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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Johnston Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware (IRS Employer
(State of Incorporation) Identification No.)
105 Thirteenth Street
Columbus, Georgia 31901
(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
- ------------------- ------------------------------
Preferred Share New York Stock Exchange
Purchase Rights
- ----------------------------------------------------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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Item 1. Description of Securities To Be Registered.
On April 19, 1999, the Board of Directors of Johnston
Industries, Inc.(the "Company") declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par value
$0.10 per share (the "Common Shares"), of the Company. The dividend is payable
immediately following the approval of the Rights for listing on the New York
Stock Exchange to the stockholders of record on May 17, 1999 (the "Record
Date"). Each Right entitles the registered holder to purchase from the Company
units, each unit being one one-hundredth of a share, of Series X Junior
Participating Preferred Stock, par value $0.01 per share (the "Preferred
Shares"), of the Company at a price of $12 per Right (the "Exercise Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Stockholder Protection Agreement (the "Rights Agreement"), dated as of May 17,
1999, between the Company and The Bank of New York, as Rights Agent (the "Rights
Agent").
Until the earlier to occur of (i) 10 business days following a
public announcement that a person or group of affiliated or associated persons
have acquired beneficial ownership of 20% or more of the outstanding Common
Shares (any such person or group an "Acquiring Person") or (ii) 10 business days
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in such person or
group becoming an Acquiring Person (the earlier of such dates being the
"Separation Time"), the Rights will be evidenced, with respect to Common Share
certificates outstanding as of the Record Date, by such Common Share certificate
with a copy of the summary of Rights attached thereto. Notwithstanding the
above, (i) certain persons acquiring more than 20% but not more than 30% of the
Company's common stock with the express written approval of the Company's Board
of Directors, (ii) certain existing stockholders of the Company and (iii)
persons acquiring the Company's common stock from such existing stockholders
irrespective of the percent acquired with the express written approval of the
Company's Board of Directors shall not be deemed Acquiring Persons.
The Rights Agreement provides that, until the Separation Time
(or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Shares. Until the Separation Time (or
earlier redemption or expiration of the Rights), new Common Share certificates
issued after the Record Date upon transfer or a new issuance of Common Shares
will contain a notation incorporating the Rights Agreement by reference. Until
the Separation Time (or earlier
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redemption or expiration of the Rights), the surrender for transfer of any
certificates for Common Shares outstanding as of the Record Date, even without
such notation or a copy of the Summary of Rights being attached thereto, will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the Separation
Time, separate certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Shares and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Separation Time. The
Rights will expire as of the close of business May 17, 2009 (the "Expiration
Time"), unless the Expiration Time is extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case, as described below.
Following the Separation Time, holders of Rights (other than
Rights beneficially owned by the Acquiring Person, which will thereafter be
void) will be entitled to receive upon exercise and payment of the Exercise
Price that number of units (each unit being one one-hundredth of a share) of
Preferred Shares which equals the result obtained by dividing the Exercise Price
by 50% of the average market price per Common Share for the twenty trading days
immediately preceding the date of exercise.
The Exercise Price and number of Rights outstanding or, if
after the Separation Time, the number and type of securities purchasable upon
exercise of the Rights, shall be adjusted from time to time to prevent dilution
if the Company (i) declares or pays a dividend on the Common Shares payable in
Common Shares (or other capital stock), (ii) subdivides the outstanding Common
Shares or (iii) combines the outstanding Common Shares into a smaller number of
Common Shares. Further, the number and kind of units of Preferred Shares or
other securities issuable upon the exercise of the Rights shall be adjusted if
the Company (w) declares or pays a dividend on the Preferred Shares payable in
voting stock of the Company, (x) subdivides the outstanding Preferred Shares,
(y) combines the outstanding Preferred Shares into a small number of shares or
(z) issues voting stock in a reclassification of the Preferred Shares.
Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Preferred Share will entitle the holder thereof, when,
as and if declared by the Board of Directors of the Company to dividends equal
to 100 times all dividends declared on the Common Shares since the first
issuance of any Preferred Share or fraction of a Preferred Share. In the event
of the liquidation of the Company, the holders of the
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Preferred Shares will be entitled to a minimum preferential liquidation payment
of $100 per share plus all accrued dividends and distributions. Following
payment of such preference, the holders of Common Shares shall be entitled to a
payment per share equal to one one-hundredth of the Preferred Share per share
payment. Following payment of this amount to the holders of the Common Shares,
holders of Preferred Shares and Common Shares will participate ratably in all
additional liquidation payments such that holders of Preferred Shares will
receive per share 100 times the amount paid on each Common Share. Each Preferred
Share will have 100 votes, voting together with the Common Shares. These rights
are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of each unit of a Preferred Share
(i.e., a one one-hundredth interest in a Preferred Share) purchasable upon
exercise of the Rights should approximate the value of one Common Share.
In the event that (i) the Company is acquired in a merger or
other business combination transaction in which the Company is not the survivor
or the Common Shares are exchanged for cash, stock or assets or (ii) 50% or more
of the Company's consolidated assets or earning power are sold, in either case,
after a person or group has become an Acquiring Person, proper provision will be
made so that each holder of a Right (other than the Acquiring Person, whose
Rights will be void) will thereafter have the right to receive, upon the
exercise thereof at the then-current Exercise Price of each Right, that number
of shares of common stock of the acquiring company which at the time of such
transaction will have a market value of two times the Exercise Price. Any
Preferred Share outstanding as of the date of such business combination or other
transaction described above shall entitle the holder thereof to 100 times the
consideration each Common Share receives in connection therewith.
At any time after the Separation Time, the Board of Directors
of the Company may exchange the Rights (other than Rights which have become
void), in whole or in part, for Common Shares at an exchange ratio equal to the
Exercise Price divided by the then market price of a Common Share.
No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
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At any time prior to the Separation Time, the Company may
redeem the Rights, in whole but not in part, at a price of $.01 per Right (the
"Redemption Price"). Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of the Rights prior
to the Separation Time. After the Separation Time, no such amendment may
materially and adversely affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Company's Board of Directors, except
pursuant to an offer conditioned on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by the Board of Directors since the Rights may be redeemed
by the Company at the Redemption Price prior to the time that a person or group
becomes an Acquiring Person.
The Rights Agreement, specifying the terms of the Rights and
including the form of the Certificate of Designation, Preferences and Rights
setting forth the terms of the Preferred Shares as an exhibit thereto and the
form of press release announcing the declaration of the Rights are attached
hereto as exhibits and are incorporated herein by reference. The foregoing
description of the Rights is qualified in its entirety by reference to such
exhibits.
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Item 2. Exhibits.
4. Form of Stockholder Protection Agreement between Johnston
Industries, Inc. and The Bank of New York, which
includes the form of Certificate of Designation, Preferences
and Rights setting forth the terms of the Series X
Junior Participating Preferred Stock, par value $0.01 per
share, as Exhibit A, the Summary of Stockholder Protection
Agreement as Exhibit B and the form of Right Certificate as
Exhibit C. Pursuant to the Stockholder Protection Agreement,
printed Right Certificates will not be mailed until as soon as
practicable after the earlier of the tenth business day after
public announcement that a person or group has become an
Acquiring Person or the tenth business day after a person
commences, or announces its intention to commence, a tender
offer or exchange offer the consummation of which would result
in such person becoming an Acquiring Person.
99. Form of press release dated May 5, 1999.
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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, thereunto duly authorized.
Johnston Industries, Inc.
By /s/ James J. Murray
-----------------------------------
James J. Murray
Chief Financial Officer
Dated: May 17 , 1999
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EXHIBIT LIST
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4. Form of Stockholder Protection Agreement, between Johnston
Industries, Inc. and The Bank of New York, which includes the form of
Certificate of Designation, Preferences and Rights setting forth the
terms of the Series X Junior Participating Preferred Stock, par value
$0.01 per share, as Exhibit A, the Summary of Stockholder Protection
Agreement as Exhibit B and the form of Right Certificate as Exhibit
C. Pursuant to the Stockholder Protection Agreement, printed Right
Certificates will not be mailed until as soon as practicable after
the earlier of the tenth business day after public announcement that
a person or group has become an Acquiring Person or the tenth
business day after a person commences, or announces its intention to
commence, a tender offer or exchange offer the consummation of which
would result in such person becoming an Acquiring Person.
99. Form of press release dated May 5, 1999.
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EXHIBIT 4
STOCKHOLDER PROTECTION AGREEMENT
DATED AS OF
_________ ___, 1999
BETWEEN
JOHNSTON INDUSTRIES, INC.
AND
THE BANK OF NEW YORK
AS RIGHTS AGENT
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STOCKHOLDER PROTECTION AGREEMENT
TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I - CERTAIN DEFINITIONS..........................................................................1
1.1 Certain Definitions................................................................1
ARTICLE II - THE RIGHTS..................................................................................7
2.1 Summary of Rights..................................................................7
2.2 Legend on Stock Certificates.......................................................7
2.3 Exercise Price; Exercise of Rights; Detachment of Rights...........................8
2.4 Adjustments to Exercise Price; Number of Rights;
Securities Purchasable...................................................11
2.5 Date On Which Exercise Is Effective...............................................13
2.6 Execution, Authentication, Delivery and Dating
of Rights Certificates...................................................13
2.7 Registration, Registration of Transfer and Exchange...............................14
2.8 Mutilated, Destroyed, Lost and Stolen Rights Certificates.........................14
2.9 Persons Deemed Owners.............................................................15
2.10 Delivery and Cancellation of Certificates.........................................15
2.11 Agreements of Rights Holders......................................................16
2.12 Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.........................................................16
2.13 Certificate of Adjusted Exercise Price or Number of Shares........................18
ARTICLE III - THE RIGHTS AGENT..........................................................................18
3.1 General...........................................................................18
3.2 Merger or Consolidation or Change of Name of Rights Agent.........................19
3.3 Duties of Rights Agent............................................................19
3.4 Change of Rights Agent............................................................21
ARTICLE IV - MISCELLANEOUS..............................................................................22
4.1 Redemption, Termination and Exchange..............................................22
4.2 Provision in Event of Insufficient Shares of Series X
Preferred Stock..........................................................24
4.3 Issuance of New Rights Certificates...............................................24
4.4 Supplements and Amendments........................................................24
4.5 Fractional Shares.................................................................25
4.6 Transactions After the Separation Time............................................25
4.7 Rights of Action..................................................................25
4.8 Holder of Rights Not Deemed a Stockholder.........................................26
4.9 Notice of Proposed Actions........................................................26
4.10 Notices...........................................................................26
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4.11 Costs of Enforcement..............................................................27
4.12 Successors........................................................................27
4.13 Benefits of this Agreement........................................................27
4.14 Descriptive Headings..............................................................27
4.15 Governing Law.....................................................................27
4.16 Counterparts......................................................................28
4.17 Severability......................................................................28
</TABLE>
EXHIBITS
Exhibit A Form of Certificate of Designation, Preferences and Rights of
Series X Junior Participating Preferred Stock
Exhibit B Form of Summary of Stockholder Protection Plan
Exhibit C Form of Rights Certificate (Together With Form of Election to
Purchase)
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STOCKHOLDER PROTECTION AGREEMENT
This Stockholder Protection Agreement (the "Agreement"), is
entered into as of ______ ___, 1999, between JOHNSTON INDUSTRIES, INC, a
Delaware corporation (the "Company"), and THE BANK OF NEW YORK, as Rights Agent
(the "Rights Agent", which term shall include any successor Rights Agent
hereunder).
WHEREAS, on April 19, 1999, the Board of Directors of the Company
adopted a stockholder protection plan designed to provide protection to the
Company's stockholders in the event any person should attempt to acquire a 20%
or greater equity interest in the Company at a price, under circumstances or on
terms that are not in the best interests of the Company and its stockholders;
WHEREAS, the Board of Directors of the Company has (a) authorized
and declared a dividend of one contingent preferred stock purchase right
("Right") in respect of each share of Common Stock (as hereinafter defined) held
of record as of the close of business on May 17, 1999 (the "Record Time") and
(b) authorized the issuance of one Right in respect of each share of Common
Stock that shall become outstanding after the Record Time and prior to the
Separation Time (as hereinafter defined);
WHEREAS, each Right entitles the holder thereof, after the
Separation Time, to purchase that number of Units (as hereinafter defined) of a
share of the Company's Series X Preferred Stock (as hereinafter defined) which
equals the quotient obtained by dividing the Exercise Price (as hereinafter
defined) by fifty percent (50%) of the Market Price (as hereinafter defined) per
share of Common Stock, pursuant to the terms and subject to the conditions set
forth herein; and
WHEREAS, the Company desires to appoint the Rights Agent to act on
behalf of the Company, and the Rights Agent is willing to so act, in connection
with the issuance, transfer, exchange and replacement of Rights Certificates (as
hereinafter defined), the exercise of Rights and other matters referred to
herein;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, the parties hereto agree as follows:
ARTICLE I - CERTAIN DEFINITIONS
1.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who has (i) acquired
or obtained the right to acquire Beneficial Ownership of 20% or more of the
outstanding shares
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of Common Stock or (ii) has commenced or announced an intention to commence a
tender or exchange offer which would result in that Person obtaining Beneficial
Ownership of 20% or more of the outstanding shares of Common Stock; provided,
however, that the term "Acquiring Person" shall not include (A) the Company, (B)
any wholly-owned Subsidiary of the Company, (C) any employee stock ownership or
other employee benefit plan of the Company or of a Subsidiary of the Company (a
"Plan"), (D) any Person holding Common Stock for or pursuant to the terms of any
such Plan, (E) any Exempted Person or (F) GRM Industries, Inc., Redlaw
Industries, Inc., the Estate of David L. Chandler, Ann P. Chandler, David Lee
Chandler, Allyn P. Chandler, A&A Chandler LLC, any trusts for the benefit of the
foregoing, and Comerica Bank, N.A. and its affiliates as transferee of any of
the foregoing individually or collectively (the "Chandler Group").
Notwithstanding the foregoing, any Person who acquires the Beneficial Ownership
of 20% or more of the shares of Common Stock of the Company either (i) by reason
of share purchases by the Company reducing the number of shares of Common Stock
outstanding (provided such Person does not acquire additional shares of Common
Stock other than by stock dividend), or (ii) inadvertently, if such Person
notifies the Board of Directors of such inadvertent purchase within five
business days and within two business days after such notice divests itself of
enough shares of Common Stock so as to no longer have the Beneficial Ownership
of 20% of the outstanding Common Stock, will not be an Acquiring Person.
(b) "Affiliate", when used to indicate a relationship with
a specified Person, shall mean a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, such specified Person.
(c) "Associate" of a specified Person shall mean (i) any
corporation, partnership or other organization of which such specified Person is
an officer or partner or is, directly or indirectly, the Beneficial Owner of 10%
or more of any class of equity securities, (ii) any trust or other estate in
which such specified Person has a substantial beneficial interest or as to which
such specified Person serves as trustee or in a similar fiduciary capacity,
(iii) any relative or spouse of such specified Person, or any relative of such
spouse, who has the same home as such specified Person or who is a director or
officer of the Company or an Affiliate of the Company and (iv) any Person who is
a director, officer, partner or trustee of such specified Person or of any
corporation, partnership or other organization (other than the Company or any
wholly owned Subsidiary of the Company) that is an Affiliate or Associate of
such specified Person.
(d) A Person shall be deemed the "Beneficial Owner", and
to have "Beneficial Ownership", of, and to "Beneficially Own", any securities as
to which such Person or any of such Person's Affiliates or Associates is or may
be deemed to be the Beneficial Owner pursuant to Rule 13d-3 or Rule 13d-5 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (or
pursuant to any comparable or successor laws or regulations or, if such Rules
shall be rescinded and there shall be no comparable or successor laws or
regulations, pursuant to Rule 13d-3 or Rule 13d-5 as in effect on the date
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of this Agreement), as well as any securities as to which such Person or any of
such Person's Affiliates or Associates has the right to become a Beneficial
Owner (whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner", or to have "Beneficial Ownership", of, or to
"Beneficially Own", any security (i) solely because such Person or any of such
Person's Affiliates or Associates has or shares the power to vote or direct the
voting of such security pursuant to a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable rules and regulations under the Exchange Act, except if such
power (or the arrangements relating thereto) is then reportable under Item 6 of
Schedule 13D under the Exchange Act (or any similar provision of a comparable or
successor report) or (ii) held for or pursuant to the terms of any Plan; and
provided, however, that nothing in this paragraph 1.1(d) shall cause a Person
engaged in business as an underwriter of securities to be the Beneficial Owner
of, to have Beneficial Ownership of, or to Beneficially Own, any securities
acquired through such Person's participation in good faith in a firm commitment
underwriting until the expiration of 40 days after the date of such acquisition.
For purposes of this Agreement, in determining the percentage of the outstanding
shares of Common Stock with respect to which a Person is the Beneficial Owner,
all shares as to which such Person is deemed the Beneficial Owner shall be
deemed outstanding.
(e) "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the Cities of New
York and Columbus, Georgia are generally authorized or obligated by law or
executive order to close.
(f) "Close of business" on any given day shall mean the
time on such date (or, if such date is not a Business Day, the time on the next
succeeding Business Day) at which the offices of the transfer agent for the
Common Stock (or, after the Separation Time, the offices of the Rights Agent)
are closed to the public.
(g) "Common Stock" shall mean the Common Stock, par value
$.01 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 equity securities or other equity
interests having power to control or direct the management of such Person.
(h) "Continuing Directors" shall mean those individuals
who as of the date of this Agreement constitute the Board of Directors of the
Company, together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of 66-2/3% of the directors of the Company then still in
office who were either directors as of the date of this Agreement or whose
election or nomination for election was previously so approved.
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(i) "Exempted Person" shall mean any Institutional
Investor and any Minority Investor. Notwithstanding the foregoing, if any
Institutional Investor or Minority Investor acquires Beneficial Ownership of the
outstanding Common Stock in excess of that percentage expressly approved in
writing by the Board of Directors of the Company, either (i) by reason of share
purchases by the Company reducing the number of shares of Common Stock
outstanding (provided such Exempted Person does not acquire additional shares of
Common Stock other than by stock dividend) or (ii) inadvertently, if such
Exempted Person notifies the Board of Directors of such inadvertent purchase
within five business days and within two business days after such notice divests
itself of enough shares of Common Stock so as to no longer have the Beneficial
Ownership of the outstanding Common Stock in excess of the specified percentage,
then in either case such Institutional Investor or Minority Investor will not
cease to be an Exempted Person.
(j) "Exercise Price" shall initially be $12, subject to
adjustment from time to time as provided in Section 2.4 hereof.
(k) "Expiration Time" shall be the close of business on
May 17, 2009.
(l) "Institutional Investor" shall mean any Person
(together with such Institutional Investor's Affiliates and Associates) (i) who,
with the express written approval of the Continuing Directors of the Company so
long as the Chandler Group owns at least 15% of the outstanding Common Stock,
and thereafter the Board of Directors of the Company, acquires aggregate
Beneficial Ownership of between 20% and 30% (or if such securities are to be
acquired from the Chandler Group, such maximum percentage as is then owned by
the Chandler Group) of the outstanding Common Stock of the Company, provided,
however, that the Institutional Investor acquires such Beneficial Ownership in
the ordinary course of business and not with the purpose nor with the effect of
changing or influencing the control of the Company, nor in connection with or as
a participant in any transaction having such purpose or effect, including any
transaction subject to Rule 13d-3(b) of the Exchange Act, and (ii) who is: (A) a
broker or dealer registered under Section 15 of the Exchange Act; (B) a bank as
defined in Section 3(a)(6) of the Exchange Act; (C) an insurance company as
defined in Section 3(a)(19) of the Exchange Act; (D) an investment company
registered under Section 8 of the Investment Company Act of 1940; (E) an
investment adviser registered under Section 203 of the Investment Advisers Act
of 1940; (F) an employee benefit plan or pension fund which is subject to the
provisions of the Employee Retirement Income Security Act of 1974 or an
endowment fund; (G) a parent holding company for Persons described in clauses
(A) through (F) above, provided the aggregate amount held directly by the
parent, and directly and indirectly by its subsidiaries which are not Persons
specified in clauses (A) through (F) above, does not exceed one percent of the
securities of the subject class; or (H) a group, provided that all the members
are Persons specified in clauses (A) through (G) above.
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(m) "Market Price" per share of Common Stock on any date
of determination shall mean the average of the daily closing prices per share of
Common Stock (determined as described below) on each of the 20 consecutive
Trading Days through and including the fifth Trading Day immediately preceding
such determination date; provided, however, that if the first public
announcement of an event described in Section 2.4 hereof occurs within such 20
Trading Day period, Market Price per share of Common Stock on such determination
date shall mean the average of the daily closing prices per share of Common
Stock on each Trading Day from and including the day after the date of such
announcement through and including the fifth Trading Day immediately preceding
such determination date. The closing price per share of Common Stock on any date
shall be the last sale price, regular way, or, in case no such sale takes place
on such date, the average of the closing bid and asked prices, regular way, for
each share of Common Stock, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common Stock is
not then listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common Stock is not
then listed or admitted to trading on any national securities exchange, the
average of the high bid and low asked prices for each share of Common Stock in
the over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or, if on any such date the Common Stock is not then 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 of Directors of the Company; provided, however, that if on
any such date the Common Stock is not listed or admitted for trading on a
national securities exchange or traded in the over-the-counter market, the
closing price per share of Common Stock on such date shall mean the fair value
per share of Common Stock on such date as determined in good faith by the Board
of Directors of the Company, after consultation with a nationally recognized
investment banking firm with respect to the fair value per share of Common
Stock. Market Price per share of Series X Preferred Stock on any date of
determination shall be determined in the same manner set forth above for Common
Stock, other than as provided in the proviso to the immediately preceding
sentence. If the Market Price per share of Series X Preferred Stock cannot be
determined in the manner provided above, or if the Series X Preferred Stock is
not publicly held or listed or traded in a manner described above, the Market
Price per share of Series X Preferred Stock shall be conclusively deemed to be
an amount equal to 100 (as such number may be appropriately adjusted for such
events as subdivisions or combinations of stock, stock dividends and
recapitalizations with respect to the Common Stock occurring after the date of
this Agreement) multiplied by the Market Price per share of Common Stock. The
Market Price of a Unit shall be equal to the Market Price of one share of Series
X Preferred Stock divided by 100.
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(n) "Minority Investor" shall mean any Person (together
with such Minority Investor's Affiliates and Associates), other than an
Institutional Investor, who, with the express, written approval of the
Continuing Directors of the Company so long as the Chandler Group owns at least
15% of the outstanding Common Stock, and thereafter the Board of Directors of
the Company, acquires aggregate Beneficial Ownership of between 20% and 30% (or
if such securities are to be acquired from the Chandler Group, such maximum
percentage as is then owned by the Chandler Group) of the outstanding Common
Stock of the Company.
(o) "Person" shall mean any individual, firm, partnership,
limited liability company, association, group (as such term is used in Rule
13d-5 under the Exchange Act, as in effect on the date of this Agreement),
corporation or other entity.
(p) "Series X Preferred Stock" shall mean the Series X
Junior Participating Preferred Stock, par value $.01 per share, of the Company
having the rights, powers, privileges and restrictions, qualifications and
limitations set forth in the Certificate of Designation, Preferences and Rights
of Series X Junior Participating Preferred Stock in the form attached as Exhibit
A.
(q) "Separation Time" shall mean the close of business on
the tenth Business Day after (i) a public announcement establishing that an
Acquiring Person has become such or (ii) a resolution by the Board of Directors
stating that the majority of the Board of Directors is aware that a Person has
become an Acquiring Person, provided that if the foregoing results in the
Separation Time being prior to the Record Time, the Separation Time shall be
extended to the Record Time.
(r) "Subsidiary" of any specified Person shall mean any
corporation or other entity of which a majority of the voting power of the
equity securities or a majority of the equity interest is Beneficially Owned,
directly or indirectly, or otherwise controlled by such Person.
(s) "Trading Day" shall mean a day on which the principal
national securities exchange or over-the-counter market on which the Common
Stock is then listed or admitted to trading is open for the transaction of
business or, if the Common Stock is not then listed or admitted to trading on
any national securities exchange or over-the-counter market, a Business Day.
(t) A "Unit" of Series X Preferred Stock shall mean one
one-hundredth of a share of Series X Preferred Stock.
(u) "Voting Stock" shall mean (i) a Unit of Series X
Preferred Stock, (ii) a share of Common Stock and (iii) any other share of
capital stock of the Company entitled to vote generally in the election of
directors or entitled to vote together with the Common Stock
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in respect of any merger, consolidation, liquidation, dissolution or winding up
of the Company or sale of all or substantially all of the Company's assets.
ARTICLE II - THE RIGHTS
2.1 SUMMARY OF RIGHTS. As soon as practicable after the date
hereof, the Company will mail to each holder of record of Common Stock as of the
Record Time, at such holder's address as shown on the records of the Company, a
copy of a Summary of Stockholder Protection Agreement in substantially the form
attached as Exhibit B.
2.2 LEGEND ON STOCK CERTIFICATES. Certificates for the Common
Stock issued after the Record Time but prior to the close of business on the
Separation Time shall evidence one Right for each share of Common Stock
represented thereby and shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
Until the earlier of the Separation Time or the Expiration
Time (as such terms are defined in the Stockholder Protection
Agreement referred to below), this certificate also evidences
and entitles the holder hereof to certain Rights as set forth
in a Stockholder Protection Agreement, dated as of ________
___, 1999 as amended, supplemented or otherwise modified from
time to time (the "Stockholder Protection Agreement"), between
JOHNSTON INDUSTRIES, INC. (the "Company") and THE BANK OF NEW
YORK, as Rights Agent, the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Stockholder
Protection Agreement, such Rights may expire, may become void
(if they are "Beneficially Owned" by an "Acquiring Person" or
an "Affiliate" or "Associate" thereof, as such terms are
defined in the Stockholder Protection Agreement, or a
transferee of any of the foregoing) or may be evidenced by
separate certificates and may no longer be evidenced by this
certificate. The Company will mail or arrange for the mailing
of a copy of the Stockholder Protection Agreement to the
holder of this certificate without charge within five days
after the receipt of a written request therefor.
Notwithstanding the absence of the foregoing legend, certificates representing
shares of Common Stock that are issued and outstanding at the Record Time shall
evidence one Right for each share of the Common Stock evidenced thereby.
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2.3 EXERCISE PRICE; EXERCISE OF RIGHTS; DETACHMENT OF RIGHTS.
(a) Subject to the terms and conditions of this Agreement,
after the Separation Time, each Right will entitle the holder thereof to
receive, upon the exercise thereof and payment of the Exercise Price, that
number of Units of Series X Preferred Stock which equals the quotient obtained
by dividing the Exercise Price by fifty percent (50%) of the Market Price per
share of Common Stock at the Separation Time, which number and type of
securities are subject to adjustment as provided in Section 2.12 hereof and in
Section 2.4 hereof. The Company shall calculate the Exercise Price and provide
the Rights Agent with notice of such Exercise Price immediately after the
Separation Time.
(b) Until the Separation Time, (i) no Right may be
exercised and (ii) each Right will be evidenced by the certificate for the
associated share of Common Stock (together, in the case of certificates issued
prior to the Record Time, with the letter or other communication mailed to each
holder of record of Common Stock pursuant to Section 2.1 hereof) and will be
transferable and/or convertible only together with, and will be transferred by a
transfer or a conversion of, such associated share (whether with or without such
letter or other communication).
(c) After the Separation Time and prior to the Expiration
Time, and subject to the provisions of clause (g) and the second paragraph of
clause (h) of this Section 2.3, the Rights (i) may be exercised and (ii) will be
transferable independently of the Common Stock. As soon as practicable following
the Separation Time, the Rights Agent will mail to each holder of record of
Common Stock as of the Separation Time (other than a holder known by the Rights
Agent to be an Acquiring Person or an Affiliate or Associate thereof), at such
holder's address as shown by the records of the Company (the Company hereby
agreeing to furnish copies of such records to the Rights Agent for this
purpose), (x) a certificate (a "Rights Certificate") in substantially the form
of Exhibit C hereto appropriately completed, representing the number of Rights
held by such holder at the Separation Time and having 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
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange or quotation system on which the Rights may
from time to time be listed or traded, or to conform to usage, and (y) a
disclosure statement describing the Rights.
(d) Subject to the provisions of clause (g) and the second
paragraph of clause (h) of this Section 2.3, Rights may be exercised on any
Business Day after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent the Rights Certificate evidencing such Rights
with an Election to Purchase (an "Election to Purchase") and certificate
substantially in the form attached to the Rights Certificate duly completed,
accompanied by payment of the Exercise Price multiplied by the number of Rights
being exercised and a sum sufficient to cover any transfer tax or charge that
may be payable in respect of any transfer involved in the transfer or delivery
of Rights Certificates
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or the issuance or delivery of certificates for Series X Preferred Stock or
depositary receipts as referenced in Section 4.5 hereof (or both) in a name
other than that of the holder of the Rights being exercised. Payment of the
Exercise Price for the Units purchased upon the exercise of the Rights hereunder
shall be made by delivery to the Company of (i) cash, (ii) certified check or
money order payable to the order of the Company, (iii) Common Stock, (iv) Rights
to purchase Units of the Company's Series X Preferred Stock or (v) in such other
form as may be determined by the Board of Directors of the Company, in each case
in an amount equal to the aggregate Exercise Price of such Rights. For the
purposes of the preceding sentence, (x) Common Stock shall be valued at its
Market Price and (y) Rights to purchase Units of the Company's Series X
Preferred Stock shall be valued at an amount equal to the fair market value of
the Units subject to the Rights (as determined by the Company's Board of
Directors) less the Exercise Price.
(e) Upon receipt of a Rights Certificate, with an Election
to Purchase and certificate duly executed accompanied by payment as set forth in
Section 2.3(d) above, and subject to the provisions of clause (g) and the second
paragraph of clause (h) of this Section 2.3, the Rights Agent will thereupon
promptly (i)(A) requisition from the Company's transfer agent certificates for
the number of shares of stock to be purchased (the Company hereby irrevocably
authorizing its transfer agent to comply with all such requisitions) and (B) if
the Company elects pursuant to Section 4.5 hereof not to issue certificates
representing fractional shares of stock, requisition from the depositary
selected by the Company cash or depositary receipts, as the case may be,
representing the fractional shares of stock to be purchased and (ii) after
receipt of such certificates or depositary receipts, deliver such certificates
or depositary receipts 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.
(f) If the holder of any Rights shall exercise fewer than
all the Rights evidenced by such holder's Rights Certificate, a new Rights
Certificate evidencing the Rights remaining unexercised will be issued by the
Rights Agent to such holder or to such holder's duly authorized assigns, subject
to the provisions of Section 4.5 hereof.
(g) Anything in this Agreement or in the Rights
Certificates to the contrary notwithstanding, Rights Beneficially Owned by an
Acquiring Person or an Affiliate or Associate thereof or any transferee of any
of the foregoing cannot validly be transferred or exercised and shall be for all
purposes void.
(h) The Company covenants and agrees that it will (i)
cause to be reserved and kept available until the Expiration Time out of its
authorized and unissued shares of capital stock a number of shares of Series X
Preferred Stock and/or Common Stock or other preferred stock or equity
securities of the Company satisfactory for delivery pursuant to Section 4.2
hereof, sufficient to permit the exercise in full of all outstanding Rights;
(ii) take all such action as may be necessary to ensure that all shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the
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<PAGE> 13
Exercise Price), be duly and validly authorized, executed, issued and delivered
and fully paid and nonassessable; (iii) take all such action as may be necessary
to comply with any applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, and the rules and
regulations thereunder, and any other applicable law, rule or regulation, in
connection with the issuance of any shares upon exercise of Rights; (iv) use its
best efforts to cause all shares issued upon exercise of Rights to be listed on
a national securities exchange or traded in the over-the-counter market and
quoted on NASDAQ upon issuance; and (v) pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of
the original issuance or delivery of the Rights Certificates or of any shares
issued upon the exercise of Rights, provided that the Company shall not be
required to pay any transfer tax or charge that may be payable in respect of any
transfer involved in the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for shares in a name other than that of the
holder of the Rights being transferred or exercised.
The Company may temporarily suspend, at any time, the
exercisability of the Rights for such period of time as may be reasonably
necessary to prepare and file such documents and to perform such acts as are
required to ensure compliance with the Securities Act, the Exchange Act, the
rules and regulations thereunder, the "blue sky" laws of the various states and
any other applicable law, rule or regulation, as provided in clause (iii) above.
The Company may also suspend such exercisability for such period of time as may
be reasonably necessary to permit any registration statement or statements
required by the Securities Act or the Exchange Act or any registration or
qualification required by any other applicable law, rule or regulation, to be
effective with respect to any securities to be issued upon exercise of Rights.
Upon any suspension of exercisability, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended. 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.
2.4 ADJUSTMENTS TO EXERCISE PRICE; NUMBER OF RIGHTS;
SECURITIES PURCHASABLE.
(a) If the Company shall at any time after the Record Time
and prior to the Expiration Time (i) declare or pay a dividend on Common Stock
payable in Common Stock (or other capital stock), (ii) subdivide the outstanding
Common Stock or (iii) combine the outstanding Common Stock into a smaller number
of shares of Common Stock, the Exercise Price and number of Rights outstanding,
or, if the payment or effective date therefor shall occur after the Separation
Time, the securities purchasable upon exercise of Rights shall be adjusted in
the manner set forth below. If the Exercise Price and number of Rights are to be
adjusted, (x) the Exercise Price in effect after such adjustment will be equal
to the Exercise Price in effect immediately prior to such adjustment divided by
the number of
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<PAGE> 14
shares of Common Stock (or other capital stock) (the "Expansion Factor") that a
holder of one share of Common Stock immediately prior to such dividend,
subdivision or combination would hold thereafter as a result thereof and (y)
each Right held prior to such adjustment will become that number of Rights equal
to the Expansion Factor, and the adjusted number of Rights will be deemed to be
distributed among the shares of Common Stock with respect to which the original
Rights were associated (if they remain outstanding) and the shares issued in
respect of such dividend, subdivision or combination, so that each such share of
Common Stock will have exactly one Right associated with it. If the securities
purchasable upon exercise of Rights are to be adjusted, the securities
purchasable upon exercise of each Right after such adjustment will be the
securities that a holder of the securities purchasable upon exercise of one
Right immediately prior to such dividend, subdivision or combination would hold
immediately thereafter. If after the Record Time and prior to the Expiration
Time the Company shall issue any shares of capital stock other than Common Stock
in a transaction of a type described in the first sentence of this Section
2.4(a) or shall issue any Voting Stock in a reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), shares
of such capital stock shall be treated herein as nearly equivalent to shares of
Common Stock as may be practicable and appropriate under the circumstances and
the Company and the Rights Agent agree to amend this Agreement to effect such
treatment.
If the Company shall at any time after the Record Time and
prior to the Separation Time issue any shares of Common Stock otherwise than in
a transaction referred to in the preceding paragraph or in Section 2.4(b)
hereof, each such share of Common Stock so issued shall automatically have one
new Right associated with it, which Right shall be evidenced by the certificate
representing such share.
(b)(i) If the Company shall at any time after the Record
Time and prior to the Expiration Time (A) declare or pay any dividend on the
Series X Preferred Stock payable in Voting Stock, (B) subdivide the outstanding
Series X Preferred Stock, (C) combine the outstanding Series X Preferred Stock
into a smaller number of shares of Series X Preferred Stock or (D) issue Voting
Stock in a reclassification of the Series X Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, and in each such
event, the number and kind of Units of Series X Preferred Stock or other
securities issuable upon the exercise of a Right on such date shall be
proportionately adjusted so that the holder of any Right exercised on or after
such date shall be entitled to receive, upon the exercise thereof and payment of
the Exercise Price, the aggregate number and kind of Units of Series X Preferred
Stock or other securities or other property, as the case may be, that, if such
Right had been exercised immediately prior to such date and at a time when such
Right was exercisable and the transfer books of the Company were open, such
holder would have owned upon such exercise and would have been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs on or prior to the Separation Time that
would require an adjustment under this Section 2.4(b)(i), the
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<PAGE> 15
adjustment provided for in this Section 2.4(b)(i) shall be made prior to giving
effect to Section 2.3(a) or Section 2.12 hereof.
(ii) If the Company shall at any time after the Record
Time and prior to the Expiration Time fix a record date for the making of a
distribution to all holders of Series X Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the surviving corporation) of securities or assets (other than a
distribution solely of Voting Stock for which an adjustment is required under
Section 2.4(b)(i) hereof or a regular quarterly cash dividend), the Exercise
Price to be in effect after such record date shall be determined by multiplying
the Exercise Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be equal to the difference of the Market
Price per share of Series X Preferred Stock on such record date minus the fair
market value of the portion of the securities or assets to be so distributed
applicable to one share of Series X Preferred Stock, and the denominator of
which shall be equal to such Market Price per share of Series X Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed, and if such a distribution is not so made, the Exercise Price shall be
adjusted to be the Exercise Price that would then be in effect if such record
date had not been fixed. If the Company fixes a record date for the making of a
distribution of both Voting Stock and other securities or assets (other than a
regular quarterly cash dividend), such that the provisions of Section 2.4(b)(i)
and Section 2.4(b)(ii) hereof would otherwise be applicable, then the provisions
of each such section shall be applicable to each such distribution,
respectively, according to the terms of each such section. If an event occurs on
or prior to the Separation Time that would require an adjustment under this
Section 2.4(b)(ii), the adjustment provided for in this Section 2.4(b)(ii) shall
be made prior to giving effect to Section 2.3(a) or Section 2.12 hereof.
(c) Each adjustment made pursuant to this Section 2.4
shall be made as of (i) the record date for the applicable issuance and
distribution, in the case of an adjustment made pursuant to Section 2.4(b)
above, and (ii) the payment or effective date for the applicable dividend,
subdivision or combination, in the case of an adjustment made pursuant to
Section 2.4(a) above.
(d) Each adjustment to the Exercise Price made pursuant to
this Section 2.4 shall be calculated to the nearest cent. Whenever an adjustment
to the Exercise Price is made pursuant to this Section 2.4, the Company shall
(i) promptly prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (ii) promptly file with
the Rights Agent and with the transfer agent for the Series X Preferred Stock,
and the transfer agent for the Common Stock a copy of such certificate and (ii)
mail a brief summary thereof to each holder of Rights.
(e) Irrespective of any adjustment or change in the
securities purchasable upon exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may
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<PAGE> 16
continue to express the securities so purchasable that were expressed in the
initial Rights Certificates issued hereunder.
2.5 DATE ON WHICH EXERCISE IS EFFECTIVE. Each person in whose
name any certificates for shares are issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the shares
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 Exercise Price for such Rights (and any applicable taxes and other
governmental charges payable by the exercising holder hereunder) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the stock transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the stock transfer
books of the Company are open.
2.6 EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF RIGHTS
CERTIFICATES.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Rights Certificates may be manual or facsimile.
(b) Rights Certificates bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Company shall bind the Company, notwithstanding that such individuals or any
of them have ceased to hold such offices prior to the countersignature and
delivery of such Rights Certificates.
(c) Promptly after the Company learns of the
Separation Time, the Company will notify the Rights Agent of such Separation
Time and will deliver Rights Certificates executed by the Company to the Rights
Agent for countersignature, and the Rights Agent shall manually countersign and
deliver such Rights Certificates to the holders of the Rights pursuant to
Section 2.3(c) hereof. No Rights Certificate shall be valid for any purpose
until manually countersigned by the Rights Agent.
(d) Each Rights Certificate shall be dated the date
of countersignature thereof.
2.7 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Company will cause to be kept a register
(the "Rights Register") in which, subject to such reasonable regulations as it
may prescribe, the Company will provide for the registration and transfer of
Rights. The Rights Agent is hereby appointed "Rights Registrar" for the purpose
of maintaining the Rights Register for the Company and registering Rights and
transfers of Rights as herein provided. If the Rights Agent shall cease
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to be the Rights Registrar, the Rights Agent will have the right to examine the
Rights Register at all reasonable times.
(b) After the Separation Time and prior to the
Expiration Time, upon surrender for registration of transfer or exchange of any
Rights Certificate, and subject to the provisions of Sections 2.3(g) and 2.7(d)
hereof, the Company will execute, and the Rights Agent will countersign and
deliver, in the name of the holder or the designated transferee or transferees,
as required pursuant to the holder's instructions, one or more new Rights
Certificates evidencing the same aggregate number of Rights as did the Rights
Certificate so surrendered.
(c) Subject to the provisions of Section 2.3(g)
hereof, all Rights issued upon any registration of transfer or exchange of
Rights Certificates shall be the valid obligations of the Company, and such
Rights shall be entitled to the same benefits under this Agreement as the Rights
surrendered upon such registration of transfer or exchange.
(d) Every Rights Certificate surrendered for
registration of transfer or exchange shall be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company or the
Rights Agent, as the case may be, duly executed by the holder thereof or such
holder's attorney-in-fact duly authorized in writing. As a condition to the
issuance of any new Rights Certificate under this Section 2.7, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto.
2.8 MUTILATED, DESTROYED, LOST AND STOLEN RIGHTS CERTIFICATES.
(a) If any mutilated Rights Certificate is
surrendered to the Rights Agent prior to the Expiration Time, the Company shall
execute and the Rights Agent shall countersign and deliver in exchange therefor
a new Rights Certificate evidencing the same number of Rights as did the Rights
Certificate so surrendered.
(b) If there shall be delivered to the Company and
the Rights Agent prior to the Expiration Time (i) evidence to their satisfaction
of the destruction, loss or theft of any Rights Certificate and (ii) such
security or indemnity as may be required by them to save each of them and any of
their agents harmless, then, in the absence of notice to the Company or the
Rights Agent that such Rights Certificate has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Rights Agent shall
countersign and deliver, in lieu of any such destroyed, lost or stolen Rights
Certificate, a new Rights Certificate evidencing the same number of Rights as
did the Rights Certificate so destroyed, lost or stolen.
(c) As a condition to the issuance of any new Rights
Certificate under this Section 2.8, the Company may require the payment of a sum
sufficient to cover any tax or
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other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights Agent) connected
therewith.
(d) Subject to the provisions of Section 2.3(g)
hereof, every new Rights Certificate issued pursuant to this Section 2.8 in lieu
of any destroyed, lost or stolen Rights Certificate shall evidence an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Rights Certificate shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Agreement equally and
proportionately with any and all other Rights duly issued hereunder.
2.9 PERSONS DEEMED OWNERS. Prior to due presentment of a
Rights Certificate (or, prior to the Separation Time, the associated Common
Stock certificate) for registration of transfer, the Company, the Rights Agent
and any agent of the Company or the Rights Agent may deem and treat the person
in whose name such Rights Certificate (or, prior to the Separation Time, such
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby for all purposes whatsoever. As used in this Agreement,
unless the context otherwise requires, the term "holder" of any Right shall mean
the registered holder of such Rights (or, prior to the Separation Time, the
associated shares of Common Stock).
2.10 DELIVERY AND CANCELLATION OF CERTIFICATES. All Rights
Certificates surrendered upon exercise or for redemption, registration or
transfer or exchange shall, if surrendered to any person other than the Rights
Agent, be delivered to the Rights Agent and, in any case, shall be promptly
canceled by the Rights Agent. The Company may at any time deliver to the Rights
Agent for cancellation any Rights Certificates previously countersigned and
delivered hereunder that the Company may have acquired in any manner whatsoever,
and all Rights Certificates so delivered shall be promptly canceled by the
Rights Agent. No Rights Certificates shall be countersigned in lieu of or in
exchange for any Rights Certificates canceled as provided in this Section 2.10,
except as expressly permitted by this Agreement. The Rights Agent shall destroy
all canceled Rights Certificates and deliver a certificate of destruction to the
Company.
2.11 AGREEMENTS OF RIGHTS HOLDERS. Every holder of Rights by
accepting such Rights consents and agrees with the Company and the Rights Agent
and with every other holder of Rights that:
(a) prior to the Separation Time, each Right will be
transferable only together with, and will be transferred by a transfer of, the
associated share of Common Stock;
(b) after the Separation Time, the Rights Certificates
will be transferable only on the Rights Register as provided herein;
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(c) each Right Beneficially Owned by an Acquiring Person
or an Affiliate or Associate thereof or any transferee of any of the foregoing
cannot validly be transferred or exercised and shall for all purposes be void;
to effectuate the foregoing, each Rights Certificate shall be transferable or
exercisable only if the holder so transferring or exercising shall certify, for
the benefit of all holders of Rights, that such holder is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person and that, to the best
of such holder's knowledge, no Rights evidenced by such Rights Certificates have
ever been Beneficially Owned by an Acquiring Person or an Affiliate or Associate
of an Acquiring Person;
(d) prior to due presentment of a Rights Certificate (or,
prior to the Separation Time, the associated Common Stock certificate) for
registration of transfer, the Company, the Rights Agent and any agent of the
Company or the Rights Agent may deem and treat the person in whose name the
Rights Certificate (or, prior to the Separation Time, 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 such
Rights Certificate 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 shall be affected by any notice to the
contrary; and
(e) this Agreement may be supplemented or amended from
time to time pursuant to Section 4.4 or the last sentence of the first paragraph
of Section 2.4(a) hereof.
2.12 CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. Subject to the terms and conditions of this Agreement, if after
the Separation Time, directly or indirectly, (a) the Company shall consolidate
with, or merge with and into, any other Person and is not the continuing or
surviving corporation, (b) any Person shall consolidate with the Company, or
merge with and into the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with such merger, all or
part of the Common Stock shall be changed into or exchanged for stock or other
securities of any Person (including the Company) or cash or any other property,
or (c) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more transactions,
assets or earning power aggregating fifty percent (50%) or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person other than the Company or one or more of its wholly owned Subsidiaries,
then, and in each such case, proper provision shall be made so that (i) each
holder of a Right (except as otherwise provided herein) shall thereafter have
the right to receive, upon the exercise thereof at any time prior to the
Expiration Time and payment of the then current Exercise Price, in accordance
with the terms of this Agreement, such number of validly authorized and issued,
fully paid and nonassessable shares of common stock of such Person or of that
Affiliate or Associate of such other Person which has the greatest aggregate
market value, determined in the same manner as the Market Price per share of
Common Stock is determined pursuant to Section 1.1(l) hereof, of outstanding
shares of
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publicly traded common stock (other than common stock held by its Affiliates,
officers, directors or employee benefit plans, or Associates of the foregoing)
as shall be equal to the result obtained by dividing the then current Exercise
Price by fifty percent (50%) of the Market Price per share of common stock on
the date of consummation of such consolidation, merger, sale or transfer of a
share of the common stock that the holder of a Right shall have the right to
receive; (ii) the issuer of such common stock shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of shares of its common stock) in connection with such
consummation as may be necessary to ensure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of common stock thereafter deliverable upon the exercise of the Rights.
The Company shall not enter into any transaction of the kind referred to in this
Section 2.12 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements that, as
a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless such issuer shall have a sufficient number of authorized shares of its
common stock that have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 2.12 and unless
prior thereto the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement providing for the terms set forth in
this Section 2.12 and further providing that, as soon as practicable after the
date of any consolidation, merger or sale of assets mentioned in this Section
2.12, such issuer will (i) prepare and file a registration statement under the
Securities 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 Securities Act) until the Expiration Time; and
(ii) will deliver to holders of the Rights historical financial statements for
such issuer and each of its Affiliates that comply in all respects with the
requirements for registration on Form 10 under the Exchange Act. The provisions
of this Section 2.12 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
2.13 CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 2.4 and 2.12 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with the transfer agents for the Series X Preferred Stock
and for the Common Stock a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Rights Certificate (or, if prior to the Separation
Time, to each holder of a certificate representing shares of Common Stock) in
accordance with Section 4.10 hereof. Notwithstanding the foregoing sentence, the
failure of the Company to make such certification or to give such notice shall
not affect the validity
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or the force and effect of such adjustment. Any adjustment to be made pursuant
to Sections 2.4 and 2.12 hereof shall be effective as of the date of the event
giving rise to such adjustment. 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 adjustment unless and until it
shall have received such certificate.
ARTICLE III - THE RIGHTS AGENT
3.1 GENERAL.
(a) The Company hereby appoints the Rights Agent to act as
agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense incurred without
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 no case shall the Rights Agent be
liable for special, indirect, incidental or consequential loss or damage of any
kind whatsoever, even if the Rights Agent has been advised of the likelihood of
such loss or damage.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
certificate for Series X Preferred Stock, Rights Certificate, certificate for or
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 3.3 hereof.
3.2 MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent is a party, or any corporation succeeding to
the stockholder services business of the Rights Agent or any successor Rights
Agent, will be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any
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<PAGE> 22
of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 3.4
hereof. In case at the time such successor Rights Agent succeeds to the agency
created by this Agreement any of the Rights Certificates have been countersigned
but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates have not been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates will have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent is
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.
3.3 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 will be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a person believed by the Rights Agent to
be the Chairman of the Board, the President or any Vice President, and by the
Chief Financial Officer or the Secretary or any Assistant Secretary of the
Company and delivered to the Rights Agent; and such certificate will be full
authorization to the Rights Agent for any action taken or omitted by it in good
faith under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable hereunder only for its
own negligence, bad faith or willful misconduct.
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<PAGE> 23
(d) The Rights Agent will not be liable for or by reason
of any of the statements of fact or recitals contained in this Agreement or in
the certificates for Series X Preferred Stock or the Rights Certificates (except
its countersignature thereof) and will not be required to verify any of the
foregoing, and all such statements and recitals are and will be deemed to have
been made by the Company only.
(e) The Rights Agent will not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due authorization, execution and delivery hereof by the
Rights Agent) or in respect of the validity or execution of any certificate for
Series X Preferred Stock or Rights Certificate (except its countersignature
thereof); nor will it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Rights Certificate;
nor will it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 2.3(g) hereof) or any
adjustment required under the provisions of Section 2.4 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 after receipt of the certificate contemplated
by Section 2.4 describing any such adjustment); nor will it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any shares of Series X Preferred Stock to be issued pursuant to
this Agreement or any Rights or as to whether any shares of Series X Preferred
Stock will, when issued, be duly and validly authorized, executed, issued and
delivered and fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any person believed by the Rights Agent to be the Chairman of the Board, the
President, a Vice President, the Chief Financial Officer, the Secretary or any
Assistant Secretary of the Company or any other person designated in writing by
such persons, and to apply to such persons for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
omitted by it in good faith in accordance with instructions of any such person.
Any application by the Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in writing any action proposed
to be taken or omitted by the Rights Agent with respect to its duties or
obligations under this Agreement and the date on and/or after which such action
shall be taken or omitted and the Rights Agent shall not be liable for any
action taken or omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date shall not be less
than ten business days after the date any such officer actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless, prior to taking or
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<PAGE> 24
omitting any such action, the Rights Agent has received written instructions in
response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in Series X
Preferred Stock, 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 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.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
3.4 CHANGE OF RIGHTS AGENT. The Rights Agent may resign and
be discharged from its duties under this Agreement upon 90 days' prior notice
(or such lesser notice as is acceptable to the Company) in writing mailed to the
Company and to each transfer agent of the Series X Preferred Stock and the
Common Stock by registered or certified mail, and at the expense of the Company
to the holders of the Rights in accordance with Section 4.10. The Company may
remove the Rights Agent upon 30 days' prior notice in writing, mailed to the
Rights Agent and to each transfer agent of the Series X Preferred Stock and the
Common Stock by registered or certified mail, and to the holders of the Rights
in accordance with Section 4.10. If the Rights Agent should resign or be removed
or otherwise become incapable of acting, the Company will appoint a successor to
the Rights Agent. If the Company fails to make such appointment within a period
of 30 days after 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 any Rights (which holder shall, with such notice, submit such
holder's Rights Certificate for inspection by the Company), then the holder of
any Rights may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be either (a) a corporation organized and
doing business under the laws of the United States or the State of Georgia, New
York or California, in good standing, having its principal office in the State
of Georgia or New York, that is authorized under such laws to exercise the
powers of the Rights Agent contemplated by this Agreement and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000 or (b) an affiliate of such a corporation. After appointment,
the successor Rights Agent will be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall
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<PAGE> 25
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company will file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Series X Preferred Stock
and the Common Stock and mail a notice thereof in writing to the holders of the
Rights in accordance with Section 4.10. Failure to give any notice provided for
in this Section 3.4, 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.
ARTICLE IV - MISCELLANEOUS
4.1 REDEMPTION, TERMINATION AND EXCHANGE.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of the Separation Time or the
Expiration Time 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 (the "Redemption Price"). The Company may, at
its option, pay the Redemption Price in cash, shares of Common Stock (based on
the Market Price at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors
of the Company ordering 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 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 of Directors ordering 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. Any notice that
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives such notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
(c)(i) The Board of Directors of the Company may, at its
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 2.3(g) and
the second paragraph of Section 2.3(h) hereof) for shares of Common Stock at an
exchange ratio which equals the quotient obtained by dividing the Exercise Price
by the Market Price per share of Common Stock per Right, appropriately adjusted
pursuant to Section 2.4 hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio").
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<PAGE> 26
(ii) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (c)(i) of this Section 4.1 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 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 2.3(g) and the second paragraph of Section 2.3(h)
hereof) held by each holder of Rights.
(iii) In the event that there shall not be sufficient
Common Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 4.1(c), the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights. In the event
the Company shall, after good faith effort, be unable to take all such action as
may be necessary to authorize such additional Common Stock, the Company shall
substitute, for each share of Common Stock that would otherwise be issuable upon
exchange of a Right, a number of shares of Series X Preferred Stock or fraction
thereof having a current market price per share equal to the Market Price per
share of one share of Common Stock as of the date of issuance of such shares of
Series X Preferred Stock or fraction thereof.
(iv) The Company shall not be required to issue fractions
of a share of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such fractional shares, there
shall be paid to the registered holders of the Rights with regard to which such
fractional shares of Common Stock would otherwise be issuable, either (i)
evidence of such fractional shares by depository receipts, in accordance with
the terms of Section 4.5 hereof or (ii) an amount in cash equal to the same
fraction of the Market Price of a whole share of Common Stock based upon the
date of exchange pursuant to this Section 4.1(c), subject to the terms of
Section 4.6 hereof.
4.2 PROVISION IN EVENT OF INSUFFICIENT SHARES OF SERIES X
PREFERRED STOCK. If there shall not be sufficient authorized but unissued shares
or reserved shares of Series X Preferred Stock of the Company to permit the
exercise in full of the Rights in accordance with the terms hereof, the Company,
with respect to each Right being exercised and to the extent necessary, may make
adequate provision to substitute for the delivery of Units or shares or
fractions of shares of Series X Preferred Stock (i) cash, (ii) Common Stock, or
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other preferred stock or equity securities of the Company, (iii) debt securities
of the Company, (iv) other assets or (v) any combination of the foregoing,
having an aggregate value equal to the Market Price of the Units of Series X
Preferred Stock that would have been purchasable upon exercise of such Right in
the absence of this Section 4.2, or may reduce the Exercise Price.
4.3 ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the number or kind or class of shares of stock purchasable upon exercise of
Rights made in accordance with the provisions of this Agreement.
4.4 SUPPLEMENTS AND AMENDMENTS. Prior to the Separation Time, the
Company and the Rights Agent, upon receipt of the certificate described
hereinbelow, shall, if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights.
From and after the Separation Time, the Company and Rights Agent, upon receipt
of the certificate described hereinbelow, shall, if the Company so directs,
supplement or amend this Agreement without the approval of any holders of Rights
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, other than the time
period during which the Rights may be exercised, or (iv) to change or supplement
the provisions hereunder in any manner that the Company may deem necessary or
desirable and which shall not materially and adversely affect the interests of
the holders of Rights (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). Upon delivery of a certificate from an
appropriate officer of the Company stating that the proposed supplement or
amendment is in compliance with the terms of this Section 4.4, the Rights Agent
shall execute such supplement or amendment. Prior to the Separation Time, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock.
4.5 FRACTIONAL SHARES. If the Company elects not to issue
certificates representing fractional shares of Series X Preferred Stock or other
securities (pursuant to Section 4.2 hereof) upon exercise of Rights, the Company
may, in lieu thereof, either (i) evidence such fractional shares by depositary
receipts issued pursuant to an appropriate agreement between the Company and a
depositary selected by it, provided that such agreement shall provide that the
holders of the depositary receipts shall have all of the rights, privileges and
preferences to which they are entitled as Beneficial Owners of such stock, or
(ii) subject to Section 4.6 hereof, pay an amount in cash equal to the same
fraction of the Market Price of a Unit of Series X Preferred Stock.
4.6 TRANSACTIONS AFTER THE SEPARATION TIME. After the Separation
Time and prior to the Expiration Time, the Company shall not engage in any
transaction not in the
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ordinary course of business that would eliminate or otherwise diminish in any
material respect the benefits intended to be afforded by this Agreement to the
holders of Rights (other than Acquiring Persons or Affiliates or Associates
thereof, or Persons who may become any of the foregoing). Without limiting the
foregoing, after the Separation Time and prior to the Expiration Time, the
Company shall not (i) sell or issue to an Acquiring Person or any Affiliate or
Associate thereof, any rights, options, warrants or convertible securities on
terms similar to, or that materially adversely affect the value of, the Rights,
or (ii) sell or issue to an Acquiring Person or any Affiliate or Associate
thereof, Series X Preferred Stock, Common Stock or shares of any other class of
capital stock if such sale or issue is intended to or would materially adversely
affect the value of the Rights.
4.7 RIGHTS OF ACTION. Subject to the terms of this Agreement,
rights of action in respect of this Agreement, other than rights of action
vested solely in the Rights Agent, are vested in the respective holders of the
Rights (other than Acquiring Persons or Affiliates or Associates thereof); and
any holder of any Rights (other than Acquiring Persons or Affiliates or
Associates thereof), without the consent of the Rights Agent or of the holder of
any other Rights, may, on such holder's own behalf and for such holder's own
benefit and the benefit of other holders of Rights, 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 such holder's
Rights in the manner provided in such holder's Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
4.8 HOLDER OF RIGHTS NOT DEEMED A STOCKHOLDER. No holder, as such,
of any Right shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of Series X Preferred Stock or any other securities that may
at any time be issuable on the exercise of such Rights, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights, 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 4.9 hereof), or to receive dividends
or subscription rights, or otherwise, until such Rights shall have been
exercised in accordance with the provisions hereof.
4.9 NOTICE OF PROPOSED ACTIONS. If the Company shall propose after
the Separation Time and prior to the Expiration Time to effect a liquidation, a
consolidation or merger with or a sale of all or substantially all of its assets
to any other Person or a reclassification of the Series X Preferred Stock, then,
in each such case, the Company shall give to each holder of a Right, in
accordance with Section 4.10 hereof, a notice of such proposed action, which
shall specify the date on which such action is to take place, and such
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<PAGE> 29
notice shall be so given at least 20 Business Days prior to the date of the
taking of such proposed action.
4.10 NOTICES. Notices or demands authorized or required by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
to or on the Company shall be sufficiently given or made if delivered or sent by
first class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
JOHNSTON INDUSTRIES, INC.
105 13th Street
Columbus, Georgia 31901
Attention: Chief Executive Officer
Any notice or demand authorized or required by this Agreement to be given or
made by the Company or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
The Bank of New York
101 Barclay Street
New York, NY 10286
Phone: 212-815-2268
Fax:212-815-3201
Attention: Raymond Poplasky
Assistant Vice President
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first class mail, postage
prepaid, addressed to such holder at the address of such holder as it appears
upon the Rights Register or, prior to the Separation Time, 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.
4.11 COSTS OF ENFORCEMENT. The Company agrees that if the Company
or any other Person the securities of which are purchasable upon exercise of
Rights fails to fulfill any of its obligations pursuant to this Agreement, then
the Company or such Person will reimburse the holder of any Rights for the costs
and expenses (including legal fees) incurred by such holder in actions to
enforce such holder's rights pursuant to any Rights or this Agreement.
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4.12 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.
4.13 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 holders of the Rights any legal or equitable right, remedy or claim under
this Agreement, and this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the holders of the Rights.
4.14 DESCRIPTIVE HEADINGS. Descriptive headings appear herein for
convenience of reference only and shall not control or affect the meaning or
construction of any of the provisions hereof.
4.15 GOVERNING LAW. This Agreement and each Right issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be governed by, and construed in accordance with, the
laws of such state without regard to the laws of such state as to choice or
conflict of laws.
4.16 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, but all such counterparts shall together constitute one and the
same instrument.
4.17 SEVERABILITY. If any term or provision hereof or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions hereof or the application of such terms or provision to circumstances
other than those as to which it is held invalid or unenforceable.
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<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and attested as of the date first above set forth.
JOHNSTON INDUSTRIES, INC.
By:
-------------------------------------
D. Clark Ogle
President and Chief Executive Officer
Attest:
- -------------------------------
, Secretary
- ------------------
THE BANK OF NEW YORK
By:
-------------------------------------
Name:
--------------------------------
Title:
--------------------------------
Attest:
- -------------------------------
Title:
-------------------------
Signature page of the Stockholder Protection
Agreement, dated as of ________________,
1999, between JOHNSTON INDUSTRIES,
INC. and THE BANK OF NEW YORK, as
Rights Agent
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<PAGE> 32
EXHIBIT A
FORM OF CERTIFICATE OF
DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES X JUNIOR PARTICIPATING PREFERRED STOCK
OF
JOHNSTON INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
We, D. Clark Ogle, President and Chief Executive Officer, and
_______________, Secretary of JOHNSTON INDUSTRIES, INC., a corporation organized
and existing under the General Corporation Law of the State of Delaware, in
accordance with provisions of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Certificate of Incorporation, as amended, of the said
Corporation, the said Board of Directors on April 19, 1999, adopted the
following resolution creating a series of 200,000 shares of Preferred Stock
designated as Series X Junior Participating Preferred Stock:
RESOLVED, that a series of the
Corporation's Preferred Stock consisting of
200,000 shares of Preferred Stock, par value
$.01 per share, be and hereby is, designated as
"Series X Junior Participating Preferred Stock"
(the "Series X Preferred Stock"), and that the
Series X Preferred Stock shall have the
designations, powers, preferences, rights and
qualifications, limitations and restrictions
substantially as set forth in the Certificate
of Designation, Preferences and Rights of
Series X Junior Participating Preferred Stock
(the "Certificate") attached as Exhibit A.
This Certificate states that the Board of Directors does hereby
fix and herein state and express such designations, powers, preferences and
relative and other special rights and qualifications, limitations and
restrictions thereof as follows (all terms used herein which are defined in the
Certificate of Incorporation shall be deemed to have the meanings provided
therein).
SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall
be designated as "Series X Junior Participating Preferred Stock" (the "Series X
Preferred Stock") and the
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<PAGE> 33
number of shares constituting such series shall be 200,000. Such number of
shares of Series X Preferred Stock may be increased or decreased by resolution
of the Board of Directors; provided, that no decrease shall reduce the number of
shares of Series X Preferred Stock to a number less than the number of shares of
Series X Preferred Stock then outstanding plus the number of shares of Series X
Preferred Stock reserved for issuance upon the exercise of outstanding options,
rights or warrants exercisable for, or upon the conversion of any outstanding
securities issued by the Corporation convertible into, Series X Preferred Stock.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of preferred stock ranking prior and superior to the shares
of Series X Preferred Stock with respect to dividends, the holders of shares of
Series X Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
dividends payable in cash in an amount per share (rounded to the nearest cent),
subject to the provision for adjustment hereinafter set forth, equal to 100 (the
"Dividend Factor") times the aggregate per share amount of all cash dividends,
and the Dividend Factor times the aggregate per share amount (payable in kind)
of all non-cash dividends or other distributions (other than a dividend payable
in shares of the Common Stock, par value $.01 per share, of the Corporation (the
"Common Stock") or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise)), declared on the Common Stock since the first
issuance of any share or fraction of a share of Series X Preferred Stock. In the
event the Corporation shall at any time after April 19, 1999 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Dividend Factor in the immediately preceding sentence shall be adjusted by
multiplying the Dividend Factor by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series X Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series X Preferred Stock from the date of declaration of
dividends on the Common Stock (other than a dividend payable in shares of Common
Stock). Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series X Preferred Stock in an amount less than the total amount
of such accrued dividends shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series X Preferred
Stock
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<PAGE> 34
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.
SECTION 3. VOTING RIGHTS. The holders of shares of Series X
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series X Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Corporation
for each matter with respect to which the holders of Common Stock are entitled
to vote. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each case the
number of votes per share to which holders of shares of Series X Preferred Stock
were entitled immediately prior to such event shall be adjusted by multiplying
such number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series X Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) Except as otherwise provided herein or provided by law, the
holders of shares of Series X Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for taking
any corporate action.
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever dividends or distributions payable on the Series X
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series X Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other distribution
on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series X Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series X Preferred Stock, except dividends paid
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<PAGE> 35
or distributions made ratably on the Series X Preferred Stock and
all such stock ranking on a parity with respect to the particular
dividend or distribution in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with
the Series X Preferred Stock, provided that the Corporation may at
any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the
Corporation ranking junior (both as to dividends and upon
dissolution, liquidation or winding up) to the Series X Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series X Preferred Stock, or any shares of stock ranking
on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series X Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series X Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series X Preferred Stock unless, prior
thereto, the holders of shares of Series X Preferred Stock shall have received
$100 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series X
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<PAGE> 36
Liquidation Preference"). Following the payment of the full amount of the Series
X Liquidation Preference, no additional distributions shall be made to the
holders of shares of Series X Preferred Stock unless, prior thereto, the holders
of shares of Common Stock shall have received an amount per share (the "Common
Stock Liquidation Amount") equal to the quotient obtained by dividing (i) the
Series X Liquidation Preference by (ii) 100 (as appropriately adjusted as set
forth in subparagraph (C) below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such number
in clause (ii), the "Adjustment Number"). Following the payment of the full
amount of the Series X Liquidation Preference and the Common Stock Liquidation
Amount in respect of all outstanding shares of Series X Preferred Stock and
Common Stock, respectively, holders of Series X Preferred Stock and holders of
shares of Common Stock shall receive their ratable and proportionate share of
remaining assets to be distributed in the ratio of the Adjustment Number to 1
with respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series X Liquidation Preference and
the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series X Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of the Series X Preferred
Stock and the holders of such parity shares in proportion to their respective
liquidation preferences.
(C) In the event the Corporation shall at any time after the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares, (iv)
reclassify the Common Stock or (v) effect a recapitalization of the Common
Stock, then in each such case the Adjustment Number in effect immediately prior
to such event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
SECTION 7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Series X Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such
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<PAGE> 37
case the amount set forth in the preceding sentence with respect to the exchange
or change of shares of Series X Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
SECTION 8. NO REDEMPTION. The shares of Series X Preferred
Stock shall not be redeemable.
SECTION 9. RANKING. The Series X Preferred Stock shall rank
junior to all other series of the Corporation's preferred stock, if any, as to
the payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise. Nothing in this Certificate shall limit the
power of the Board of Directors to create a new series of preferred stock
ranking senior to the Series X Preferred Stock in any respect.
SECTION 10. AMENDMENT. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series X
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of two-thirds or more of the outstanding shares of Series X
Preferred Stock, voting separately as a class.
SECTION 11. FRACTIONAL SHARES. Series X Preferred Stock may be
issued in fractions of a share, which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series X Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this _____ day of ____, 1999.
-----------------------------------
D. Clark Ogle, President
Attest:
- -------------------------------------
, Secretary
- -------------------------
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<PAGE> 38
EXHIBIT B
SUMMARY OF STOCKHOLDER PROTECTION AGREEMENT
On April 19, 1999, the Board of Directors of JOHNSTON INDUSTRIES,
INC. (the "Company") declared a dividend distribution of one right (a "Right")
to purchase a certain number of units (determined by a formula described herein)
for each outstanding share of common stock, par value $.01 per share (the
"Common Shares"), of the Company at a price of $12, subject to adjustment (the
"Exercise Price"). Each unit is equal to one one-hundredth of a share of a newly
authorized Series X Junior Participating Preferred Stock, par value $.01 per
share ("Series X Preferred Shares") of the Company. The distribution will be
payable on May 17, 1999 (the "Record Date") to the stockholders of record on
that date. The description and terms of the Rights are set forth in the
Stockholder Protection Agreement (the "Agreement") between the Company and The
Bank of New York, as rights agent (the "Rights Agent").
The following is a general description only and is subject to the
detailed terms and conditions of the Agreement.
- Common Share Certificates Evidencing Rights
Until the Separation Time (as defined below), the Rights
are not exercisable. Certificates for the Rights will not
be sent to stockholders; the Rights are deemed to attach
to and trade together with the Common Shares. Common
Shares issued after the Record Date and prior to the
Separation Time will be issued with accompanying Rights.
Accordingly, the Common Share certificates outstanding on
the Record Date will represent the Rights related thereto,
and Common Share certificates issued after the Record Date
(upon the transfer of shares or the issuance of new
shares) will also contain a notation incorporating the
Agreement by reference.
- Separation Time
Subject to certain exceptions described in the Agreement,
unless earlier redeemed by the Company, the Rights will
separate from the Common Shares, separate certificates
evidencing the Rights (the "Rights Certificates") will be
issued and the Rights will become exercisable 10 business
days (the "Separation Time") following the date on which a
person (including its affiliates and associates) (i)
acquires, (ii) obtains the right to acquire or (iii)
announces or commences a tender or exchange offer to
acquire Beneficial
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<PAGE> 39
Ownership of 20% or more of the outstanding Common Shares
(such person thereby becoming an "Acquiring Person"). (1)
- Issuance of Rights Certificates; Expiration of Rights
As soon as practicable following the Separation Time, the
Rights Certificates will be mailed to holders of record of
the Common Shares as of the Separation Time and such
separate Rights Certificates alone will evidence the
Rights from and after the Separation Time. The Rights will
expire on the tenth anniversary of the adoption of the
Agreement (the "Expiration Date").
- Exercise of the Rights
Following the Separation Time, holders of the Rights (the
"Rights Holders") (other than Rights beneficially owned by
the Acquiring Person or its affiliates or associates,
which will thereafter be void) will be entitled to receive
upon exercise and payment of the Exercise Price that
number of units of Series X Preferred Shares which equals
the result obtained by dividing the Exercise Price by 50%
of the average market price per Common Share over the 20
trading days immediately preceding the date of such
exercise (the "Market Price") (as defined in the
Agreement). Assuming for purposes of illustration an
unadjusted Exercise Price of $20 per Right and a Common
Share Market Price of $5, a payment by a Rights Holder of
$20 would entitle him to 8 units or .08 Series X Preferred
Shares. The Rights Holder would receive 8 Series X
Preferred Shares for each 100 Common Shares held by him.
The rights, preferences, privileges and restrictions with
respect to the Series X Preferred Shares are set forth in
a Certificate of Designation, Rights and Preferences filed
with the office of the Delaware Secretary of State.
- Right to Buy Acquiring Company Shares at Half Price
If, after the Separation Time, unless the Rights are
earlier redeemed or amended, (i) the Company were to be
acquired in a merger or other business
- -----------------
(1) Pursuant to the terms of the Agreement, certain types of institutional
investors, as well as designated minority investors, will not generally become
an Acquiring Person unless it (i) acquires, (ii) obtains the right to acquire or
(iii) announces or commences a tender or exchange offer to acquire Beneficial
Ownership of in excess of 30% of the outstanding Common Shares or some greater
percentage if Beneficial Ownership is to be acquired from certain current
stockholders of the Company. The Agreement also excludes certain current
stockholders holding greater than 20% of the outstanding Common Shares from the
definition of Acquiring Person.
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combination transaction in which the Company was not the
surviving corporation or in which the Company's
outstanding Common Shares were changed or exchanged for
cash, stock or assets of another person or (ii) 50% or
more of the Company's consolidated assets or earning power
were to be sold (other than in transactions in the
ordinary course of business), then proper provision would
be made so that each Rights Holder who has not theretofore
exercised his Rights (other than Rights beneficially owned
by the Acquiring Person or its affiliates or associates,
which will thereafter be void) will thereafter have the
right to receive, upon exercise, a number of shares of
common stock of the acquiring company having a value equal
to two times the Exercise Price.
Each Series X Preferred Share for which Rights had been
exercised prior to a business combination or other
transaction of the type referred to in clause (i) in the
immediately preceding paragraph would be entitled to
receive upon consummation thereof 100 times the
consideration (cash, securities or other property, or a
combination thereof) that one Common Share would receive.
Assuming again the illustrative facts set forth under
Exercise of the Rights above, and assuming also that each
Common Share was exchanged for $5 in cash and a debenture
having a face amount of $2, the holder of 100 Common
Shares and 8 Series X Preferred Shares would be entitled
to receive $4,500 in cash and $1,800 face amount of
debentures. Without the Series X Preferred Shares, such
holder would have been entitled to receive $500 in cash
and $200 face amount of debentures.
- Redemption
Any time on or prior to the earlier of (i) the Separation
Time or (ii) the Expiration Date of the Rights, the
Company may redeem the Rights in whole, but not in part,
at a price of $.01 per Right (the "Redemption Price").
Immediately upon the action of the Board of Directors
authorizing redemption of the Rights, the right to
exercise the Rights will terminate and the only right of
the Rights Holders will be to receive the Redemption
Price.
- Amendment of Agreement
The provisions of the Agreement may be supplemented or
amended by the Board of Directors, without approval of
Rights Holders, in any manner prior to the Separation
Time. Any amendment adopted by the Board of Directors
after the Separation Time may not materially and adversely
affect the interests of the holders of the Rights
Certificates.
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<PAGE> 41
- Exchange for Common Shares
At any time following the Separation Time but before the
Expiration Date, the Company may, at its option, exchange
all or any portion of the Rights (except those Rights
which are void) for Common Shares at an exchange ratio
which equals the Exchange Price divided by the Market
Price per Common Share per Right.
- Adjustments to Prevent Dilution
Each of the Exercise Price payable, the number of Rights
issued per Common Share and the number of Series X
Preferred Shares or other securities or property issuable
upon exercise of the Rights is subject to adjustment from
time to time to prevent dilution, as set forth in the
Agreement.
- Fractional Shares
The Company may elect not to issue fractional Series X
Preferred Shares, Common Shares or other securities of the
Company upon exercise or exchange of the Rights and in
lieu thereof may evidence such fractional shares by
depositary receipts or may make an adjustment in cash
based on the value of the Series X Preferred Shares,
Common Shares or other securities of the Company. The
holders of any such depositary receipts will have all the
rights, preferences and privileges to which they are
entitled as holders of Series X Preferred Shares.
- No Stock Rights Prior to Exercise
Until a Right is exercised, the Rights Holder, as such,
will have no rights as a shareholder of the Company (other
than rights resulting from such Rights Holder's ownership
of Common Shares), including, without limitation, the
right to vote or to receive dividends.
- Federal Securities Law Registration
The sale of Series X Preferred Shares pursuant to the
Rights will be subject to the effectiveness of a
registration statement under the Securities Act of 1933
and a Registration Statement on Form 8-A under the
Securities Exchange Act of 1934. A copy of the Agreement
will be filed with the Securities and Exchange Commission
as an exhibit to such registration statements and as an
exhibit to the Company's Current Report on Form 8-K
relating to the Agreement. Rights Holders will be able to
obtain a copy of the Agreement free of charge from the
Company.
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<PAGE> 42
EXHIBIT C
FORM OF RIGHTS CERTIFICATE
CERTIFICATE NO. R- ________ RIGHTS
RIGHTS CERTIFICATE
JOHNSTON INDUSTRIES, INC.
NOT EXERCISABLE AFTER May 17, 2009 OR EARLIER IF REDEEMED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER
RIGHT ON THE TERMS SET FORTH IN THE STOCKHOLDER PROTECTION AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH
TERM IS DEFINED IN THE STOCKHOLDER PROTECTION AGREEMENT) AND ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. IF 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 STOCKHOLDER PROTECTION AGREEMENT), THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID AS
SPECIFIED IN SECTION 2.3(g) OF SUCH AGREEMENT.
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 Stockholder Protection Agreement, dated as of _______ ___, 1999 (the
"Stockholder Protection Agreement"), between JOHNSTON INDUSTRIES, INC., a
Delaware corporation (the "Company"), and The Bank of New York (the "Rights
Agent"), to purchase from the Company at any time after the Separation Time, as
such term is defined in the Stockholder Protection Agreement, and prior to the
close of business on May 17, 2009, at the office or offices of the Rights Agent
designated for such purpose, or its successors as Rights Agent, at a purchase
price of $12 per share (the "Exercise Price"), that number of one one-hundredths
of a share (each one one-hundredth of a share being referred to hereinafter as a
"Unit") of the Company's Series X Junior Participating Preferred Stock, par
value of $.01 per share (the "Series X Preferred Stock"), which equals the
quotient obtained by dividing the Exercise Price by 50% of the Market Price (as
defined in the Stockholder Protection Agreement) per share of the Company's
Common Stock, $.01 par value per share (the "Common Stock"), upon
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<PAGE> 43
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certificate duly executed. If, after the Separation
Time, (i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation or in which
the Company's outstanding Common Stock is changed or exchanged for stock or
assets of another person or (ii) 50% or more of the Company's consolidated
assets or earning power is sold, then proper provision must be made so that each
holder of a Right which has not theretofore been exercised (except as otherwise
provided in the Stockholder Protection Agreement) will thereafter have the right
to receive, upon exercise, shares of common stock of the acquiring company
having a value equal to two times the Exercise Price. The Exercise Price shall
be paid, at the election of the holder, in cash, by certified check or money
order payable to the order of the Company, Common Stock, Rights to purchase
Units of the Company's Series X Preferred Stock, or, in the sole discretion of
the Board of Directors of the Company, in such other form as may be determined
by the Board of Directors of the Company, in each case in an amount equal to the
aggregate Exercise Price of such Rights. The number of Rights evidenced by this
Rights Certificate (and the number of shares that may be purchased upon exercise
thereof) set forth above, and the Exercise Price per share set forth above, are
the number and Exercise Price as of May 17, 1999.
At the Separation Time (as such term is defined in the Stockholder
Protection 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 Stockholder
Protection Agreement) or (ii) a transferee of any such Acquiring Person,
Associate or Affiliate, such Rights cannot validly be transferred or exercised
and are for all purposes void.
As provided in the Stockholder Protection Agreement, the Exercise
Price is subject to adjustment upon the occurrence of certain events.
This Rights Certificate is subject to all of the terms, provisions
and conditions of the Stockholder Protection Agreement, which terms, provisions
and conditions are hereby incorporated herein by reference and made a part
hereof and to which Stockholder Protection 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 exercisability of such Rights under the specific circumstances
set forth in the Stockholder Protection Agreement. Copies of the Stockholder
Protection Agreement are on file at the 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 principal 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
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<PAGE> 44
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Series X Preferred Stock (or such other securities) 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 Stockholder Protection 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 the Separation Time or the Expiration Time.
If the Company does not have a sufficient number of shares of
Series X Preferred Stock to permit the exercise in full of the Rights, the
Company may issue, in lieu of Units of Series X Preferred Stock, cash, Common
Stock or other preferred stock or equity securities, debt securities, other
assets, or any combination of the foregoing, or may reduce the Exercise Price.
The Company is not obligated to issue fractional shares of Series
X Preferred Stock (or such other securities of the Company) upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof may issue depository
receipts, as provided in the Stockholder Protection Agreement.
No holder, as such, of this Rights Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of shares
of Series X Preferred Stock or of any other securities of the Company that may
at any time be issuable on the exercise hereof, nor shall anything contained in
the Stockholder Protection Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Stockholder Protection 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 Stockholder Protection 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 _____ __, ____.
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<PAGE> 45
ATTEST: JOHNSTON INDUSTRIES, INC.
By:
- ----------------------------- --------------------------------------------
Secretary Name: D. Clark Ogle
Title: President and Chief Executive
Officer
Countersigned:
The Bank of New York
By:
---------------------------
Authorized Officer
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<PAGE> 46
[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 therein,
and does hereby irrevocably constitute and appoint ____________________
Attorney-in-Fact, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
--------------------- ----------------------------
Signature
Signature Guaranteed:
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<PAGE> 47
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 pursuant to the Stockholder Protection Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] 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:
---------------------------- ---------------------------
Signature
Signature Guaranteed:
- ----------------------------------
NOTICE
The signature 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.
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<PAGE> 48
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 pursuant to the Stockholder Protection Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] 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 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.
<PAGE> 49
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: JOHNSTON INDUSTRIES, INC.
The undersigned hereby irrevocably elects to exercise ______
Rights represented by this Rights Certificate to purchase the shares of Series X
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be issued
in the name of and delivered to:
Please insert social security or other identifying number _____________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights 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 insert social security or other identifying number_____________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
Dated:
----------------------- ---------------------------------
Signature
Signature Guaranteed:
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<PAGE> 1
EXHIBIT 99
FOR: JOHNSTON INDUSTRIES, INC.
FROM: MARTIN SKALA, VP
PORTER, LEVAY & ROSE, INC.
(212) 564-4700
COMPANY JAMES J. MURRAY, CHIEF FINANCIAL OFFICER
CONTACT: (706) 641-3140
FOR IMMEDIATE RELEASE
JOHNSTON INDUSTRIES REPORTS FIRST QUARTER RESULTS
ADOPTS SHAREHOLDER RIGHTS PLAN
COLUMBUS, GA, MAY 5 -- Johnston Industries, Inc. (NYSE: JII), a leading
domestic manufacturer of industrial, home furnishings and hospitality textiles,
today announced results for the first quarter ended April 3, 1999. The company
also announced the adoption of a Shareholders Rights Plan.
The company reported a net loss for the quarter of $1,747,000, or 16
cents per basic and diluted share, on revenues of $65,032,000, compared with a
net loss of $935,000. or nine cents per basic and diluted share, on revenues of
$79,839, 000 for the first quarter of 1998.
The lower sales in 1999 are attributable to weaknesses in indirect
exports and in many of the company's domestic upholstery and home furnishings
markets.
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<PAGE> 2
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Clark Ogle, president and CEO, stated, "Our first quarter performance
was a mixed bag from an operating standpoint, although our favorable cash flow
enabled us to reduce debt by $1,569,000, further deleveraging the balance sheet.
Our Finished Fabrics Division had its best quarter since the 1997 realignment,
overcoming weak upholstery markets to post a $2.5 million profit improvement
over the first quarter of 1998. However, our Greige Fabrics Division was not
able to overcome weak demand in its home furnishings and upholstery markets. The
Greige Fabrics Division, which carried this company for a long time, is
aggressively trying to reestablish its market position while controlling costs
and inventory levels. Our Fiber Products Division rebounded quickly from the
fire in the DeWitt plant and should resume its upward profitability trends,
though at a reduced level due to lower cotton prices. Johnston Industries
Composite Reinforcements had its strongest quarter ever and is well on the way
to attaining the critical mass necessary to become a real contributor."
In a separate announcement, the company said that it has declared a
dividend of one Preferred Share Purchase Right on each outstanding share of its
common stock.
In commenting on the Shareholder Rights Plan, Mr. Ogle, noted, "The
Rights are designed to assure that all of our stockholders receive fair and
equal treatment in the event of any proposed takeover of the company and to
guard against partial tender offers, squeezeouts, open market accumulations and
other abusive tactics to gain control of the company without paying all
stockholders the same control premium. The Rights will not prevent a takeover,
but should encourage anyone seeking to acquire the company to negotiate with the
Board prior to attempting a takeover."
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<PAGE> 3
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The Rights will be exercisable only if a person or group acquires 20%
or more of the company's common stock or announces or commences a tender offer
for 20% or more of the common stock; provided that the acquisition of more than
20% but not more than 30% of the company's common stock with the express written
approval of the Board of Directors of the company and certain defined
transactions engaged in by certain existing stockholders of the company will not
result in the Rights becoming exercisable. Once the Rights become exercisable,
each Right will entitle stockholders (other than the person or group acquiring
20% or more of the company's common stock) to buy shares, or fractions of
shares, of a new series of junior participating preferred stock of the company
at an exercise price of $12, which preferred shares will have a market value of
twice that price.
In addition, if the company is acquired in a merger or other business
combination transaction after a person has acquired 20% or more of the company's
common stock, each Right will entitle its holder to purchase, at the Right's
then-current exercise price, a number of the acquiring company's common shares
having a market value of twice such price.
Following the acquisition by a person or group of beneficial ownership
of 20% or more of the company's common stock, the Board of Directors may
exchange the Rights (other than the Rights owned by such person or group), in
whole or in part, for shares of common stock of the company at an exchange ratio
equal to the then-market exercise price of the Rights divided by the then market
price of the common stock.
Prior to the acquisition by a person or group of beneficial ownership
of 20% or more of the common stock, the Rights are redeemable for one cent per
Right at the option of the Board of Directors.
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<PAGE> 4
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The Board of Directors is also authorized to amend the terms of the
Rights, prior to the acquisition by a person or group of beneficial ownership of
20% or more of the common stock and without the approval of the holders of
Rights, in any manner, including to reduce the 20% threshold.
The dividend distribution will be payable to stockholders of record on
May 17, 1999 and distributed immediately following listing of the Rights with
the New York Stock Exchange. The Rights will expire ten years from the date of
distribution. The Rights distribution is not taxable to stockholders.
Johnston Industries, Inc. manufactures and markets textile fabrics
through four operating divisions. One of its operating subsidiaries, Johnston
Industries Composite Reinforcements, Inc. makes Vectorply(R) and other
sophisticated non-crimp multiaxial reinforcing fabrics from fiberglass, carbon
and aramid fibers used in a Wide variety of applications.
This press release contains statements of a forward-looking nature regarding
future events, These statements are only predictions and actual events may
differ materially. Please refer to documents that Johnston files from time to
time with the Securities and Exchange Commission for a discussion of certain
factors that could cause actual results to differ materially from those
contained in the forward-looking statements.
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<PAGE> 5
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JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
4/3/99 4/4/98
------ ------
<S> <C> <C>
Net sales $65,032,000 79,839,000
Costs and Expenses:
Cost of Sales 57,730,000 70,060,000
Selling, General and Administrative 6,559,000 7,053,000
Amortization of Goodwill 157,000 157,000
Restructuring and Impairment Charges -- 100,000
----------- -----------
Total Costs and Expenses 64,446,000 77,370,000
----------- -----------
Income from Operations 586,000 2,469,000
Other Expenses (Income):
Interest Expense 3,118,000 3,213,000
Interest Income (228,000) (79,000)
Other -- Net 456,000 668,000
----------- -----------
Total Other Expenses -- Net 3,346,000 3,802,000
Equity in earnings of equity investees 158,000 ---
----------- ------------
Loss Before Benefit For Income Taxes (2,602,000) (1,333,000)
Benefit for Income Taxes (855,000) (398,000)
------------ ------------
Net loss $(1,747,000) $ (935,000)
============ ============
Net Loss Per Common Share:
Basic and Diluted $ (0.16) $ (0.09)
============ ============
Weighted Average Number of Common and
Common Equivalent Shares outstanding 10,722,000 10,743,000
=========== ===========
</TABLE>
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SELECTED CONSOLIDATED BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
4/3/99 1/2/99
------ ------
<S> <C> <C>
ASSETS:
Cash and Cash Equivalents 1,525,000 $ 1,231,000
Accounts and Notes Receivable
net of Allowance for Doubtful Accounts
of $1,392,000 and $1,442,000 35,982,000 34,768,000
Inventories 57,300,000 58,079,000
Total Current Assets 104,136,000 102,226,000
Total Assets 217,254,000 219,539,000
LIABILITIES AND STOCKHOLDERS EQUITY:
Total Current Liabilities 105,221,000 101,148,000
Long-Term Debt-- Less Current Maturities 47,176,000 51,109,000
Total Stockholders' Equity 46,527,000 48,274,000
Total Liabilities and Stockholders' Equity 217,254,000 219,539,000
</TABLE>
######
1999
