Acquiring Person or of any such Affiliate or
Associate, if such Person's nomination for election or election to the
Board is recommended or approved by a vote of a majority of the
Continuing Directors.
j. "Current Market Price" shall have the meaning set
forth in Section 11(d)(i) hereof.
k. "Current Value" shall have the meaning set forth
in Section 11(a) (iii) hereof.
l. "Distribution Date" shall have the meaning set
forth in Section 3(a) hereof.
m. "Equivalent Preference Stock" shall have the
meaning set forth in Section 11(b) hereof.
5
n. "Exchange Act" shall have the meaning set forth in
Section 1(a) hereof.
o. "Exchange Ratio" shall have the meaning set forth
in Section 24 hereof.
p. "Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
q. "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
r. "Offering Person" shall mean any Person (other
than the Company or any of its Subsidiaries or any employee benefit
plan of the Company or of any Subsidiary of the Company or any Person
appointed as trustee by the Company or such Subsidiary pursuant to the
terms of any such plan in such Person's capacity as trustee) who, at
the time of the first occurrence of either of the circumstances
described in clauses (i) and (ii) of Section 23(c) hereof, (i) has
commenced, or has publicly announced its intent to commence, a tender
or exchange offer if upon consummation thereof such Person, together
with all Affiliates and Associates of such Person, would be the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, or (ii) has made by public announcement or by written
communication that is or becomes the subject of a public announcement,
or has publicly announced its intent to make, a proposal to the
Company or its stockholders for (x) a merger, consolidation or similar
transaction involving the Company or any of its Subsidiaries, (y) a
purchase or other acquisition of all or a substantial portion of the
assets or deposits of the Company and its Subsidiaries, or (z) a
purchase or other acquisition of securities representing 15% or more
of the shares of Common Stock then outstanding (any transaction of the
type described in clauses (x), (y) or (z) of this paragraph (ii), an
"Acquisition Transaction").
s. "Person" shall mean any individual, firm,
corporation, partnership, limited liability company, limited liability
partnership, trust, syndicate or other entity and includes, without
limitation, an unincorporated group of persons who, by formal or
informal agreement or arrangement (whether or not in writing), have
embarked on a common purpose or act.
t. "Preference Stock" shall mean shares of Series I
Junior Participating Preference Stock, no par value, of the Company,
and, to the extent that there is not a sufficient number of shares of
Series I Junior Participating Preference Stock authorized to permit
the full exercise of the Rights, any other series of preference stock
of the Company designated for such purpose containing terms
substantially similar to the terms of the Series I Junior
Participating Preference Stock.
6
u. "Principal Party" shall have the meaning set forth
in Section 13(b) hereof.
v. "Purchase Price" shall have the meaning set forth
in Section 4(a) hereof.
w. "Qualifying Offer" shall have the meaning set
forth in Section 11(a)(ii) hereof.
x. "Record Date" shall have the meaning set forth in
the fourth WHEREAS clause at the beginning of this Agreement.
y. "Rights" shall have the meaning set forth in the
fourth WHEREAS clause at the beginning of this Agreement.
z. "Rights Agent" shall have the meaning set forth in
the parties clause at the beginning of this Agreement.
aa. "Rights Certificate" shall have the meaning set
forth in Section 3(a) hereof.
ab. "Rights Dividend Declaration Date" shall have the
meaning set forth in the fourth WHEREAS clause at the beginning of
this Agreement.
ac. "Section 11 (a)(ii) Event" shall mean any event
described in Section 11(a)(ii) hereof.
ad. "Section 13 Event" shall mean any event described
in clauses (x), (y) or (z) of Section 13(a) hereof.
ae. "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
af. "Stock Acquisition Date" shall mean the earlier of
(i) the first date of public announcement by the Company that any
Person has become an Acquiring Person pursuant to clause (x) of the
definition of Acquiring Person, and (ii) the date on which an Offering
Person and/or any Affiliate or Associate thereof has entered into an
agreement or arrangement with the Company or any Subsidiary of the
Company providing for an Acquisition Transaction.
ag. "Subsidiary" shall mean, with reference to any
Person, any corporation or other entity of which an amount of voting
securities (or other ownership interests having ordinary voting power)
sufficient to elect at least a majority of the directors (or other
persons performing similar functions) of such corporation or other
entity is directly or indirectly beneficially owned or otherwise
controlled by such Person.
ah. "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii) hereof.
7
ai. "Trading Day" shall have the meaning set forth in
Section 11(d)(i) hereof.
aj. "Triggering Event" shall mean any Section
11(a)(ii) Event or any Section 13 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 hereof, shall
prior to the Distribution Date also be the holders of the Common
Stock) in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may from
time to time appoint such co-rights agents as it may deem necessary or
desirable.
3. ISSUANCE OF RIGHTS CERTIFICATES.
a. Until the earlier of (i) the close of business on
the twentieth day after the Stock Acquisition Date (or, if the
twentieth day after the Stock Acquisition Date occurs before the
Record Date, the close of business on the Record Date), or (ii) the
close of business on the twentieth day (or such specified or
unspecified later date as the Board shall determine (PROVIDED,
HOWEVER, that if any deferral of a Distribution Date by the Board
pursuant to this clause (ii) is authorized at any time on or after the
earliest of (x) the time that any Person becomes an Acquiring Person
or (y) the first occurrence of either of the circumstances described
in clauses (i) and (ii) of Section 23(c) hereof, such authorization
shall be effective only if there is at least one Continuing Director
then in office and only if a majority of Continuing Directors then in
office concurs with such authorization)) after the date that a tender
or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or
of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms
of any such plan) is first published or sent or given within the
meaning of Rule 14d-2 (a) of the General Rules and Regulations under
the Exchange Act, if upon consummation thereof, such Person would be
the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, in either instance other than pursuant to a Qualifying
Offer (the earlier of (i) and (ii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraphs (b) and (c) of this Section 3) by the
certificates for the Common Stock registered in the names of the
holders thereof (which certificates for Common Stock shall be deemed
also to be certificates for Rights) and not by separate certificates,
and (y) the Rights will be transferable only in connection with the
transfer of the underlying shares of Common Stock (including a
transfer to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class, insured,
postage prepaid mail, to each record holder of the Common Stock as of
the close of business on the Distribution Date, at the address of such
8
holder shown on the records of the Company, one or more right
certificates, substantially in the form of EXHIBIT A hereto (the
"Rights Certificates"), evidencing one Right for each share of Common
Stock so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock
has been made pursuant to Section 11(i) or Section 11(p) hereof, at
the time of distribution of the Rights Certificates, the Company shall
not be required to issue Rights Certificates evidencing fractional
rights, but may, in lieu thereof, make the necessary and appropriate
rounding adjustments (in accordance with Section 14(a) hereof) so that
Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of
and after the Distribution Date, the Rights will be evidenced solely
by such Rights Certificates.
b. The Company delivered a copy of a Summary of
Rights, substantially in the form attached as Exhibit C to the 1991
Rights Agreement (the "Summary of Rights"), by first-class, postage
prepaid mail, to each record holder of Common Stock as of the close of
business on February 28, 1991, at the address of such holder then
shown on the records of the Company. With respect to certificates for
the Common Stock outstanding as of the Record Date, as set forth in
paragraph (a) above, until the earlier of the Distribution Date or the
Expiration Date, the Rights will be evidenced by (i) such certificates
for the Common Stock with or without a copy of the Summary of Rights
attached or (ii) certificates for the Common Stock as legended
pursuant to the terms of the 1991 Rights Agreement, and the registered
holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution Date or
the Expiration Date, the transfer of any certificates representing
shares of Common Stock in respect of which Rights have been issued
shall also constitute the transfer of the Rights associated with such
shares of Common Stock.
c. Rights shall be issued in respect of all shares of
Common Stock which are issued (whether originally issued or from the
Company's treasury) after the Record Date but prior to the earlier of
the Distribution Date or the Expiration Date, and to the extent
provided in Section 22 hereof, in respect of shares of Common Stock
issued after the Distribution Date and prior to the Expiration Date.
Certificates representing such shares of Common Stock shall also be
deemed to be certificates for Rights, and shall, as promptly as
practicable following the Record Date, bear the following legend:
This certificate also evidences and entitles
the holder hereof to certain Rights as set forth
in the Rights Agreement between Franklin Electric
Co., Inc. (the "Company") and the Rights Agent
thereunder, dated as of October 15, 1999, as the
same may be amended, restated, renewed or extended
from time to time (the "Rights Agreement"), the
terms of which are hereby incorporated herein by
9
reference and a copy of which is on file at the
principal offices of the Company. Under certain
circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by
separate certificates and will no longer be
evidenced by this certificate. The Company will
mail to the holder of this certificate a copy of
the Rights Agreement, as in effect on the date of
mailing, without charge, promptly after receipt of
a written request therefor. Under certain
circumstances set forth in the Rights Agreement,
Rights issued to, or beneficially owned by, any
Person who is, was or becomes an Acquiring Person
or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement),
whether currently held by or on behalf of such
Person or by any subsequent holder, may become
null and void.
With respect to such certificates containing the foregoing legend,
until the earlier of (i) the Distribution Date or (ii) the Expiration
Date, the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and
registered holders of Common Stock shall also be the registered
holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
4. FORM OF RIGHTS CERTIFICATES.
a. The Rights Certificates (and the forms of election
to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the form attached hereto as EXHIBIT A
and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable
law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record
Date and on their face shall entitle the holders thereof to purchase
such number of one one-hundredths of a share of Preference Stock as
shall be set forth therein at the price set forth therein (such
exercise price per one one-hundredth of a share, as adjusted from time
to time hereunder, the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided
herein.
10
b. Any Rights Certificate issued pursuant to Section
3(a), Section 11(i) or Section 22 hereof that represents Rights
beneficially owned by: (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the
Board, in its sole discretion, has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect
avoidance of the provisions of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate
are or were beneficially owned by a Person who was
or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms
are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void
in the circumstances specified in Section 7(e) of
the Rights Agreement.
5. Countersignature and Registration.
----------------------------------
a. The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President or
any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by an authorized signatory of the
Rights Agent, either manually or by facsimile signature, and shall not
be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature
by an authorized signatory of the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may
be countersigned by an authorized signatory of the Rights Agent and
issued and delivered by the Company with the same force and effect as
though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be
11
signed on behalf of the Company by any person who, at the actual date
of the execution of such Rights Certificate, shall be a proper officer
of the Company to sign such Rights Certificate, although at the date
of the execution of this Agreement any such person was not such an
officer.
b. Following the Distribution Date, the Rights Agent
will keep, or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the
Rights Certificates, the number of Rights evidenced on its face by
each of the Rights Certificates and the date of each of the Rights
Certificates.
6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.
a. Subject to the provisions of Section 4(b), Section
7(e) and Section 14 hereof, at any time after the close of business on
the Distribution Date, and at or prior to the close of business on the
Expiration Date, any Rights Certificate or Certificates (other than
Rights Certificates representing Rights that may have been exchanged
pursuant to Section 24 hereof) may be transferred, split up, combined
or exchanged for another Rights Certificate or Certificates, entitling
the registered holder to purchase a like number of one one-hundredths
of a share of Preference Stock (or, following the occurrence of a
Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or 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 Rights Certificate or Certificates
shall make such request in writing delivered to the Rights Agent, and
shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged, with the forms of
assignment and certificate contained therein duly executed, at the
principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have
completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon
the Rights Agent shall, subject to Section 4(b), Section 7(e), Section
14 hereof and Section 24 hereof, countersign and deliver to the Person
entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment from
the holder of a Rights Certificate of a sum sufficient to cover any
12
tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights 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 Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new
Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
a. Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9
(c), Section 11(a) (iii) and Section 23(a) hereof) in whole or in part
at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate
contained therein duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to
the total number of one one-hundredths of a share of Preference Stock
(or, following the occurrence of a Triggering Event, Common Stock,
other securities, cash or other assets, as the case may be) as to
which such surrendered Rights are then exercisable, at or prior to the
earliest of (i) 5:00 P.M., Fort Wayne, Indiana time, on February 28,
2011 (such date, the "Final Expiration Date"), (ii) the time at which
all of the Rights are redeemed or exchanged as provided in Section 23
or Section 24 hereof, respectively, or (iii) the time at which the
Rights expire pursuant to Section 13(d) hereof (the earliest of (i),
(ii) and (iii) being herein referred to as the "Expiration Date").
b. The Purchase Price for each one one-hundredth of a
share of Preference Stock pursuant to the exercise of a Right shall
initially be $300.00, and shall be subject to adjustment from time to
time as provided in Section 11 and Section 13(a) hereof and shall be
payable in accordance with paragraph (c) below.
c. Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) per one one-hundredth
of a share of Preference Stock (or Common Stock, other securities,
13
cash or other assets, as the case may be) to be purchased as set forth
below and an amount equal to any applicable transfer tax, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)
(A) requisition from any transfer agent of the shares of Preference
Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of one one-
hundredths of a share of Preference Stock to be purchased, and the
Company hereby irrevocably authorizes its transfer agent to comply
with all such requests, or (B) if the Company shall have elected to
deposit the total number of shares of Preference Stock 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 share of Preference Stock as are to be
purchased (in which case certificates for the shares of Preference
Stock represented by such receipts shall be deposited by the transfer
agent with the depositary agent), and the Company will direct the
depositary agent to comply with such request, (ii) requisition from
the Company the amount of cash, if any, to be paid in lieu of
fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to
be delivered to or, upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of
such Rights Certificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii) hereof) shall be
made in cash or by certified bank check or bank draft payable to the
order of the Company. In the event that the Company is obligated to
issue other securities (including Common Stock) of the Company, pay
cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate. The
Company reserves the right to require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of Rights
be exercised so that only whole shares of Preference Stock would be
issued.
d. In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby,
a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14
hereof.
e. Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii)
Event, any Rights beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Affiliate or Associate) who becomes a
14
transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Affiliate or
Associate) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in
writing) regarding the transferred Rights or (B) a transfer which the
Board has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section
7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights
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.
f. Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder of a
Rights Certificate upon the occurrence of any purported assignment or
exercise as set forth in this Section 7 unless such registered holder
shall have (i) completed and signed the certificate contained in the
form of assignment or election to purchase set forth on the reverse
side of the Rights Certificate surrendered for such assignment 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 shall reasonably request.
8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split-up, combination or exchange shall, if surrendered to
the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights
Agent, shall be canceled by it, and no Rights Certificates shall be
issued in lieu thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired
by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Rights Certificates to the Company.
9. Reservation and Availability of Capital Stock.
a. The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and
unissued shares of Preference Stock (and, following the occurrence of
a Triggering Event, out of its authorized and unissued shares of
15
Common Stock and/or other securities or out of its authorized and
issued shares held in its treasury), the number of shares of
Preference Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities, as the case may be) that, as
provided in this Agreement including Section 11(a)(iii) hereof, will
be sufficient to permit the exercise in full of all outstanding
Rights.
b. So long as the shares of Preference Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or
other securities, as the case may be) issuable and deliverable upon
the exercise of the Rights may be listed on any national securities
exchange, the Company shall use all reasonable efforts to cause, from
and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
c. The Company shall use its reasonable best efforts
to (i) file, as soon as practicable following the earliest date after
the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined in accordance with Section 11 (a)(iii)
hereof, or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement on an appropriate
form under the Act, with respect to the Common Stock or other
securities purchasable upon exercise of the Rights, (ii) cause such
registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which
the Rights are no longer exercisable for such securities, and (B) the
date of the expiration of the Rights. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with
the excercisibility of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the
date set forth in clause (i) of the first sentence of this Section
9(c), the excercisibility of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon
any such suspension, the Company shall issue a public announcement
stating that the excercisibility 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 shall
determine that a registration statement is required in other
circumstances following the Distribution Date, the Company similarly
may temporarily suspend the excercisibility of the Rights until such
time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained, or
the exercise thereof shall not be permitted under applicable law, or a
registration statement shall not have been declared effective.
16
d. The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all one one-
hundredths of a share of Preference Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other
securities, as the case may be) delivered upon exercise of Rights
shall at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
e. The Company further covenants and agrees that it
will pay when due and payable any and all federal and state transfer
taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates and of any certificates for a
number of one one-hundredths of a share of Preference Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the
issuance or delivery of a number of one one-hundredths of a share of
Preference Stock (or Common Stock and/or other securities, as the case
may be) in a name other than that of the registered holder of the
Rights Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates for a number of one one-hundredths
of a share of Preference Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall
have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
10. PREFERENCE STOCK RECORD DATE. Each person in whose
name any certificate for a number of one one-hundredths of a share of
Preference Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such fractional
shares of Preference Stock (or Common Stock and/or other securities,
as the case may be) represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preference
Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares (fractional or
otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Preference Stock (or Common Stock
and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate, as such, shall not be
entitled to any rights of a stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other
17
distributions or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company,
except as provided herein.
11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of
shares, or fractions thereof, purchasable upon exercise of each Right
and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any
time after the date of this Agreement (A) declare a dividend
on the Preference Stock payable in shares of Preference
Stock, (B) subdivide or split the outstanding Preference
Stock, (C) combine or consolidate the outstanding Preference
Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the
Preference Stock (including any such reclassification in
connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e)
hereof, the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of
such subdivision, split, combination, consolidation or
reclassification, and the number and kind of shares of
Preference Stock (or other capital stock, as the case may
be,) issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after
such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind
of shares of Preference Stock or capital stock, as the case
may be, which, if such Right had been exercised immediately
prior to such date (whether or not such Right was then
exercisable) and at a time when the transfer books for the
Preference Stock (or other capital stock, as the case may
be) of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, split, combination,
consolidation or reclassification. If an event occurs which
would require an adjustment under both this Section 11(a)(i)
and Section 11(a)(ii) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) In the event any Person shall, at any time
after the Rights Dividend Declaration Date, become an
Acquiring Person, unless the event causing such Person to
become an Acquiring Person is a transaction set forth in
Section 13(a) hereof, or is an acquisition of shares of
Common Stock pursuant to a tender offer or an exchange offer
for all outstanding shares of Common Stock at a price and on
18
terms determined by at least a majority of the members of
the Board who are not officers of the Company or any of its
Subsidiaries and who are Continuing Directors, after
receiving advice from one or more investment banking firms,
to be (a) at a price which is fair to the Company's
stockholders and not inadequate (taking into account all
factors which such members of the Board deem relevant,
including, without limitation, prices which could reasonably
be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
stockholders (a "Qualifying Offer"), then, promptly
following the occurrence of such event, proper provision
shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this
Agreement, in lieu of a number of one one-hundredths of a
share of Preference Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by
(x) multiplying the then current Purchase Price by the then
number of one one-hundredths of a share of Preference Stock
for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event (whether or
not such Right was then issued or exercisable), and (y)
dividing that product (which, following such first
occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price (determined
pursuant to Section 11(d) hereof) per share of Common Stock
on the date of such first occurrence (such number of shares,
the "Adjustment Shares").
(iii) In the event that the number of shares
of Common Stock which are authorized by the Company's
Restated Articles of Incorporation, but which are not
outstanding or reserved for issuance for purposes other than
upon exercise of the Rights, is not sufficient to permit the
exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the
Company, acting by resolution of the Board, shall (A)
determine the value of the Adjustment Shares issuable upon
the exercise of a Right (the "Current Value"), and (B) with
respect to each Right (subject to Section 7(e) hereof), make
adequate provision to substitute for the Adjustment Shares,
upon the exercise of such Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities
of the Company (including, without limitation, shares or
units of shares of preference stock, such as the Preference
Stock, which the Board has deemed to have essentially the
same value or economic rights as shares of Common Stock
19
(such shares of preference stock being referred to as
"Common Stock Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the
Board based upon the advice of a nationally recognized
investment banking firm selected by the Board; provided,
however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on
which the Company's right of redemption pursuant to Section
23(a) hereof expires (the later of (x) and (y) being
referred to herein as the "Section 11(a)(ii) Trigger Date"),
then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring
payment of the Purchase Price, shares of Common Stock (to
the extent available) and then, if necessary, cash, which
shares and/or cash have an aggregate value equal to the
Spread. For purposes of the preceding sentence, the term
"Spread" shall mean the excess of (i) the Current Value over
(ii) the Purchase Price. If the Board determines in good
faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day period set forth
above may be extended to the extent necessary, but not more
than ninety (90) days after the Section 11(a)(ii) Trigger
Date, in order that the Company may seek stockholder
approval for the authorization of such additional shares
(such thirty (30) day period, as it may be extended, is
herein called the "Substitution Period"). To the extent
that action is to be taken pursuant to the first and/or
third sentences of this Section 11(a)(iii), the Company (1)
shall provide, subject to Section 7(e) hereof, that such
action shall apply uniformly to all outstanding Rights, and
(2) may suspend the excercisibility of the Rights until the
expiration of the Substitution Period in order to seek such
stockholder approval for such authorization of additional
shares and/or to decide the appropriate form of distribution
to be made pursuant to such first sentence and to determine
the value thereof. In the event of any such suspension, the
Company shall issue a public announcement stating that the
excercisibility of the Rights has been temporarily
suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of each Adjustment Share shall
be the Current Market Price (as defined in Section 11(d)
hereof) per share of the Common Stock on the Section
11(a)(ii) Trigger Date, and the per share or per unit value
of any Common Stock Equivalent shall be deemed to equal the
Current Market Price per share of the Common Stock on such
date. Notwithstanding the foregoing provisions of this
20
subparagraph (iii), in the event that, pursuant to this
subparagraph (iii), upon the exercise of the Rights the
Company shall be required to deliver value in any form other
than shares of Common Stock, such value shall be delivered
only to the extent and at the time that, if required, the
approval by appropriate financial regulatory authorities
with supervisory jurisdiction over the Company or its
financial institution Subsidiaries of such delivery of such
value shall have been obtained.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Preference Stock entitling them to subscribe for or purchase (for a
period expiring within forty-five (45) calendar days after such record
date) Preference Stock (or shares having the same rights, privileges
and preferences as the shares of Preference Stock ("Equivalent
Preference Stock")) or securities convertible into Preference Stock or
Equivalent Preference Stock at a price per share of Preference Stock
or per share of Equivalent Preference Stock (or having a conversion
price per share, if a security convertible into Preference Stock or
Equivalent Preference Stock) less than the Current Market Price (as
determined pursuant to Section 11(d) hereof) per share of Preference
Stock on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preference Stock
outstanding on such record date, plus the number of shares of
Preference Stock which the aggregate subscription or offering price of
the total number of shares of Preference Stock and/or Equivalent
Preference Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which
shall be the number of shares of Preference Stock outstanding on such
record date, plus the number of additional shares of Preference Stock
and/or Equivalent Preference Stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered
are initially convertible). In case such subscription price may be
paid by delivery of consideration, part or all of which may be in a
form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Shares of
Preference Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date
is fixed, and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preference Stock (including any such
distribution made in connection with a consolidation or merger in
21
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend out of
the earnings or retained earnings of the Company), assets (other than
a dividend payable in Preference Stock, but including any dividend
payable in stock other than Preference Stock) or subscription rights
or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the Current Market Price (as determined pursuant to Section 11(d)
hereof) per share of Preference Stock on such record date, less the
fair market value (as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes) of the portion of the
cash, assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to a share of
Preference Stock, and the denominator of which shall be such Current
Market Price (as determined pursuant to Section 11(d) hereof) per
share of Preference Stock. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event
that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if
such record date had not been fixed.
(d) (i) For the purpose of any computation
hereunder, other than computations made pursuant to Section
11(a)(iii) hereof, the Current Market Price per share of Common
Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date, and for purposes of computations
made pursuant to Section 11(a)(iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days
immediately following such date; provided, however, that in the
event that the Current Market Price per share of the Common Stock
is determined during a period following the announcement by the
issuer of such Common Stock of (A) a dividend or distribution on
such Common Stock payable in shares of such Common Stock or
securities convertible into shares of such Common Stock (other
than the Rights), or (B) any subdivision, combination,
consolidation, reverse stock split or reclassification of such
Common Stock, and the ex-dividend date for such dividend or
distribution, or the record date for such subdivision,
combination, consolidation, reverse stock split or
reclassification shall not have occurred prior to the
commencement of the requisite thirty (30) Trading Day or ten (10)
Trading Day period, as set forth above, then, and in each such
case, the Current Market Price shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day
shall be the last sale price, regular way, or, in case no such
22
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 shares of Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system or as
quoted by the Nasdaq National Market with respect to securities
listed or admitted to trading on another national securities
exchange or quoted by the Nasdaq National Market, respectively,
or if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange or quoted by the
Nasdaq National Market, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market
or such other quotation system then in use, or, if on any such
date the shares of Common Stock 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 Stock selected by the Board. If on any such date the
Common Stock is not publicly held and is not so listed, admitted
to trading or quoted, and no market maker is making a market in
the Common Stock, Current Market Price shall mean the fair value
of such shares on such date as determined in good faith by the
Board, which determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all
purposes. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the
Current Market Price per share of Preference Stock shall be
determined in the same manner asset forth above for the Common
Stock in clause (i) of this Section 11(d) (other than the
penultimate sentence thereof). If the Current Market Price per
share of Preference Stock cannot be determined in the manner
provided above or if the Preference Stock is not publicly held or
listed or admitted to trading or quoted in a manner described in
clause (i) of this Section 11(d), the Current Market Price per
share of Preference Stock shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately adjusted
for such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock occurring
after the date of this Agreement) multiplied by the Current
Market Price per share of the Common Stock. If neither the
Common Stock nor the Preference Stock is publicly held or so
listed or admitted to trading or quoted, the Current Market Price
per share of the Preference Stock shall mean the fair value per
share as determined in good faith by the Board, whose
23
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the Current Market Price of one one-
hundredth of a share of Preference Stock shall be equal to the
Current Market Price of one share of Preference Stock divided by
100.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease in the Purchase Price
of at least one percent (1%); provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest ten-thousandth of a share of Common
Stock or other share or one-millionth of a share of Preference Stock,
as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three (3) years from the date of
the transaction which mandates such adjustment, or (ii) the Expiration
Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a)(ii) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive any shares of
capital stock other than Preference Stock, thereafter the number of
such other shares so receivable upon exercise of any Right and the
Purchase Price thereof (or the number of Rights) shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Preference Stock contained in Sections 11(a), (b), (c), (e), (g), (h),
(i), (j), (k) and (m) hereof, and the provisions of Sections 7, 9, 10,
13 and 14 hereof with respect to the Preference Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-hundredths of a share of Preference Stock
purchasable from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i) hereof, upon each adjustment of
the Purchase Price as a result of the calculations made in Sections
11(b) and (c) hereof, each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-
hundredths of a share of Preference Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-
hundredths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to
24
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
lieu of any adjustment in the number of one one-hundredths of a share
of Preference Stock purchasable upon the exercise of a Right. Each of
the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of one one-hundredths of a share
of Preference Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one-ten-thousandth of a Right) obtained by
dividing the Purchase Price in effect immediately prior to adjustment
of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued, shall be
at least ten (10) days later than the date of the public announcement.
If Rights Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified
in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of
Preference Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-hundredth of a share and the number of
one one-hundredths of a share which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then stated value, if
any, of the number of one one-hundredths of a share of Preference
25
Stock issuable upon exercise of the Rights, the Company shall use all
reasonable efforts to 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, such number
of one one-hundredths of a share of Preference Stock at such adjusted
Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of any
Right exercised after such record date of the number of one one-
hundredths of a share of Preference Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise over
and above the number of one one-hundredths of a share of Preference
Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
adjustments 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 shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preference
Stock, (ii) issuance wholly for cash of any shares of Preference Stock
at less than the Current Market Price, (iii) issuance wholly for cash
of shares of Preference Stock or securities which by their terms are
convertible into or exchangeable for shares of Preference Stock, (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 Preference Stock shall not be taxable to such
stockholders.
(n) The Company covenants and agrees that it shall
not, at any time after the Distribution Date, (i) consolidate with any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), or (iii) sell or transfer
(or permit any Subsidiary to sell or transfer), in one transaction, or
a series of related transactions, assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x)
at the time of or immediately after such consolidation, merger, sale
or transfer there are any rights, warrants or other instruments or
26
securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to
be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger, sale or transfer, the
stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have
received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or
Section 27 hereof, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution
Date (i) declare a dividend on the outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
shares of Common Stock, or (iii) combine or consolidate the
outstanding shares of Common Stock into a smaller number of shares,
the number of Rights associated with each share of Common Stock then
outstanding, or issued or delivered thereafter but prior to the
Distribution Date (or issued or delivered on or after the Distribution
Date pursuant to Section 22), shall be proportionately adjusted so
that the number of Rights thereafter associated with each share of
Common Stock following any such event shall equal the result obtained
by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common
Stock outstanding immediately following the occurrence of such event.
12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 and
Section 13 hereof, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (b) promptly file with the
Rights Agent, and with each transfer agent for the Preference Stock
and the Common Stock, a copy of such certificate, and (c) if a
Distribution Date has occurred, mail or cause the Rights Agent to mail
a brief summary thereof to each holder of a Rights Certificate in
accordance with Section 26 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such
certificate.
27
13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
a. In the event that, on or after the Stock
Acquisition Date, directly or indirectly, (x) the Company shall
consolidate with, or merge with and into, any other Person or Persons
(other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger,
(y) any Person or Persons (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof) shall
consolidate with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or
part of the outstanding shares of Common Stock shall be changed into
or exchanged for stock or other securities of any other Person or
Persons or cash or any other property, or (z) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as
a whole and calculated on the basis of the Company's most recent
regularly prepared financial statements) to any Person or Persons
(other than the Company or any Subsidiary of the Company in one or
more transactions each of which complies with Section 11(o) hereof),
then, and in each such case (except as may be contemplated by Section
13(d) hereof), proper provision shall be made so that: (i) each holder
of a Right, except as provided in Section 7(e) hereof, shall, from and
after the later of (A) the date of the first occurrence of any such
Section 13 Event or (B) the date of the expiration of the period
within which the Rights may be redeemed pursuant to Section 23 hereof
(as the same may be amended), have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and
issued, fully paid, nonassessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter
defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the
number of one one-hundredths of a share of Preference Stock for which
a Right is exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior
to the first occurrence of a Section 13 Event, multiplying the number
of such one one-hundredths of a share for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event by the Purchase Price in effect immediately prior to
such first occurrence), and (2) dividing that product (which,
following the first occurrence of a Section 13 Event, shall be
referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(d)(i) hereof) per share of the
Common Stock of such Principal Party on the date of consummation of
28
such Section 13 Event; (ii) such Principal Party shall thereafter be
liable for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following
the first occurrence of a Section 13 Event; (iv) such Principal Party
shall take such steps (including, but not limited to, the reservation
of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following
the first occurrence of any Section 13 Event.
b. "Principal Party" shall mean:
i. in the case of any transaction described
in clause (x) or (y) of the first sentence of Section 13(a),
the Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted, changed
or exchanged in such merger or consolidation, or if no
securities are so issued, the Person that is the other party
to such merger or consolidation, or if the other party to
the merger does not survive the merger, the Person that does
survive the merger (including the Company, if it survives);
and
ii. in the case of any transaction described
in clause (z) of the first sentence of Section 13 (a), the
Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other Person; and
(2) if the Common Stock of such Person is not and has not been so
registered and such Person is a Subsidiary, directly or indirectly, of
more than one Person, the Common Stocks of two or more of which are
and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value.
c. The Company shall not consummate any such Section
13 Event unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
29
accordance with this Section 13 and unless prior thereto the Company
and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement confirming that the requirements
of Section 13(a) and Section 13(b) hereof shall promptly be performed
in accordance with their terms and further providing that, as soon as
practicable after the date of any such Section 13 Event, the Principal
Party will
i. prepare and file a registration
statement under the Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause
such registration statement to (A) become effective as soon
as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of
the Act) until the Expiration Date; and
ii. take all such other action as may be
necessary to enable the Principal Party to issue the
securities purchasable upon exercise of the Rights,
including but not limited to the registration or
qualification of such securities under all requisite
securities laws of jurisdictions of the various states and
the listing of such securities on such exchanges and trading
markets as may be necessary or appropriate; and
iii. deliver to holders of the Rights
historical financial statements for the Principal Party and
each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 (or any successor
form) under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence
of a Section 11(a)(ii) Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner
described in Section 13(a).
d. Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction
described in subparagraph (x) or (y) of Section 13(a) if (i) such
transaction is consummated with a Person or Persons, or a wholly owned
subsidiary of any such Person or Persons, who acquired shares of
Common Stock pursuant to a Qualifying Offer (as such term is defined
in Section 11(a)(ii) hereof), (ii) the price per share of Common Stock
offered in such transaction is not less than the price per share of
Common Stock paid to all holders of shares of Common Stock whose
shares were purchased pursuant to such Qualifying Offer and (iii) the
form of consideration being offered to the remaining holders of shares
of Common Stock pursuant to such transaction is the same as the form
of consideration paid pursuant to such Qualifying Offer. Upon
30
consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
a. The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as provided
in Section 11(i) and Section 11(p) hereof, or to distribute Rights
Certificates which evidence fractional Rights. In lieu of any such
fractional Rights, there shall be paid to the registered holders of
the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For purposes
of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any Trading
Day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if
the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system or the Nasdaq National Market with respect to
securities listed on another national securities exchange or quoted by
the Nasdaq National Market, respectively, or if the Rights are not
listed or admitted to trading on any national securities exchange or
quoted by the Nasdaq National Market, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market or
such other quotation 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. If on any
such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by
the Board shall be used.
b. The Company shall not be required to issue
fractions of shares of Preference Stock (other than fractions which
are integral multiples of one one-hundredth of a share of Preference
Stock, which may, at the option of the Company, be evidenced by
depositary receipts) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preference Stock
(other than fractions which are integral multiples of one one-
hundredth of a share of Preference Stock). In lieu of fractional
shares of Preference Stock that are not integral multiples of one one-
hundredth of a share of Preference Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-hundredth of a share
31
of Preference Stock. For purposes of this Section 14(b), the current
market value of one one-hundredth of a share of Preference Stock shall
be one one-hundredth of the closing price of a share of Preference
Stock, or if unavailable, the appropriate alternative price (in each
case, as determined pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.
c. Following the occurrence of a Triggering Event,
the Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one (1) share of Common Stock.
For purposes of this Section 14(c), the current market value of one
share of Common Stock shall be the closing price of one share of
Common Stock, or if unavailable, the appropriate alternative price (in
each case, as determined pursuant to Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
d. The holder of a Right by the acceptance of that
Right expressly waives such holder's right to receive any fractional
Rights or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.
15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, other than rights of action vested in the Rights Agent
pursuant to Section 18 hereof, are vested in the respective registered
holders of the Rights Certificates (and, prior to the Distribution
Date, the registered holders of the Common Stock); and any registered
holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of
the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in such holder's own
behalf and for such holder's own benefit, enforce, and may institute
and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to
exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this
Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder 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:
32
a. prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of shares of Common
Stock;
b. after the Distribution Date, the Rights
Certificates are transferable only on the registry books of the Rights
Agent if surrendered at the principal office or offices of the Rights
Agent designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and
certificates contained therein duly executed;
c. subject to Section 6(a) and Section 7(f) hereof,
the Company and the Rights Agent may deem and treat the person in
whose name a Rights Certificate (or, prior to the Distribution Date,
the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the
associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to
the contrary; and
d. notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, that
the Company must use its reasonable best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as
possible.
17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the
number of one one-hundredths of a share of Preference Stock or any
other securities of the Company which may at any time be issuable upon
the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights
of a 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 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or
33
Rights evidenced by such Rights Certificate shall have been exercised
in accordance with the provisions hereof.
18. CONCERNING THE RIGHTS AGENT.
a. The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, reimbursement for
its reasonable expenses and counsel fees and disbursements and other
disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder.
The parties agree that until the Rights Agent receives proper notice
from the Company to issue Rights Certificates to stockholders
following a Trigger Event, the Rights Agent has no obligation to issue
such Rights Certificates. Thereafter, the Rights Agent will prepare
for issuance such Rights Certificates as promptly as practicable. The
Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in
the premises.
b. The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken, suffered or
omitted by it in good faith in connection with its administration of
this Agreement in reliance upon any Rights Certificate or certificate
for Common Stock or for other securities of the Company, or any
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement,
or other paper or document reasonably 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
shall be a party, or any corporation succeeding to the corporate
trust, stock transfer or other shareholder services business of the
Rights Agent or any successor Rights Agent, shall be the successor to
the Rights Agent under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties
hereto, but only if such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21 hereof.
If at the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights Certificates shall have
been countersigned but not delivered, any such successor Rights Agent
34
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates
either in the name of the predecessor or in the name of the successor
Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this
Agreement.
b. If at any time the name of the Rights Agent shall
be changed and at such time any of the Rights Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates
so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this
Agreement.
20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the
holders of Rights Certificates, by their acceptance thereof, shall be
bound:
a. The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and
in accordance with such opinion.
b. Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter (including, without limitation, the identity
of any Acquiring Person and the determination of Current Market Price)
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 the
Chairman of the Board, the Vice Chairman, the President, any Vice
President, the Treasurer and Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent
for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
c. The Rights Agent shall be liable hereunder only
for its own negligence, bad faith or willful misconduct.
d. The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in this
35
Agreement or in the Rights Certificates, nor shall it be required to
verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall be
deemed to have been made by the Company only.
e. The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the
Rights Agent) or in respect of the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of
Section 11, Section 13 or Section 24 hereof 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 Rights
Certificates after receipt of a certificate describing any such
adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any shares of Common Stock or Preference Stock to be issued pursuant
to this Agreement or any Rights Certificate or as to whether any
shares of Common Stock or Preference Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable.
f. The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the Rights
Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
g. The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the Vice Chairman, the
President, any Vice President, the Secretary, any Assistant Secretary,
the Treasurer or any Assistant Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any
such officer.
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 shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
36
i. The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect or
misconduct; provided, however, reasonable care was exercised in the
selection and continued employment thereof.
j. No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder
(other than internal costs incurred by the Rights Agent in providing
services to the Company in the ordinary course of its business as
Rights Agent) or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
k. If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof, the
Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the
Company.
21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days' notice in writing mailed
to the Company, and to each transfer agent of the Common Stock and
Preference Stock, by registered or certified mail, and, if such
resignation occurs after the Distribution Date, to the registered
holders of the Rights Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon thirty
(30) days' notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preference Stock, by registered or certified mail,
and, if such removal occurs after the Distribution Date, to the
holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable
of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights
Certificate for inspection by the Company), then any registered holder
of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court,
37
shall be (a) a legal business entity organized and doing business
under the laws of the United States or of any state of the United
States, in good standing, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or
examination by a federal or state authority and which has at the time
of its appointment as Rights Agent a combined capital and surplus of
at least $50,000,000 or (b) an Affiliate of a legal business entity
described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights,
duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and shall execute and
deliver any further assurance, conveyance, act or deed necessary for
that purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock
and the Preference Stock, and, if such appointment occurs after the
Distribution Date, mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of
the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the
contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the
Board to reflect any adjustment or change in the Purchase Price and
the number or kind or class of shares or other securities or property
purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the
issuance or sale of shares of Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to shares of Common Stock so issued or
sold pursuant to the exercise of stock options or under any employee
plan or arrangement, granted or awarded as of the Distribution Date,
or upon the exercise, conversion or exchange of securities hereafter
issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company
or the Person to whom such Rights Certificate would be issued, and
(ii) no such Rights Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.
38
23. REDEMPTION AND TERMINATION.
a. The Board may, at its option, at any time prior to
the earlier of (i) the close of business on the twentieth day
following the Stock Acquisition Date (or, if the Stock Acquisition
Date shall have occurred prior to the Record Date, the close of
business on the twentieth day following the Record Date), or (ii) the
Final Expiration Date, direct the Company to, and if directed, the
Company shall, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right, as such
amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"). Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption hereunder has expired. The Company may,
at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the Current Market Price, as defined in Section
11(d)(i) hereof, of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board.
b. Immediately upon the action of the Board directing
the Company to make the redemption of the Rights, evidence of which
shall have been filed with the Rights Agent and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price for each Right so held. Promptly
after the action of the Board directing the Company to make the
redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to each such holder at such holder's
last address as it appears upon the registry books of the Rights
Agent, or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.
c. Notwithstanding the provisions of Section 23(a)
hereof, in the event that either (i) a majority of the Board is
elected by stockholder action by written consent (including where such
election occurs pursuant to more than one consent solicitation or
stockholder action by written consent), or (ii) a majority of the
Board is comprised of persons elected at a meeting or meetings of
stockholders which persons were not nominated by the Board in office
immediately prior to such meeting or, if more than one meeting, each
of such meetings, then for a period of one hundred and eighty (180)
days following the effectiveness of such election the Rights shall not
be redeemable under any circumstances.
d. Notwithstanding the provisions of Section 23(a)
hereof, if the Board authorizes a redemption of the Rights at any time
following the expiration of the one-hundred-and-eighty-day period
39
under Section 23(c) above, then there must be at least one Continuing
Director in office at the time of such authorization and such
authorization shall require the concurrence of a majority of the
Continuing Directors then in office.
24. EXCHANGE.
a. The Board may, at its option, at any time after
the first occurrence of a Section 11(a) (ii) Event, exchange all or
part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of
Section 7(e) hereof) for Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the
date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"); provided, however, that if the Board authorizes
such exchange of the Rights at any time on or after the earliest of
(x) the time that any Person becomes an Acquiring Person or (y) the
first occurrence of either of the circumstances described in clauses
(i) and (ii) of Section 23(c) hereof, there must be at least one
Continuing Director then in office and such authorization shall
require the approval of a majority of the Continuing Directors then in
office. Notwithstanding the f ore- going, the Board shall not be
empowered to effect such exchange at any time after any Person (other
than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, or any entity holding
Common Stock for or pursuant to the terms of any such plan), together
with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Stock then outstanding.
b. Immediately upon the action of the Board ordering
the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of shares of
Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the
Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of
Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
40
c. In any exchange pursuant to this Section 24, the
Company, at its option, may substitute Preference Stock (or Equivalent
Preference Stock, as such term is defined in paragraph (b) of Section
11 hereof) for Common Stock exchangeable for Rights, at the initial
rate of one one-hundredth of a share of Preference Stock (or
Equivalent Preference Stock) for each share of Common Stock, as
appropriately adjusted to reflect stock splits, stock dividends and
other similar transactions after the date hereof.
d. In the event that the number of shares of Common
Stock which are authorized by the Company's Restated Articles of
Incorporation but which are not outstanding or reserved for issuance
for purposes other then upon exercise of the Rights is not sufficient
to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Board shall take all such action as may be
necessary to authorize additional shares of Common Stock for issuance
upon exchange of the Rights.
e. The Company shall not be required to issue
fractions of shares of Common Stock or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, there shall be paid to the
registered holders of the Rights Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value
of a whole share of Common Stock. For the purposes of this subsection
(e), the current market value of a whole share of Common Stock shall
be the closing price of a share of Common Stock (as determined
pursuant to the second sentence of Section 11(d) (i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
25. NOTICE OF CERTAIN EVENTS.
a. In case the Company shall propose, at any time
after the Distribution Date, (i) to pay any dividend payable in stock
of any class to the holders of Preference Stock or to make any other
distribution to the holders of Preference Stock (other than a regular
periodic cash dividend out of earnings or retained earnings of the
Company), or (ii) to offer to the holders of Preference Stock rights
or warrants to subscribe for or to purchase any additional shares of
Preference Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification
of its Preference Stock (other than a reclassification involving only
the subdivision or split of outstanding shares of Preference Stock),
or (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series of related
transactions, of 50% or more of the assets or earning power of the
Company and/or its Subsidiaries (taken as a whole) to any other Person
41
or Persons (other than the Company and/or any of its Subsidiaries in
one or more transactions each of which complies with Section 11(o)
hereof), or (v) to effect the liquidation, dissolution or winding up
of the Company, then, in each such case, the Company shall give to
each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which
such reclassification; consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the shares of Preference
Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at
least twenty (20) days prior to the record date for determining
holders of the shares of Preference Stock for purposes of such action,
and in the case of any such other action, at least twenty (20) days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preference Stock
whichever shall be the earlier.
b. In case any Section 11(a)(ii) Event shall occur,
then, in any such case, (i) the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii)
hereof, and (ii) all references in the preceding paragraph to
Preference Stock shall be deemed thereafter to refer to Common Stock
and/or, if appropriate, other securities.
26. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of
any Rights Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent by
the Company) as follows:
Franklin Electric Co., Inc.
400 East Spring Street
Bluffton, Indiana 46714
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by
the holder of any Rights Certificate to or on the Rights Agent shall
be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the
Rights Agent with the Company) as follows:
Illinois Stock Transfer Company
209 W. Jackson Boulevard
Suite 903
42
Chicago, Illinois 60606
Attention: President
Notices or demands authorized by this Agreement to be given
or made by the Company or the Rights Agent to the holder of any Rights
Certificate (or, if prior to the Distribution Date, to the holder of
any certificate representing shares of Common Stock) shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company.
27. SUPPLEMENTS AND AMENDMENTS.
a. Prior to the Distribution Date, and subject to the
penultimate sentence of this Section 27(a) and the provisions of
Sections 27(b) and 27(c) hereof, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend any provision of
this Agreement (including, without limitation, any extension of the
period in which the Rights may be redeemed, any increase in the
Purchase Price and any extension of the Final Expiration Date) without
the approval of any holders of certificates representing shares of
Common Stock. From and after the Distribution Date, and subject to the
penultimate sentence of this Section 27(a) and the provisions of
Sections 27(b) and 27(c) hereof, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period
hereunder, or (iv) to change or supplement the provisions hereunder in
any manner which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii)
of this sentence, (A) a time period relating to when the Rights may be
redeemed, or to modify the ability (or inability) of the Board (with,
where required, the concurrence of a majority of the Continuing
Directors) to redeem the Rights, in either case at such time as the
Rights are not then redeemable, or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of
Rights (other than an Acquiring Person or any Affiliate or Associate
of an Acquiring Person). Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price or the number of one one-hundredths
of a share of Preference Stock for which a Right is exercisable. Prior
to the Distribution Date, the interests of the holders of Rights shall
be deemed coincident with the interests of the holders of Common
Stock.
43
b. Notwithstanding anything contained in this
Agreement to the contrary, for a period of one hundred and eighty
(180) days following the first occurrence of either of the
circumstances described in clause (i) and clause (ii) of Section 23(c)
hereof, no supplement or amendment shall be made to this Agreement
under any circumstances.
c. Notwithstanding anything contained in this
Agreement to the contrary, at any time following the expiration of the
one-hundred-and-eighty-day period under Section 27(b) above, this
Agreement may be amended or supplemented only if there is at least one
Continuing Director then in office and only if a majority of the
Continuing Directors then in office concurs with such amendment or
supplement.
d. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or
amendment.
28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent
shall bind and inure to the benefit of their respective successors and
assigns hereunder.
29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC. For all purposes of this Agreement, any calculation of the
number of shares of Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of
such outstanding shares of Common Stock of which any Person is the
Beneficial Owner, shall be made in accordance with the last sentence
of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act. The Board (with, where specifically provided for herein,
the concurrence of the Continuing Directors) shall have the exclusive
power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board (with, where
specifically provided for herein, the concurrence of the Continuing
Directors) 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 a determination to redeem
or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including,
for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board (with, where
specifically provided for herein, the concurrence of the Continuing
Directors) in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board, any of the directors on
44
the Board or the Continuing Directors to any liability to the holders
of the Rights.
30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, registered holders of the Common
Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
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 shall remain in full force and effect and shall in no
way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or
authority to be invalid, void or unenforceable and the Board
determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section
23 hereof shall be reinstated and shall not expire until the close of
business on the fifteenth day following the date of such determination
by the Board. Without limiting the foregoing, if any provision of this
Agreement requiring that a determination be made by, or with the
concurrence of, less than the entire Board is held by any court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, such determination shall then be made by the Board in
accordance with applicable law and the Company's Restated Articles of
Incorporation and By-laws.
32. GOVERNING LAW. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of Indiana and for all purposes shall
be governed by and construed in accordance with the laws of such State
applicable to contracts made and to be performed entirely within such
State.
33. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall
together constitute but one and the same instrument.
34. DESCRIPTIVE HEADINGS. Descriptive headings of the
several sections of this Agreement are inserted for convenience only
and shall not control or affect the meaning or construction of any of
the provisions hereof.
45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and attested as of the day and year first above
written.
Attest: FRANKLIN ELECTRIC CO., INC.
By: /s/ Gregg C. Sengstack By: /s/ D. W. Pfister
--------------------------- --------------------------
Name: Gregg C. Sengstack Name: D. W. Pfister
Title: V.P.-C.F.O. Title: Secretary
Attest: ILLINOIS STOCK TRANSFER COMPANY
By: /s/ Kimberlee A. Koskiewicz By: /s/ Veronica F. Gall
--------------------------- ---------------------------
Name: Kimberlee A. Koskiewicz Name: Veronica F. Gall
Title: Vice President Title: Executive Vice
President
46
EXHIBIT A
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER FEBRUARY 28, 2011, SUBJECT TO
EARLIER REDEMPTION OR EXPIRATION PURSUANT TO THE
RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF
ANY SUCH PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.] <*>
<*> The portion of the legend in brackets shall be
inserted only if applicable and shall replace the
preceding sentence.
A-1
Rights Certificate
FRANKLIN ELECTRIC CO., INC.
This certifies that
__________________________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of October 15, 1999 (as
amended, restated, renewed or extended from time to time, the "Rights
Agreement") , between Franklin Electric Co., Inc., an Indiana
corporation (the "Company") , and Illinois Stock Transfer Company, an
Illinois corporation (the "Rights Agent"), to purchase from the Company
at any time prior to 5:00 P.M. (Fort Wayne, Indiana time) on February
28, 2011 at the office or offices of the Rights Agent, or its successors
as Rights Agent, designated for such purpose, one one-hundredth of a
fully paid, non-assessable share of Series I Junior Participating
Preference Stock of the Company (the "Preference Stock"), at a purchase
price of $300.00 per one one-hundredth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with
the Form of Election to Purchase and related Certificate duly completed
and executed. The number of Rights evidenced by this Rights Certificate
(and the number of shares 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 October 15, 1999, based on the Preference Stock
as constituted at such date. The Company reserves the right to require
prior to the occurrence of a Triggering Event (as such term is defined
in the Rights Agreement) that a number of Rights be exercised so that
only whole shares of Preference Stock will be issued.
As more fully set forth in the Rights Agreement, from and
after the first occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement) , if the Rights evidenced by this
Rights Certificate are beneficially owned by (i) an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms
are defined in the Rights Agreement), (ii) a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of such
Acquiring Person (or of any such Affiliate or Associate) who becomes a
transferee prior to or concurrently with such Acquiring Person becoming
such, such Rights shall become null and void without any further action,
and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preference Stock or other securities
which may be purchased upon the exercise of the Rights evidenced by this
Rights Certificate are subject to modification and adjustment upon the
happening of certain events, including Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
A-2
provisions and conditions are hereby incorporated herein by reference
and made a part hereof and to which Rights Agreement reference is hereby
made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates, which limitations of
rights include the temporary suspension of the excercisibility of such
Rights under the specific circumstances set forth in the Rights
Agreement. Copies of the Rights Agreement are on file at the above-
mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent .
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office or offices of the Rights
Agent designated for such purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate number of one
one-hundredths of a share of Preference Stock as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered shall have
entitled such holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights Certificates for
the number of whole Rights not exercised .
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 at any time prior to the
earlier of (i) the close of business on the twentieth day following the
Stock Acquisition Date, and (ii) the Final Expiration Date. The
foregoing notwithstanding, the Rights generally may not be redeemed for
one hundred eighty (180) days following a change in a majority of the
Board as a result of a proxy contest, and thereafter, the decision to
redeem shall require the concurrence of a majority of the Continuing
Directors. In addition, under certain circumstances following the Stock
Acquisition Date, the Rights may be exchanged, in whole or in part, for
shares of the Common Stock, or shares of preference stock of the Company
having essentially the same value or economic rights as such shares.
Immediately upon the action of the Board of Directors of the Company
authorizing any such exchange, and without any further action or any
notice, the Rights (other than Rights which are not subject to such
exchange) will terminate and the Rights will only enable holders to
receive the shares issuable upon such exchange.
If the Company so determines, no fractional shares of
Preference Stock will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of
one one-hundredth of a share of Preference Stock, which may, at the
election of the Company, be evidenced by depositary receipts) , but in
lieu thereof, a cash payment will be made, as provided in the Rights
Agreement. The Company, at its election, may require that a number of
Rights be exercised so that only whole shares of Preference Stock would
be issued.
A-3
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the
holder of shares of Preference Stock or of any other securities of the
Company which may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or herein be construed
to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting
thereof, or to give consent to or withhold consent from any corporate
action, or, to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement) , or to
receive dividends or subscription rights, or otherwise, until the Right
or Rights evidenced by this Rights Certificate shall have been exercised
as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ___________ ____
ATTEST: FRANKLIN ELECTRIC CO., INC.
__________________________ By:________________________________
Secretary Title:__________________________
Countersigned:
ILLINOIS STOCK TRANSFER COMPANY
By:_______________________ By:________________________________
Authorized Signature
A-4
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED _______ hereby sells, assigns and
transfers unto _________________________________________________________
________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest
herein, and does hereby irrevocably constitute and appoint
____________________ Attorney, to transfer the within Rights Certificate
on the books of the within-named Company, with full power of
substitution.
Dated:______________________, ____
_____________________________________
Signature
Signature Medallion Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated:____________________, ____
NOTICE
The signature(s) to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by
the Rights Certificate.)
To FRANKLIN ELECTRIC CO., INC.
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Rights Certificate to purchase the
shares of Preference Stock issuable upon the exercise of the Rights (or
such other securities of the Company or of any other Person which may be
issuable or such other assets which may be deliverable upon the exercise
of the Rights) and requests that certificates for any such shares or
securities be issued in the name of and delivered to:
________________________________________________________________________
(Please print name and address)
________________________________________________________________________
Please insert social security
or other identifying number:
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of
such Rights shall be registered in the name of and delivered to:
________________________________________________________________________
(Please print name and address)
________________________________________________________________________
Please insert social security
or other identifying number:
Dated: ________________,____
Signature
Signature Medallion Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [
] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights
evidenced by this Rights Certificate from any Person who is, was or
became an Acquiring Person or an Affiliate or Associate of an Acquiring
Person.
Dated:___________________ ________________________________
Signature
Signature Medallion Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or
any change whatsoever .
