SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 19, 1997
IONICS, INCORPORATED
(Exact name of registrant as specified in its charter)
Massachusetts 1-7211 04-2068530
(State or other jurisdiction (Commission) (IRS Employer
of incorporation) File Number) Identification No.)
65 Grove Street, Watertown, MA 02172
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (617) 926-2500
/1
ITEM 5. Other Events
On August 19, 1997, the Board of Directors of Ionics, Incorporated
(the "Company") approved the renewal of the Company's existing stockholder
rights agreement by adopting a Renewed Rights Agreement between the Company
and BankBoston, N.A., as rights agent (the "Renewed Rights Agreement").
Pursuant to the Renewed Rights Agreement, one new right (a "Right") will be
issued for each share of common stock, par value $1.00 per share, of the
Company (the "Common Stock") (i) outstanding upon the "Expiration Date" as
such term is defined in the Company's existing rights agreement dated as of
December 22, 1987 between the Company and The First National Bank of Boston
(currently known as BankBoston, N.A.) (the "Record Date"); (ii) for each
share of Common Stock issued between the Record Date and the Distribution
Date (as defined in the Renewed Rights Agreement); and (iii) under certain
circumstances thereafter. Each new Right will initially represent the
right to purchase from the Company one share of Common Stock, upon the
terms and subject to the conditions set forth in the Renewed Rights
Agreement. The new Rights are redeemable under certain circumstances at
$.01 per Right and will expire on August 19, 2007, subject to extension or
earlier redemption.
The description and terms of the new Rights are set forth in the
Renewed Rights Agreement, a copy of which is filed herewith and is
incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits
Exhibits
1. Form of Renewed Rights Agreement, dated as of August 19, 1997,
between the Company and BankBoston N.A.
-2-
/2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
IONICS, INCORPORATED
Date: August 27, 1997 By:/s/Arthur L. Goldstein
Arthur L. Goldstein
Chairman and
Chief Executive Officer
-3-
/3
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Description Page
1. Form of Renewed Rights Agreement 5
dated as of August 19, 1997
between the Company and
BankBoston N.A.
/4 -4-
IONICS, INCORPORATED
and
BANKBOSTON, N.A.
Rights Agent
Renewed Rights Agreement
Dated as of August 19, 1997
/5
Table of Contents
Section Page
1 Certain Definitions . . . . . . . . . . . . . . . . . . . 2
2 Appointment of Rights Agent . . . . . . . . . . . . . . . 8
3 Issuance of Rights Certificates . . . . . . . . . . . . . 8
4 Form of Rights Certificates . . . . . . . . . . . . . . .11
5 Countersignature and Registration . . . . . . . . . . . .12
6 Transfer, Split Up, Combination and Ex-
change of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certifi-
cates . . . . . . . . . . . . . . . . . . . . . . . . . .13
7 Exercise of Rights; Purchase Price; Expira-
tion Date of Rights . . . . . . . . . . . . . . . . . . .15
8 Cancellation and Destruction of Rights Cer-
tificates . . . . . . . . . . . . . . . . . . . . . . . .18
9 Reservation and Availability of Capital
Stock . . . . . . . . . . . . . . . . . . . . . . . . . .18
10 Record Date for Securities Issued Upon Ex-
ercise. . . . . . . . . . . . . . . . . . . . . . . . . 21
11 Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights. . . . . . . . . . . .21
12 Certificate of Adjusted Purchase Price or
Number of Shares. . . . . . . . . . . . . . . . . . . . .33
13 Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. . . . . . . . . . . . . . . .34
14 Fractional Rights and Fractional Shares . . . . . . . . .39
15 Rights of Action. . . . . . . . . . . . . . . . . . . . .40
16 Agreement of Rights Holders . . . . . . . . . . . . . . .41
i
/6
17 Rights Certificate Holder Not Deemed a
Stockholder . . . . . . . . . . . . . . . . . . . . . . .42
18 Concerning the Rights Agent . . . . . . . . . . . . . . .42
19 Merger or Consolidation or Change of Name
of Rights Agent . . . . . . . . . . . . . . . . . . . . .43
20 Duties of Rights Agent. . . . . . . . . . . . . . . . . .44
21 Change of Rights Agent. . . . . . . . . . . . . . . . . .47
22 Issuance of New Rights Certificates . . . . . . . . . . .48
23 Redemption and Termination. . . . . . . . . . . . . . . .49
24 Notice of Certain Events. . . . . . . . . . . . . . . . .50
25 Notices . . . . . . . . . . . . . . . . . . . . . . . . .51
26 Supplements and Amendments. . . . . . . . . . . . . . . .52
27 Successors. . . . . . . . . . . . . . . . . . . . . . . .53
28 Determinations and Actions by the Board,
etc.. . . . . . . . . . . . . . . . . . . . . . . . . . .53
29 Benefits of this Agreement. . . . . . . . . . . . . . . .54
30 Severability. . . . . . . . . . . . . . . . . . . . . . .54
31 Governing Law . . . . . . . . . . . . . . . . . . . . . .55
32 Counterparts. . . . . . . . . . . . . . . . . . . . . . .55
33 Descriptive Headings. . . . . . . . . . . . . . . . . . .55
Exhibit A -- Form of Rights Certificate
ii
/7
RENEWED RIGHTS AGREEMENT
RENEWED RIGHTS AGREEMENT, dated as of August
19, 1997, between Ionics, Incorporated, a Massachusetts
corporation (the "Company"), and BankBoston, N.A., a
national banking association (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on December 22, 1987, the Board of
Directors of the Company (the "Board") adopted a stock-
holder rights plan (the "Existing Rights Plan") and exe-
cuted a Rights Agreement, between the Company and the
Rights Agent (the "1987 Agreement");
WHEREAS, the Existing Rights Plan is scheduled
to expire on December 31, 1997;
WHEREAS, on August 19, 1997 the Board deter-
mined it desirable and in the best interests of the
Company and its stockholders for the Company to renew the
Existing Rights Plan upon its expiration and to implement
such renewal by executing this Agreement (as hereinafter
defined) and declaring the dividend distribution referred
to in the fourth WHEREAS clause herein;
WHEREAS, on August 19, 1997, (the "Rights Divi-
dend Declaration Date"), the Board authorized and de-
clared a dividend distribution of one Right (as hereinaf-
ter defined) for each share of Common Stock (as hereinaf-
ter defined) of the Company outstanding upon the "Expi-
ration Date" under the 1987 Agreement (the "Record Date")
and authorized the issuance of one Right (as such number
may hereafter be adjusted pursuant to the provisions of
Section 11(i) hereof) for each share of Common Stock of
the Company issued between the Record Date (whether
originally issued or delivered from the Company's trea-
sury) and the Distribution Date (as hereinafter defined)
and under certain circumstances thereafter, each Right
initially representing the right to purchase one share of
Common Stock of the Company, upon the terms and subject
to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premis-
es and the mutual agreements hereinafter set forth, the
parties hereby agree as follows:
/8
Section 1. Certain Definitions. For purposes
of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any
Person (as hereinafter defined) who or which, together
with all Affiliates and Associates (as hereinafter de-
fined) of such Person, shall be the Beneficial Owner (as
hereinafter defined) of 15% or more of the shares of
Common Stock of the Company then outstanding, but shall
not include an Exempt Person (as hereinafter defined).
(b) "Act" shall mean the Securities Act
of 1933, as amended.
(c) "Adjustment Shares" shall have the
meaning set forth in Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under the
Exchange Act (as hereinafter defined).
(e) "Agreement" shall mean this Renewed
Rights Agreement as originally executed or as it may from
time to time be supplemented, amended, renewed, restated
or extended pursuant to the applicable provisions hereof.
(f) A Person shall be deemed the "Benefi-
cial Owner" of, and shall be deemed to "beneficially
own," any securities:
(i) which such Person or any of
such Person's Affiliates or Associates, direct-
ly or indirectly, owns or has the right to ac-
quire (whether such right is exercisable imme-
diately or only after the passage of time)
pursuant to any agreement, arrangement or un-
derstanding (whether or not in writing) or upon
the exercise of conversion rights, exchange
rights, rights, warrants, options or otherwise;
provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "bene-
ficially own," (A) securities tendered pursuant
to a tender or exchange offer made by or on
behalf of such Person or any of such Person's
Affiliates or Associates until such tendered
2
/9
securities are accepted for purchase or ex-
change, or (B) securities issuable upon exer-
cise of Rights at any time prior to the occur-
rence of a Triggering Event (as hereinafter
defined), or (C) securities issuable upon exer-
cise of Rights from and after the occurrence of
a Triggering Event which Rights are Original
Rights (as hereinafter defined) or securities
issued pursuant to Section 11(i) or Section
11(p) hereof in connection with an adjustment
made with respect to any Original Rights;
(ii) which such Person or any of
such Person's Affiliates or Associates, direct-
ly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as
determined pursuant to Rule 13d-3 of the Gener-
al Rules and Regulations under the Exchange
Act), including pursuant to any agreement,
arrangement or understanding, whether or not in
writing; provided, however, that a Person shall
not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this
subparagraph (ii) as a result of an agreement,
arrangement or understanding (whether or not in
writing) to vote such security if such agree-
ment, arrangement or understanding: (A) arises
solely from a revocable proxy or consent given
in response to a public proxy or consent solic-
itation made pursuant to, and in accordance
with, the applicable provisions of the General
Rules and Regulations under the Exchange Act
and (B) is not also then reportable by such
Person on Schedule 13D under the Exchange Act
(or any comparable or successor statement); or
(iii) which are beneficially
owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof)
with which such Person (or any of such Person's
Affiliates or Associates) has any agreement,
arrangement or understanding (whether or not in
writing) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as
described in clause (A) of the proviso to sub-
paragraph (ii) of this paragraph (f)) or dis-
posing of any voting securities of the Company;
3
/10
provided, however, that nothing in this paragraph (f)
shall cause a Person engaged in business as an underwrit-
er of securities to be the "Beneficial Owner" of, or to
be deemed to "beneficially own," any securities acquired,
or which that Person has the right to acquire, 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.
(g) "Board" shall have the meaning set
forth in the first "WHEREAS" clause at the beginning of
this Agreement.
(h) "Business Day" shall mean any day
other than a Saturday, Sunday or day on which banking
institutions in the Commonwealth of Massachusetts are
authorized or obligated by law or executive order to
close.
(i) "Close of Business" on any given date
shall mean 5:00 P.M., Boston, Massachusetts time, on such
date; provided, however, that if such date is not a Busi-
ness Day, it shall mean 5:00 P.M., Boston, Massachusetts
time, on the next succeeding Business Day.
(j) "Common Stock" when used in reference
to the Company shall mean the common stock, par value
$1.00 per share, of the Company or any other shares of
capital stock of the Company into which such stock shall
be reclassified or changed. "Common Stock" when used
with reference to any Person other than the Company
organized in corporate form shall mean (i) the capital
stock or other equity interest in such Person with the
greatest voting power, (ii) the equity securities or
other equity interest having power to control or direct
the management of such Person or (iii) if such Person is
a Subsidiary (as hereinafter defined) of another Person,
the capital stock, equity securities of or other equity
interest in the Person or Persons which ultimately con-
trol such first-mentioned Person and which has issued any
such outstanding capital stock, equity securities or
equity interest. "Common Stock" when used with reference
to any Person not organized in corporate form shall mean
units of beneficial interest which (x) represent the
right to participate generally in the profits and losses
of such Person (including without limitation any flow-
through tax benefits resulting from an ownership interest
4
/11
in such Person) and (y) are entitled to exercise the
greatest voting power of such Person or, in the case of a
limited partnership, have the power to remove the general
partner or partners.
(k) "Common Stock Equivalents" shall have
the meaning set forth in Section 11(a)(iii) hereof.
(l) "Company" shall have the meaning set
forth in the first paragraph of this Agreement until a
successor corporation or entity shall have become such or
until a Principal Party (as hereinafter defined) shall
assume, and thereafter be liable for, all obligations and
duties of the Company hereunder pursuant to the applica-
ble provisions of this Agreement, and thereafter, "Compa-
ny" shall mean such successor or Principal Party, respec-
tively.
(m) "Current Market Price" shall have the
meaning set forth in Section 11(d) hereof.
(n) "Current Value" shall have the mean-
ing set forth in Section 11(a)(iii) hereof.
(o) "Distribution Date" shall have the
meaning set forth in Section 3(a) hereof.
(p) "Exchange Act" shall mean the Securi-
ties Exchange Act of 1934, as amended.
(q) "Exempt Person" shall mean (i) the
Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan or employee stock plan of the
Company or of any Subsidiary of the Company, (iv) any
Person or entity organized, appointed, established or
holding Common Stock of the Company by, for or pursuant
to the terms of any employee benefit plan or employee
stock plan, (v) a Person who (A) is the Beneficial Owner
of less than 20% of the Common Stock of the Company then
outstanding and has reported such ownership on Schedule
13G under the Exchange Act (as hereinafter defined) (or
any successor or comparable report) or on Schedule 13D
under the Exchange Act (or any successor or comparable
report) which Schedule 13D does not state any intention
to or reserve the right to control or influence the
management or policies of the Company or engage in any of
the actions specified in Item 4 of such Schedule 13D
5
/12
(other than the disposition of Common Stock of the Compa-
ny), (B) within ten Business Days (as hereinafter de-
fined) of being requested by the Company to advise the
Company regarding its intentions, certifies to the Compa-
ny that such Person acquired shares of Common Stock of
the Company in excess of 14.99% inadvertently or without
knowledge of the terms of the Rights, (C) the Company
determines acquired in excess of 14.99% inadvertently or
without knowledge of the terms of the Rights and (D)
together with its Affiliates and Associates, thereafter
does not acquire additional shares of Common Stock of the
Company while the Beneficial Owner of 15% or more of the
shares of the Common Stock of the Company then outstand-
ing or (vi) a Person who, together with its Affiliates
and Associates, becomes the Beneficial Owner of 15% or
more of the shares of Common Stock of the Company then
outstanding solely as a result of a reduction in the
number of shares of Common Stock of the Company outstand-
ing due to the repurchase of shares of Common Stock of
the Company by the Company, unless and until such time as
such Person shall purchase or otherwise become (as a
result of actions taken by such Person or its Affiliates
or Associates) the Beneficial Owner of additional shares
of Common Stock of the Company constituting 1% or more of
the then outstanding shares of Common Stock of the Compa-
ny.
(r) "Existing Rights Plan" shall have the
meaning set forth in the first "WHEREAS" clause hereof.
(s) "Expiration Date" shall have the
meaning set forth in Section 7(a) hereof.
(t) "Final Expiration Date" shall mean
the Close of Business on August 19, 2007.
(u) "Original Rights" shall mean Rights
acquired by a Person or such Person's Affiliates or
Associates prior to the Distribution Date or issued
pursuant to Section 3(a) or Section 22 hereof.
(v) "Outside Directors" shall mean the
members of the Board who are not officers of the Company
or any of its Subsidiaries and who are not Acquiring
Persons or representatives, nominees, Affiliates or Asso-
ciates of any Acquiring Person.
6
/13
(aa) "Person" shall mean any individual,
firm, corporation, partnership, trust or other entity and
includes without limitation an unincorporated group of
persons who, by formal or informal agreement or arrange-
ment (whether or not in writing), have embarked on a
common purpose or act.
(bb) "Principal Party" shall have the
meaning set forth in Section 13(b) hereof.
(cc) "Purchase Price" shall have the
meaning set forth in Section 4(a) hereof.
(dd) "Record Date" shall have the meaning
set forth in the fourth "WHEREAS" clause at the beginning
of this Agreement.
(ee) "Redemption Price" shall have the
meaning set forth in Section 23(a) hereof.
(ff) "Rights" shall have the meaning set
forth in the fourth "WHEREAS" clause at the beginning of
this Agreement.
(gg) "Rights Agent" shall mean the Person
named as the "Rights Agent" in the first paragraph of
this Agreement until a successor Rights Agent shall have
become such pursuant to the applicable provisions hereof,
and thereafter "Rights Agent" shall mean such successor
Rights Agent. If at any time there is more than one
Person appointed by the Company as Rights Agent pursuant
to the applicable provisions of this Agreement, "Rights
Agent" shall mean and include each such Person.
(hh) "Rights Certificate" shall have the
meaning set forth in Section 3(a) hereof.
(ii) "Rights Dividend Declaration Date"
shall have the meaning set forth in the fourth "WHEREAS"
clause at the beginning of this Agreement.
(jj) "Section 11(a)(ii) Event" shall have
the meaning set forth in Section 11(a)(ii) hereof.
(kk) "Section 11(a)(ii) Trigger Date"
shall have the meaning set forth in Section 11(a)(iii)
hereof.
7
/14
(ll) "Section 13 Event" shall have the
meaning set forth in Section 13(a) hereof.
(mm) "Spread" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(nn) "Stock Acquisition Date" shall mean
the first date of public announcement by the Company that
an Acquiring Person has become such.
(oo) "Subsidiary" shall mean, with refer-
ence to any Person, any corporation or other entity of
which securities or other ownership interest having
ordinary voting power sufficient, in the absence of
contingencies, to elect a majority of the board of direc-
tors or other persons performing similar functions of
such corporation or other entity are at the time directly
or indirectly beneficially owned or otherwise controlled
by such Person and any Affiliate or Associate of such
Person.
(pp) "Substitution Period" shall have the
meaning set forth in Section 11(a)(iii) hereof.
(qq) "Summary of Rights" shall have the
meaning set forth in Section 3(b) hereof.
(rr) "Trading Day" shall have the meaning
set forth in Section 11(d) hereof.
(ss) "Triggering Event" shall mean any
Section 11(a)(ii) Event or any Section 13 Event.
(tt) "1987 Agreement" shall have the
meaning set forth in the first "WHEREAS" clause at the
beginning of this Agreement.
Section 2. Appointment of Rights Agent. The
Company has appointed the Rights Agent to act as agent
for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Dis-
tribution Date also be the holders of the Common Stock of
the Company) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appoint-
ment. The Company may from time to time appoint such Co-
Rights Agents as it may deem necessary or desirable, upon
ten days' prior written notice to the Rights Agent. The
8
/15
Rights Agent shall have no duty to supervise, and in no
event shall be liable for, the acts or ommissions of any
such Co-Rights Agent. In the event that the Company ap-
points one or more Co-Rights Agents, the respective
duties of the Rights Agent and any Co-Rights Agents shall
be as the Company shall determine, and any actions which
may be taken by the Rights Agent pursuant to the terms of
this Agreement may be taken by any such Co-Rights Agent.
Section 3. Issuance of Rights Certificates.
(a) Until the earliest of (i) the Close
of Business on the tenth Business Day (or such specified
or unspecified later date as may be determined by the
Board before the occurrence of a Distribution Date) after
the Stock Acquisition Date (or, if the tenth Business Day
(or such later date) after the Stock Acquisition Date
occurs before the Record Date, the Close of Business on
the Record Date), (ii) the Close of Business on the tenth
Business Day (or such specified or unspecified later date
as may be determined by the Board before the occurrence
of a Distribution Date) after the date that a tender or
exchange offer by any Person (other than an Exempt Per-
son) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regula-
tions under the Exchange Act if upon consummation thereof
such Person would be the Beneficial Owner of 15% or more
of the Common Stock of the Company then outstanding (the
earlier of (i) and (ii) being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraphs (b) and (c) of
this Section 3) by the certificates for the Common Stock
of the Company registered in the names of the holders
thereof (which certificates shall be deemed also to be
certificates for Rights) and not by separate certificates
and (y) the Rights will be transferable only in connec-
tion with the transfer of the underlying shares of Common
Stock of the Company (including a transfer to the Compa-
ny). As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured,
postage prepaid mail, to each record holder of the Common
Stock of the Company as of the Close of Business on the
Distribution Date, at the address of such holder shown on
the records of the Company, one or more rights certifi-
cates, substantially in the form attached hereto as
Exhibit A (the "Rights Certificates"), evidencing one
Right for each share of Common Stock of the Company so
9
/16
held, subject to adjustment as provided herein. In the
event that an adjustment in the number of Rights per
share of Common Stock of the Company has been made pursu-
ant to Section 11(i) hereof, at the time of distribution
of the Rights Certificates, the Company shall not be re-
quired to issue Rights Certificates evidencing fractional
Rights, but may, in lieu thereof, make the necessary and
appropriate rounding adjustments (in accordance with
Section 14(a) hereof) so that Rights Certificates repre-
senting only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) The Company sent a copy of a Summary
of Rights, in substantially the form attached as Exhibit
B to the 1987 Agreement (the "Summary of Rights"), by
first-class, postage prepaid mail, to each record holder
of the Common Stock of the Company as of the Close of
Business on December 31, 1987, at the address of such
holder then shown on the records of the Company. With
respect to certificates for the Common Stock of the
Company outstanding as of the Record Date, as set forth
in paragraph (a) above, until the earlier of the Distri-
bution Date or the Expiration Date, the Rights will be
evidenced by (i) such certificates for the Common Stock
of the Company with or without a copy of the Summary of
Rights attached or (ii) certificates for the Common Stock
of the Company as legended pursuant to the terms of the
1987 Agreement, and the registered holders of the Common
Stock of the Company shall also be the registered holders
of the associated Rights. Until the earlier of the
Distribution Date or the Expiration Date, the transfer of
any certificates representing shares of Common Stock of
the Company in respect of which Rights have been issued
shall also constitute the transfer of the Rights associ-
ated with such shares of Common Stock of the Company.
(c) Rights shall be issued in respect of
all shares of Common Stock of the Company which are
issued (whether originally issued or from the Company's
treasury) after the Record Date but prior to the earlier
of the Distribution Date or the Expiration Date and, to
the extent provided in Section 22 hereof, in respect of
shares of Common Stock of the Company issued after the
Distribution Date and prior to the Expiration Date.
Certificates representing such shares of Common Stock of
10
/17
the Company shall also be deemed to be certificates for
Rights, and shall, as promptly as practicable following
the Record Date, bear the following legend:
This certificate also evidences and enti-
tles the holder hereof to certain Rights as set
forth in the Renewed Rights Agreement between
Ionics, Incorporated (the "Company") and
BankBoston, N.A. (the "Rights Agent") dated as
of August 19, 1997, as the same may be amended,
restated, renewed or extended from time to time
(the "Rights Agreement"), the terms of which
are hereby incorporated herein by reference and
a copy of which is on file at the principal of-
fices of the Company. Under certain circum-
stances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate cer-
tificates and will no longer be evidenced by
this certificate. The Company will mail to the
holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing,
without charge, promptly after receipt of a
written request therefor. Under certain cir-
cumstances set forth in the Rights Agreement,
Rights beneficially owned (as such term is
defined in the Rights Agreement) by any Person
who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement),
whether currently held by or on behalf of such
Person or by any subsequent holder, may become
null and void. The Rights shall not be exer-
cisable, and shall be void so long as held, by
a holder in any jurisdiction where the requi-
site qualification to the issuance to such
holder, or the exercise by such holder, of the
Rights in such jurisdiction shall not have been
obtained or be obtainable.
With respect to such certificates containing the forego-
ing legend, until the earlier of (i) the Distribution
Date or (ii) the Expiration Date, the Rights associated
with the Common Stock of the Company represented by such
certificates shall be evidenced by such certificates
alone, and registered holders of Common Stock of the
Company shall also be the registered holders of the asso-
ciated Rights, and the transfer of any of such certifi-
11
/18
cates shall also constitute the transfer of the Rights
associated with the Common Stock of the Company repre-
sented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the
forms of election to purchase, assignment and certificate
contained therein to be printed on the reverse thereof)
shall each be substantially in the form attached hereto
as Exhibit A and may have such marks of identification or
designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursu-
ant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provi-
sions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall be dated as of
the Record Date and on their face shall entitle the
holders thereof to purchase such number of shares of
Common Stock of the Company as shall be set forth therein
at the exercise price set forth therein (such exercise
price per share of Common Stock of the Company, as ad-
justed from time to time hereunder, the "Purchase
Price"), but the amount and type of securities purchas-
able upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided
herein.
(b) Any Rights Certificate issued pursu-
ant to Section 3(a) or Section 22 hereof that represents
Rights beneficially owned by: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associ-
ate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders
of equity interests in the Acquiring Person or to any
Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding (whether or not
12
/19
in writing) regarding the transferred Rights or (B) a
transfer which the Board, in its sole discretion, has
determined is part of a plan, arrangement or understand-
ing which has as a primary purpose or effect avoidance of
the provisions of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment
of any other Rights Certificate referred to in this
sentence, shall contain (to the extent feasible) the
following legend:
The Rights represented by this Rights Certifi-
cate 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 Renewed
Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby
may become null and void in the circumstances
specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be
executed under seal on behalf of the Company by its
Chairman of the Board, its President or any Vice Presi-
dent, either manually or by facsimile signature, and by
the Treasurer or any Assistant Treasurer of the Company,
either manually or by facsimile signature. The Rights
Certificates shall be manually countersigned by an autho-
rized signatory of the Rights Agent and shall not be
valid for any purpose unless so countersigned. In case
any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of
the Company before countersignature by an authorized
signatory of the Rights Agent and issuance and delivery
by the Company, such Rights Certificates, nevertheless,
may be countersigned by an authorized signatory of the
Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed
such Rights Certificates had not ceased to be such offi-
cer of the Company; and any Rights Certificate may be
signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate,
shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution
13
/20
of this Agreement any such person was not such an offi-
cer.
(b) Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its prin-
cipal office or offices designated as the appropriate
place for surrender of Rights Certificates upon exercise
or transfer, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of
the Rights Certificates, the number of Rights evidenced
on its face by each of the Rights Certificates and the
date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section
4(b), Section 7(e) and Section 14 hereof, at any time
after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the Expiration
Date, any Rights Certificate or Rights Certificates may
be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates enti-
tling the registered holder to purchase a like number of
shares of Common Stock of the Company (or, following the
occurrence of a Triggering Event, other securities, cash
or other assets, as the case may be) as the Rights Cer-
tificate or Rights Certificates surrendered then entitled
such holder (or former holder in the case of a transfer)
to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or
Rights Certificates shall make such request in writing
delivered to the Rights Agent and shall surrender the
Rights Certificate or Rights Certificates to be trans-
ferred, split up, combined or exchanged, with the forms
of assignment and certificate contained therein duly
executed, at the principal office or offices of the
Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate or Rights Certifi-
cates until the registered holder shall have completed
and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate
or Rights Certificates and shall have provided such addi-
14
/21
tional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. There-
upon, the Rights Agent shall, subject to Section 4(b),
Section 7(e) and Section 14 hereof, countersign and
deliver to the Person entitled thereto a Rights Certifi-
cate or Rights Certificates, as the case may be, as so
requested. The Company may require payment from the
holder of a Rights Certificate of a sum sufficient to
cover any tax or governmental charge that may be imposed
in connection with any transfer, split up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the
Rights Agent of evidence reasonably satisfactory to them
of the loss, theft, destruction or mutilation of a valid
Rights Certificate and, in case of loss, theft or de-
struction, of indemnity or security reasonably satisfac-
tory to them and reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental there-
to, and upon surrender to the Rights Agent and cancella-
tion of the Rights Certificate if mutilated, the Company
will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and deliv-
ery to the registered owner in lieu of the Rights Certif-
icate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the
registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provid-
ed herein, including without limitation, the restrictions
on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23(a) hereof) in whole or in part
at any time after the Distribution Date upon surrender of
the Rights Certificate, with the form of election to
purchase and the certificate contained therein duly
executed, to the Rights Agent at the principal office or
offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price
with respect to the total number of shares of Common
Stock of the Company (or, following the occurrence of a
Triggering Event, other securities, cash or other assets,
as the case may be) as to which such surrendered Rights
are then exercisable, at or prior to the earliest of (i)
15
/22
the Final Expiration Date, (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof and
(iii) the time at which the Rights expire pursuant to
Section 13(d) hereof (the earliest of (i), (ii) and (iii)
being herein referred to as the "Expiration Date").
(b) The Purchase Price for each share of
Common Stock of the Company pursuant to the exercise of
a Right shall initially be $175, shall be subject to ad-
justment from time to time as provided in Sections 11
and 13(a) hereof and shall be payable in accordance with
paragraph (c) below.
(c) Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of elec-
tion to purchase and the certificate contained therein
duly executed, accompanied by payment, with respect to
each Right so exercised, of the Purchase Price, as such
amount may be reduced pursuant to Section 11(a)(iii)
hereof, for each share of Common Stock of the Company
(or, following a Triggering Event, for other securities,
cash or other assets, as the case may be) to be purchased
(as set forth below) and an amount equal to any applica-
ble transfer tax, the Rights Agent shall, subject to
Sections 7(f) and 20(k) hereof, thereupon promptly (i)
(A) requisition from any transfer agent of the shares of
Common Stock of the Company (or make available, if the
Rights Agent is the transfer agent for such shares)
certificates for the total number of shares of Common
Stock of the Company to be purchased, and the Company
hereby irrevocably authorizes its transfer agent to
comply with all such requests or (B) if the Company shall
have elected to deposit the total number of shares of
Common Stock of the Company issuable upon exercise of the
Rights hereunder with a depositary agent, requisition
from the depositary agent depositary receipts represent-
ing such number of shares of Common Stock of the Company
as are to be purchased (in which case certificates for
the shares of Common Stock of the Company represented by
such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company will direct
the depositary agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any,
to be paid in lieu of fractional shares in accordance
with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be
delivered to, or upon the order of, the registered holder
16
/23
of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to, or upon
the order of, the registered holder of such Rights Cer-
tificate. The payment of the Purchase Price (as such
amount may be reduced pursuant to Section 11(a)(iii)
hereof) shall be made in cash or by certified check,
cashier's check or bank draft payable to the order of the
Company. In the event that the Company is obligated to
issue other securities, pay cash or distribute other
property pursuant to this Section 7(c) or Section 11(a)
hereof, the Company will make all arrangements necessary
so that such other securities, cash or other property are
available for distribution by the Rights Agent, if and
when appropriate. In the event that, immediately prior
to the occurrence of a Distribution Date, the number of
shares of Common Stock of the Company which are autho-
rized by the Company's articles of organization, as
amended and in effect at such time, but not outstanding
or reserved for issuance for purposes other than upon
exercise of the Rights is not sufficient to permit exer-
cise in full of the Rights in accordance with their
terms, the Company, acting by resolution of the Board,
shall follow the same procedures and may take any of the
same actions in connection with the exercise of Rights
under this Section 7(c) as are required or permitted to
be followed or taken pursuant to Section 11(a)(iii)
hereof with respect to substitution of value in connec-
tion with the exercise of Rights under Section 11(a)(ii)
hereof. The Company reserves the right to require prior
to the occurrence of a Triggering Event that, upon any
exercise of Rights, a number of Rights be exercised so
that only whole shares of Common Stock of the Company
would be issued.
(d) In case the registered holder of any
Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evi-
dencing Rights equivalent to the Rights remaining unexer-
cised shall be issued by the Rights Agent and delivered
to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as
may be designated by such holder, subject to the provi-
sions of Section 14 hereof.
(e) Notwithstanding anything in this
Agreement to the contrary, from and after the first
17
/24
occurrence of a Section 11(a)(ii) Event, any Rights bene-
ficially owned by (i) an Acquiring Person or an Affiliate
or Associate of an Acquiring Person which the Board, in
its sole discretion, determines is or was involved in or
caused or facilitated, directly or indirectly (including
through any change in the Board), such Section 11(a)(ii)
Event, (ii) a transferee of any such Acquiring Person (or
of any such Affiliate or Associate) who becomes a trans-
feree after such Acquiring Person becomes such or (iii) a
transferee of any such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to
or concurrently with such Acquiring Person becoming such
and receives such Rights pursuant to either (A) a trans-
fer (whether or not for consideration) from such Acquir-
ing Person to holders of equity interests in such Acquir-
ing Person or to any Person with whom such Acquiring
Person has any continuing agreement, arrangement or
understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board has
determined is part of a plan, arrangement or understand-
ing which has as a primary purpose or effect the avoid-
ance of this Section 7(e), shall become null and void
without any further action, and no holder of such Rights
shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts
to ensure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determina-
tions with respect to an Acquiring Person or any of their
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action
with respect to a registered holder of any Rights Certif-
icate upon the occurrence of any purported assignment or
exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or elec-
tion to purchase set forth on the reverse side of the
Rights Certificate surrendered for such assignment or
exercise and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Benefi-
cial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.
18
/25
Section 8. Cancellation and Destruction of
Rights Certificates. All Rights Certificates surrendered
for the purpose of exercise, transfer, split up, combina-
tion or exchange shall, if surrendered to the Company or
any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to
the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent
for cancellation and retirement, and the Rights Agent
shall so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon
the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such
cancelled Rights Certificates and, in such case, shall
deliver a certificate of destruction thereof to the
Company.
Section 9. Reservation and Availability of
Capital Stock.
(a) The Company covenants and agrees
that, from and after the Distribution Date, it will cause
to be reserved and kept available out of its authorized
and unissued shares of Common Stock of the Company (and,
following the occurrence of a Triggering Event, other
securities) or out of its authorized and issued shares of
Common Stock of the Company held in its treasury, the
number of shares of Common Stock of the Company (and,
following the occurrence of a Triggering Event, the
amount of other securities) that, as provided in this
Agreement (including Section 11(a)(iii) hereof), will be
sufficient to permit the exercise in full of all out-
standing Rights.
(b) So long as the shares of Common Stock
of the Company (and, following the occurrence of a Trig-
gering Event, other securities) issuable and deliverable
upon the exercise of the Rights may be listed on any
national securities exchange, the Company shall use all
reasonable efforts to cause, from and after such time as
the Rights become exercisable, all shares reserved for
such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
19
/26
(c) The Company shall use all reasonable
efforts to (i) file, as soon as practicable following the
earliest date after the first occurrence of a Triggering
Event in which the consideration to be delivered by the
Company upon exercise of the Rights has been determined
in accordance with this Agreement, or as soon as required
by law following the Distribution Date, as the case may
be, a registration statement under the Act on an appro-
priate form with respect to the Common Stock or other
securities purchasable upon exercise of the Rights, (ii)
cause such registration statement to become effective as
soon as practicable after such filing and (iii) cause
such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities and
(B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compli-
ance with, the securities or "blue sky" laws of the
various states and other jurisdictions in connection with
the exercisability of the Rights. The Company may,
acting by resolution of the Board, temporarily suspend,
for a period of time not to exceed 90 days after the date
set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and
permit it to become effective. In the event of any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended and shall issue a public announce-
ment at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that
a registration statement is required in other circum-
stances following the Distribution Date, the Company may
similarly temporarily suspend the exercisability of the
Rights until such time as a registration statement has
been declared effective. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not
be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been
obtained, or the exercise thereof shall not otherwise be
permitted under applicable law or a registration state-
ment shall not have been declared effective.
(d) The Company covenants and agrees that
it will take all such action as may be necessary to
ensure that all shares of Common Stock of the Company
20
/27
(and, following the occurrence of a Triggering Event,
other securities) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price),
be duly and validly authorized and issued and fully paid
and nonassessable.
(e) The Company further covenants and
agrees that, except as set forth in Section 6(a) hereof
and this Section 9(e), it will pay when due and payable
any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or deliv-
ery of the Rights Certificates and of any certificates
for a number of shares of Common Stock of the Company (or
other securities, as the case may be) upon the exercise
of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect
of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a
number of shares of Common Stock of the Company (or other
securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise,
nor shall the Company be required to issue or deliver any
certificates for a number of shares of Common Stock of
the Company (or other securities, as the case may be) in
a name other than that of the registered holder upon the
exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that
no such tax is due.
Section 10. Record Date for Securities Issued
Upon Exercise. Each Person in whose name any certificate
for a number of shares of Common Stock of the Company (or
other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to
have become the holder of record of such shares of Common
Stock of the Company (or other securities, as the case
may be) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certifi-
cate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and all applicable trans-
fer taxes) was made; provided, however, that if the date
of such surrender and payment is a date upon which the
transfer books for the Common Stock (or other securities,
21
/28
as the case may be) of the Company are closed, such
Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business
Day on which the transfer books for the Common Stock (or
other securities, as the case may be) of the Company are
open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate, as such,
shall not be entitled to any rights of a stockholder of
the Company (or the Principal Party) with respect to
shares for which the Rights shall be exercisable, includ-
ing without limitation the right to vote, to receive
dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive
any notice of any proceedings of the Company (or the
Principal Party), except as provided herein.
Section 11. Adjustment of Purchase Price,
Number and Kind of Shares or Number of Rights. The Pur-
chase Price, the number and kind of shares, or fractions
thereof, purchasable upon exercise of each Right and the
number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall
at any time after the date of this Agreement
(A) declare a dividend on the outstanding
shares of Common Stock of the Company payable
in shares of Common Stock of the Company, (B)
subdivide or split the outstanding shares of
Common Stock of the Company, (C) combine or
consolidate the outstanding shares of Common
Stock of the Company into a smaller number of
shares or (D) issue any shares of its capital
stock in a reclassification of the Common Stock
of the Company (including any such reclassifi-
cation in connection with a consolidation or
merger in which the Company is the continuing
or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e)
hereof, the Purchase Price in effect at the
time of the record date for such dividend or of
the effective date of such subdivision, split,
combination, consolidation or reclassification,
and the number and kind of shares of Common
Stock (or other securities, as the case may be)
issuable on such date, shall be proportionately
22
/29
adjusted so that the holder of any Right exer-
cised after such time shall be entitled to
receive, upon payment of the Purchase Price
then in effect, the aggregate number and kind
of shares of Common Stock or capital stock, as
the case may be, which, if such Right had been
exercised immediately prior to such date,
whether or not such Right was then exercisable,
and at a time when the transfer books for the
Common Stock (or other capital stock, as the
case may be) of the Company were open, he would
have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivi-
sion, split, combination, consolidation or re-
classification. If an event occurs which would
require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be
made prior to, any adjustment required pursuant
to Section 11(a)(ii) hereof.
(ii) In the event (a "Section
11(a)(ii) Event") that any Person (other than
an Exempt Person), alone or together with its
Affiliates and Associates, shall, at any time
after the Rights Dividend Declaration Date,
become the Beneficial Owner of 15% or more of
the shares of Common Stock of the Company then
outstanding, unless the event causing (A) the
15% threshold to be crossed is a transaction
set forth in Section 13(a) hereof or (B) is an
acquisition of shares of Common Stock of the
Company pursuant to a tender offer or an ex-
change offer for all outstanding shares of
Common Stock of the Company at a price and on
terms determined by at least a majority of the
Outside Directors, after receiving advice from
one or more investment banking firms, to be (x)
at a price that is fair to stockholders (taking
into account all factors which such members of
the Board deem relevant, including without
limitation prices which could reasonably be
achieved if the Company or its assets were sold
on an orderly basis designed to realize maximum
value) and (y) otherwise in the best interests
of the Company and its stockholders, then
23
/30
promptly after the date of occurrence of a Sec-
tion 11(a)(ii) Event, proper provision shall be
made so that each holder of a Right (except as
provided below and in Section 7(e) hereof)
shall thereafter have the right to receive,
upon exercise thereof at the then current Pur-
chase Price in accordance with the terms of
this Agreement, such number of shares of Common
Stock of the Company as shall equal the result
obtained by (1) multiplying the then current
Purchase Price by the then number of shares of
Common Stock of the Company for which a Right
was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event (wheth-
er or not such Right was then exercisable) and
(2) dividing that product (which following such
first occurrence, shall thereafter be referred
to as the "Purchase Price" for each Right and
for all purposes of this Agreement) by 50% of
the Current Market Price per share of Common
Stock of the Company on the date of such first
occurrence (such number of shares being re-
ferred to as the "Adjustment Shares").
(iii) In lieu of issuing any
shares of Common Stock of the Company in accor-
dance with Section 11(a)(ii) hereof, the Compa-
ny, acting by resolution of the Board, may, and
in the event that the number of shares of Com-
mon Stock of the Company which are authorized
by the Company's articles of organization but
not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights
is not sufficient to permit the exercise in
full of the Rights in accordance with the fore-
going subparagraph (ii) of this Section 11(a),
the Company, acting by resolution of the Board,
shall: (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon
the exercise of a Right (the "Current Value")
over (2) the Purchase Price attributable to
each Right (such excess being referred to as
the "Spread") and (B) with respect to all or a
portion of each Right (subject to Section 7(e)
hereof), make adequate provision to substitute
for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a
24
/31
reduction in the Purchase Price, (3) equity
securities of the Company other than Common
Stock of the Company (including without limita-
tion shares, or units of shares, of preferred
stock which the Board has deemed to have the
same value as shares of Common Stock of the
Company (such shares of preferred stock being
referred to as "Common Stock Equivalents")),
(4) debt securities of the Company, (5) other
assets or (6) any combination of the foregoing
which, when added to any shares of Common Stock
of the Company issued upon such exercise, has
an aggregate value equal to the Current Value,
where such aggregate value has been determined
by the Board based upon the advice of a nation-
ally recognized investment banking firm select-
ed by the Board; provided, however, that if the
Company shall not have made adequate provision
to deliver value pursuant to clause (B) above
within 30 days following the later of (x) the
first occurrence of a Section 11(a)(ii) Event
and (y) the date on which the Company's right
of redemption pursuant to Section 23(a) hereof,
as such date may be extended pursuant to Sec-
tion 23(a) hereof or amended pursuant to Sec-
tion 26 hereof, expires (the later of (x) and
(y) being referred to herein as the "Section
11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surren-
der for exercise of a Right and without requir-
ing payment of the Purchase Price, shares of
Common Stock of the Company (to the extent
available) and then, if necessary, cash, which
shares and cash have an aggregate value equal
to the Spread. If the Board shall determine in
good faith that it is likely that sufficient
additional shares of Common Stock of the Compa-
ny could be authorized for issuance upon exer-
cise in full of the Rights, the 30-day period
set forth above may be extended to the extent
necessary, but not more than 90 days after the
Section 11(a)(ii) Trigger Date, in order that
the Company may seek stockholder approval for
the authorization of such additional shares
(such period, as it may be extended, the "Sub-
stitution Period"). To the extent that the
Company determines that some action need be
25
/32
taken pursuant to the first or second sentences
of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 7(e) hereof,
that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the
exercisability of the Rights until the expira-
tion of the Substitution Period in order to
seek any authorization of additional shares or
to decide the appropriate form of distribution
to be made pursuant to such first sentence and
to determine the value thereof. In the event
of any such suspension, the Company shall issue
a public announcement stating that the
exercisability of the Rights has been tempo-
rarily suspended and a public announcement at
such time as the suspension is no longer in
effect. For purposes of this Section
11(a)(iii), the value of the Common Stock of
the Company shall be the Current Market Price
per share of the Common Stock of the Company on
the Section 11(a)(ii) Trigger Date, and the
value of any Common Stock Equivalent shall be
deemed to be equal to the value of the Common
Stock of the Company on such date.
(b) In case the Company shall fix a
record date for the issuance of rights, options or war-
rants to all holders of Common Stock of the Company
entitling them to subscribe for or purchase (for a period
expiring within 45 calendar days after such record date)
Common Stock of the Company ("Common Stock Equivalents")
or securities convertible into Common Stock of the Compa-
ny or Common Stock Equivalents at a price per share of
Common Stock of the Company or per share of Common Stock
Equivalents (or having a conversion price per share, if a
security convertible into Common Stock of the Company or
Common Stock Equivalents) less than the Current Market
Price per share of Common Stock of the Company on such
record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the
sum of (i) the number of shares of Common Stock of the
Company or Common Stock Equivalents outstanding on such
record date, (ii) the number of shares of Common Stock of
the Company or Common Stock Equivalents underlying secu-
rities outstanding on such record date which are convert-
26
/33
ible into Common Stock of the Company or Common Stock
Equivalents and (iii) the number of shares of Common
Stock of the Company which the aggregate subscription
price of the total number of shares of Common Stock of
the Company or Common Stock Equivalents so to be offered
(or the aggregate initial conversion price of the con-
vertible securities so to be offered) would purchase at
such Current Market Price, and the denominator of which
shall be the sum of (i) the number of shares of Common
Stock of the Company outstanding on such record date,
(ii) the number of shares of Common Stock of the Company
or Common Stock Equivalents underlying securities out-
standing on such record date which are convertible into
Common Stock of the Company or Common Stock Equivalents
and (iii) the number of additional shares of Common Stock
of the Company or Common Stock Equivalents to be offered
for subscription or purchase (or into which the convert-
ible securities so to be offered are initially convert-
ible). In case such subscription price may be paid by
delivery of consideration part or all of which may be in
a form other than cash, the value of such consideration
shall be as determined in good faith by the Board, which
determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all
purposes. Shares of Common Stock of the Company owned by
or held for the account of the Company shall not be
deemed outstanding for the purpose of any such compu-
tation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event
that such rights, options or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a
record date for a distribution to all holders of Common
Stock of the Company (including any such distribution
made in connection with a consolidation or merger in
which the Company is the continuing or surviving corpora-
tion) of evidences of indebtedness, cash (other than a
regular, periodic cash dividend out of the earnings or
retained earnings of the Company), assets (other than a
dividend payable in Common Stock of the Company, but
including any dividend payable in stock other than Common
Stock of the Company) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof),
the Purchase Price to be in effect after such record date
27
/34
shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a frac-
tion, the numerator of which shall be the Current Market
Price per share of Common Stock of the Company on such
record date, less the fair market value (as determined in
good faith by the Board, which determination shall be
described in a statement filed with the Rights Agent and
shall be conclusive for all purposes) of the portion of
the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants
applicable to a share of Common Stock of the Company and
the denominator of which shall be such Current Market
Price per share of Common Stock of the Company. Such
adjustments shall be made successively whenever such a
record date is fixed, and in the event that such dis-
tribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been
in effect if such record date had not been fixed.
(d) For the purpose of any computation
hereunder, other than computations made pursuant to
Section 11(a)(iii) hereof, the "Current Market Price" per
share of Common Stock on any date shall be deemed to be
the average of the daily closing prices per share of such
Common Stock for the 30 consecutive Trading Days immedi-
ately prior to such date, and for purposes of computa-
tions made pursuant to Section 11(a)(iii) hereof, the
Current Market Price per share of Common Stock on any
date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the 10
consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current
Market Price per share of the Common Stock is determined
during a period following the announcement by the issuer
of such Common Stock of (A) a dividend or distribution on
such Common Stock payable in shares of such Common Stock
or securities convertible into shares of such Common
Stock (other than the Rights) or (B) any subdivision,
combination, consolidation, reverse stock split or re-
classification of such Common Stock, and prior to the
expiration of the requisite 30-Trading Day or 10-Trading
Day period, as set forth above, after the ex-dividend
date for such dividend or distribution, or the record
date for such subdivision, combination, consolidation,
reverse stock split or reclassification, then, and in
each such case, the Current Market Price shall be proper-
ly adjusted to take into account ex-dividend trading.
28
/35
The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the shares of Common
Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consol-
idated transaction reporting system or as quoted by the
Nasdaq National Market with respect to securities listed
or admitted to trading on another national securities ex-
change or quoted by the Nasdaq National Market, respec-
tively or, if the shares of Common Stock are not listed
or admitted to trading on any national securities ex-
change or quoted by the Nasdaq National Market, the last
quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter
market, as reported by The Nasdaq Stock Market or such
other quotation system then in use or, if on any such
date the shares of Common Stock are not quoted by any
such organization, the average of the closing bid and
asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the
Board. If on any such date the Common Stock is not pub-
licly held or not so listed, admitted to trading or quot-
ed, and no market maker is making a market in such Common
Stock, Current Market Price shall mean the fair value of
such shares on such date as determined in good faith by
the Board, which determination shall be described in a
statement filed with the Rights Agent and shall be con-
clusive for all purposes. The term "Trading Day" shall
mean a day on which the principal national securities ex-
change on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of busi-
ness or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange,
a Business Day.
(e) Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price
shall be required unless such adjustment would require an
increase or decrease in the Purchase Price of at least
one percent; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under
29
/36
this Section 11 shall be made to the nearest one cent or
to the nearest one-thousandth of a share of Common Stock
of the Company as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than
the earlier of (i) three years from the date of the
transaction which mandates such adjustment or (ii) the
Expiration Date.
(f) If as a result of an adjustment made
pursuant to Section 11(a)(ii) or Section 13(a) hereof,
the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other
than Common Stock of the Company, thereafter the number
of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof (or the number of
Rights) shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practi-
cable to the provisions with respect to the Common Stock
of the Company contained in Sections 11(a), (b), (c),
(e), (g), (h), (i), (j), (k), (l) and (m) hereof, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Common Stock of the Company shall apply on
like terms to any such other shares; provided, however,
that the Company shall not be liable for its inability to
reserve and keep available for issuance upon exercise of
the Rights pursuant to Section 11(a)(ii) hereof a number
of shares of Common Stock of the Company greater than the
number then authorized by the Company's articles of orga-
nization, but not outstanding or reserved for any other
purpose.
(g) All Rights originally issued by the
Company subsequent to any adjustment made to the Purchase
Price hereunder shall evidence the right to purchase, at
the adjusted Purchase Price, the number of shares of
Common Stock of the Company purchasable from time to time
hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exer-
cised its election as provided in Section 11(i) hereof,
upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c) hereof,
each Right outstanding immediately prior to the making of
such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of
30
/37
shares of Common Stock of the Company (calculated to the
nearest one-thousandth of a share of Common Stock) ob-
tained by (i) multiplying (x) the number of shares of
Common Stock of the Company covered by a Right immediate-
ly prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Pur-
chase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the
date of any adjustment of the Purchase Price to adjust
the number of Rights, in lieu of any adjustment in the
number of shares of Common Stock of the Company purchas-
able upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights
shall be exercisable for the number of shares of Common
Stock of the Company for which a Right was exercisable
immediately prior to such adjustment. Each Right held of
record prior to such adjustment of that number of Rights
shall become the number of Rights (calculated to the
nearest one-thousandth of a Right) obtained by dividing
the Purchase Price in effect immediately prior to adjust-
ment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of
its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjust-
ment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a
result of such adjustment or, at the option of the Compa-
ny, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by
the Company, new Rights Certificates evidencing all the
Rights to which such holders shall be entitled after such
31
/38
adjustment. Rights Certificates so to be distributed
shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the
Company, the adjusted Purchase Price) and shall be regis-
tered in the names of the holders of record of Rights
Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or
change in the Purchase Price or the number of shares of
Common Stock of the Company issuable upon the exercise of
the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase
Price per share of Common Stock of the Company and the
number of shares Common Stock of the Company which were
expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would
cause an adjustment reducing the Purchase Price below the
then stated value, if any, of the number of shares of
Common Stock of the Company issuable upon exercise of the
Rights, the Company shall use all reasonable efforts to
take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may
validly and legally issue, fully paid and nonassessable,
such number of shares of Common Stock of the Company at
such adjusted Purchase Price.
(l) In any case in which this Section 11
shall require that an adjustment in the Purchase Price be
made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exer-
cised after such record date of the number of shares of
Common Stock of the Company or other capital stock or
securities of the Company, if any, issuable upon such
exercise over and above the number of shares of Common
Stock of the Company or other capital stock or securities
of the Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities
upon the occurrence of the event requiring such adjust-
ment.
32
/39
(m) Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled
to make such adjustments in the Purchase Price, in addi-
tion to those adjustments expressly required by this
Section 11, as and to the extent that in its good faith
judgment the Board shall determine to be advisable in
order that any (i) consolidation or subdivision of the
Common Stock of the Company, (ii) issuance wholly for
cash of any shares of Common Stock of the Company at less
than the Current Market Price, (iii) issuance wholly for
cash of shares of Common Stock of the Company or securi-
ties which by their terms are convertible into or ex-
changeable for shares of Common Stock of the Company,
(iv) stock dividends or (v) issuance of rights, options
or warrants referred to in this Section 11, hereafter
made by the Company to holders of its Common Stock shall
not be taxable to such stockholders.
(n) The Company covenants and agrees that
it shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof) or
(iii) sell or transfer (or permit any Subsidiary to sell
or transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company or any of its
Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof) if (x) at the time of
or immediately after such consolidation, merger, sale or
transfer there are any rights, warrants or other instru-
ments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such
consolidation, merger, sale or transfer, the stockholders
of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associ-
ates.
33
/40
(o) The Company covenants and agrees
that, after the Distribution Date, it will not, except as
permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that
such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares. Whenever an adjustment is
made as provided in Section 11 or Section 13 hereof, the
Company shall (a) promptly prepare a certificate setting
forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with
the Rights Agent, and with each transfer agent for the
Common Stock of the Company, a copy of such certificate
and (c) mail a brief summary thereof to each record
holder of a Rights Certificate (or, if prior to the
Distribution Date, to each record holder of a certificate
representing shares of Common Stock of the Company) in
accordance with Section 24 hereof. Notwithstanding the
foregoing sentence, the failure of the Company to prepare
such certificate or statement or make such filings or
mailings shall not affect the validity of, or the force
or effect of, the requirement for 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 such
adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.
(a) In the event (a "Section 13 Event")
that, on or after the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate or other-
wise combine with, or merge with or into, any other
Person or Persons (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) here-
of) and the Company shall not be the continuing or sur-
viving corporation of such consolidation, combination or
merger, (y) any Person or Persons (other than a Subsid-
iary of the Company in a transaction which complies with
Section 11(o) hereof) shall consolidate or otherwise
combine with, or merge with or into, the Company and the
34
/41
Company shall be the continuing or surviving corporation
of such consolidation, combination or merger and, in
connection with such consolidation, combination or merg-
er, all or part of the outstanding shares of Common Stock
of the Company shall be changed into or exchanged for
stock or other securities of any other Person or Persons
or cash or any other property or (z) the Company shall
sell or otherwise transfer (or one or more of its Subsid-
iaries shall sell or otherwise transfer), in one transac-
tion or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken
as a whole and calculated on the basis of the Company's
most recent regularly prepared financial statements) to
any Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions
each of which complies with Section 11(o) hereof); pro-
vided, however, that this clause (z) of Section 13(a)
hereof shall not apply to the pro rata distribution by
the Company of assets (including securities) of the
Company or any of its Subsidiaries to all holders of
Common Stock of the Company; then, and in each such case
(except as may be contemplated by Section 13(d) hereof),
proper provision shall be made so that: (i) each holder
of a Right, except as provided in Section 7(e) hereof,
shall, on or after the later of (A) the date of the first
occurrence of any such Section 13 Event or (B) the date
of the expiration of the period within which the Rights
may be redeemed pursuant to Section 23 hereof (as the
same may be extended pursuant to Section 23(a) hereof or
amended pursuant to Section 26 hereof), thereafter have
the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and
issued, fully paid, nonassessable and freely tradeable
shares of Common Stock of the Principal Party, not sub-
ject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase
Price by the number of shares of Common Stock of the
Company for which a Right is exercisable immediately
prior to the first occurrence of a Section 13 Event (or,
if a Section 11(a)(ii) Event has occurred prior to the
first occurrence of a Section 13 Event, multiplying the
number of such shares of Common Stock of the Company for
which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the
35
/42
Purchase Price in effect immediately prior to such first
occurrence), and (2) dividing that product (which, fol-
lowing the first occurrence of a Section 13 Event, shall
be referred to as the "Purchase Price" for each Right and
for all purposes of this Agreement) by 50% of the Current
Market Price per share of the Common Stock of such Prin-
cipal Party on the date of consummation of such Section
13 Event; (ii) the shares of Common Stock of such Princi-
pal Party received by each holder of a Right upon exer-
cise of that Right shall be fully paid and nonassessable;
(iii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company
pursuant to this Agreement; (iv) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Sec-
tion 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event; (v)
such Principal Party shall take such steps (including
without limitation the reservation of a sufficient number
of shares of its Common Stock) in connection with the
consummation of any such transaction as may be necessary
to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation
to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (vi) the provisions of
Section 11(a)(ii) hereof shall be of no effect following
the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transac-
tion described in clause (x) or (y) of the
first sentence of Section 13(a) hereof, (A) the
Person that is the issuer of any securities
into which shares of Common Stock of the Compa-
ny are converted, changed or exchanged in such
merger, consolidation or combination (or, if
there is more than one such issuer, the issuer
the Common Stock of which has the greatest
market value) or (B) if no securities are so
issued, the Person that is the other party to
such merger (and survives the merger), consoli-
dation or combination (or, if there is more
than one such Person, the Person the Common
Stock of which has the greatest market value),
or if the other party to the merger does not
36
/43
survive the merger, the Person that does sur-
vive the merger (including the Company, if it
survives); and
(ii) in the case of any transac-
tion described in clause (z) of the first sen-
tence of Section 13(a) hereof, the Person that
is the party receiving the greatest portion of
the assets or earning power transferred pursu-
ant to such transaction or transactions or, if
each Person that is a party to such transaction
or transactions receives the same portion of
the assets or earning power so transferred or
if the Person receiving the greatest portion of
the assets or earning power cannot be deter-
mined, whichever of such Persons is the issuer
of Common Stock having the greatest market
value;
provided, however, that in any such case, (1) if the
Common Stock of such Person is not at such time and has
not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another
Person the Common Stock of which is and has been so
registered, "Principal Party" shall refer to such other
Person; (2) if the Common Stock of such Person is not and
has not been so registered and such Person is a Subsid-
iary, directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have
been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value; and (3)
if the Common Stock of such Person is not and has not
been so registered and such Person is owned, directly or
indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by
the same Person, the rules set forth in (1) and (2) above
shall apply to each of the chains of ownership having an
interest in such joint venture as if such party were a
Subsidiary of both or all of such joint venturers, and
the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same
ratio as their direct or indirect interests in such
Person bear to the total of such interests.
37
/44
(c) The Company shall not consummate any
Section 13 Event unless the Principal Party shall have a
sufficient number of authorized shares of its Common
Stock which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accor-
dance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement
confirming that the requirements of Section 13(a) and
Section 13(b) hereof shall promptly be performed in
accordance with their terms and that such Section 13
Event shall not result in a default by the Principal
Party under this Agreement as the same shall have been
assumed by the Principal Party pursuant to Section 13(a)
and Section 13(b) hereof and further providing that, as
soon as practicable after the date of any such Section 13
Event, the Principal Party will:
(i) prepare and file a regis-
tration statement under the Act with respect to
the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form,
and will use its best efforts to cause such
registration statement to (A) become effective
as soon as practicable after such filing and
(B) remain effective (with a prospectus at all
times meeting the requirements of the Act)
until the Expiration Date and to similarly
comply with applicable state securities laws;
(ii) use its best efforts to
list or obtain quotation of (or continue the
listing or quotation of) the Rights and the
securities purchasable upon exercise of the
Rights on a national securities exchange or by
an automated quotation service;
(iii) deliver to holders of the
Rights historical financial statements for the
Principal Party and each of its Affiliates
which comply in all respects with the require-
ments for registration on Form 10 (or any suc-
cessor form) under the Exchange Act; and
(iv) use its best efforts to
obtain waivers of any rights of first refusal
or preemptive rights in respect of the shares
38
/45
of Common Stock of the Principal Party subject
to purchase upon exercise of outstanding
Rights.
The provisions of this Section 13 shall similarly apply
to successive mergers, consolidations, combinations or
sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights which have not there-
tofore been exercised shall thereafter become exercisable
in the manner described in Section 13(a) hereof.
(d) Notwithstanding anything in this
Agreement to the contrary, Section 13 hereof shall not be
applicable to a transaction described in subparagraph (x)
or subparagraph (y) of Section 13(a) hereof if (i) such
transaction is consummated with a Person or Persons (or a
wholly owned Subsidiary of any such Person or Persons)
who acquired shares of Common Stock of the Company pursu-
ant to a tender offer or exchange offer for all outstand-
ing shares of Common Stock of the Company which complies
with the exception provided for in Section 11(a)(ii)
hereof, (ii) the price per share of Common Stock of the
Company offered in such transaction is not less than the
price per share of Common Stock of the Company paid to
all holders of shares of Common Stock of the Company
whose shares were purchased pursuant to such tender offer
or exchange offer and (iii) the form of consideration
being offered to the remaining holders of shares of
Common Stock of the Company pursuant to such transaction
is the same as the form of consideration paid pursuant to
such tender offer or exchange offer. Upon consummation
of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional
Shares.
(a) The Company shall not be required to
issue fractions of Rights, except prior to the Distribu-
tion Date as provided in Section 11(i) hereof, or to dis-
tribute Rights Certificates which evidence fractional
Rights. In lieu of any such fractional Rights, there
shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole
39
/46
Right. For purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price
of the Rights for the Trading Day immediately prior to
the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for
any Trading Day shall be the last sale price, regular
way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consoli-
dated transaction reporting system with respect to secu-
rities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admit-
ted to trading on the New York Stock Exchange, as report-
ed in the principal consolidated transaction reporting
system or the Nasdaq National Market with respect to
securities listed on another national securities exchange
or quoted by the Nasdaq National Market, respectively, or
if the Rights are not listed or admitted to trading on
any national securities exchange or quoted by the Nasdaq
National Market, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices
in the over-the-counter market, as reported by The Nasdaq
Stock Market or such other quotation system then in use
or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and
asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board. If
on any such date no such market maker is making a market
in the Rights, the fair value of the Rights on such date
as determined in good faith by the Board shall be used.
(b) The Company shall not be required to
issue fractions of shares of Common Stock of the Company
upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Common Stock of the
Company. In lieu of fractional shares of Common Stock of
the Company, the Company may pay to the registered hold-
ers of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to
the same fraction of the current market value of one
share of Common Stock of the Company. For purposes of
this Section 14(b), the current market value of one share
of Common Stock of the Company shall be the closing price
of a share of Common Stock of the Company, or if unavail-
able, the appropriate alternative price (in each case, as
determined pursuant to Section 11(d) hereof) for the
40
/47
Trading Day immediately prior to the date of such exer-
cise.
(c) The holder of a Right by the accep-
tance of that Right expressly waives such holder's right
to receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of
action in respect of this Agreement, other than rights of
action vested in the Rights Agent in Section 18 hereof,
are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date,
the registered holders of the Common Stock of the Compa-
ny); and any registered holder of any Rights Certificate
(or, prior to the Distribution Date, of the Common Stock
of the Company), without the consent of the Rights Agent
or of the holder of any other Rights Certificate (or,
prior to the Distribution Date, of the Common Stock of
the Company), may, in the holder's own behalf and for the
holder's own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, the
holder's right to exercise the Rights evidenced by such
Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders
of Rights would not have an adequate remedy at law for
any breach of this Agreement and shall be entitled to
specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations
of the obligations hereunder of any Person subject to
this Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right, by accepting the same, consents
and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the
Rights will be transferable only in connection with the
transfer of shares of Common Stock of the Company;
(b) after the Distribution Date, the
Rights Certificates are transferable only on the registry
41
/48
books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper in-
strument of transfer and with the appropriate forms and
certificates contained therein duly executed;
(c) subject to Section 6(a) and Section
7(f) hereof, the Company and the Rights Agent may deem
and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated
certificate for Common Stock of the Company) is regis-
tered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificate or the
associated certificate for Common Stock of the Company
made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to the last sen-
tence of Section 7(e) hereof, shall be required to be
affected by any notice to the contrary; and
(d) notwithstanding anything in this
Agreement to the contrary, neither the Company nor the
Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to
perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of compe-
tent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or by reason of any
statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation;
provided, however, that the Company must use its reason-
able efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not
Deemed a Stockholder. No holder, as such, of any Rights
Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the number of
shares of Common Stock of the Company or any other secu-
rities of the Company which may at any time be issuable
upon the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certifi-
cate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder
42
/49
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 24 hereof), or to receive dividends or sub-
scription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the
Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on
demand of the Rights Agent, reimbursement for its reason-
able expenses and counsel fees and disbursements and
other disbursements incurred in the administration and
execution of this Agreement and the exercise and perfor-
mance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harm-
less 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 omit-
ted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs
and expenses of defending against any claim of liability
in the premises.
(b) The Rights Agent shall be protected
and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in good faith in
connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for
Common Stock of the Company or for other securities of
the Company or upon any instrument of assignment or
transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, state-
ment or other paper or document reasonably believed by it
to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person
or Persons.
43
/50
Section 19. Merger or Consolidation or Change
of Name of Rights Agent.
(a) Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation result-
ing from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or
any corporation succeeding to the corporate trust or
stock transfer business of the Rights Agent or any suc-
cessor Rights Agent, shall be the successor to the Rights
Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any
of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a suc-
cessor Rights Agent under the provisions of Section 21
hereof. If at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of
the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt
the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and if
at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name
of the predecessor or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certifi-
cates and in this Agreement.
(b) If at any time the name of the Rights
Agent shall be changed and at such time any of the Rights
Certificates shall have been countersigned but not deliv-
ered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so
countersigned; and if at that time any of the Rights Cer-
tificates 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 Agree-
ment.
Section 20. Duties of Rights Agent. The
Rights Agent undertakes the duties and obligations im-
posed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders
44
/51
of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) The Rights Agent may consult with
legal counsel (who may be legal counsel for the Company),
and the opinion of such counsel shall be full and com-
plete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter (in-
cluding without limitation the identity of any Acquiring
Person and the determination of Current Market Price) be
proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the
Chairman of the Board, the President, any Vice President,
the Treasurer, any Assistant Treasurer, the Clerk or any
Assistant Clerk of the Company and delivered to the
Rights Agent; and such certificate shall be full authori-
zation to the Rights Agent for any action taken or suf-
fered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable
hereunder only for its own negligence, bad faith or
willful misconduct.
(d) The Rights Agent shall not be liable
for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Rights
Certificates, nor shall it be required to verify the same
(except as to its countersignature on such Rights Certif-
icates), but all such statements and recitals are and
shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under
any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Cer-
tificate (except its countersignature thereon); nor shall
it be responsible for any breach by the Company of any
45
/52
covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section
11 or Section 13 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertain-
ing of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of a
certificate describing any such adjustment); nor shall it
by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any
shares of Common Stock of the Company to be issued pursu-
ant to this Agreement or any Rights Certificate or as to
whether any shares of Common Stock of the Company will,
when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carry-
ing out or performing by the Rights Agent of the provi-
sions of this Agreement.
(g) The Rights Agent is hereby authorized
and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of
the Board, the President, any Vice President, the Trea-
surer, any Assistant Treasurer, the Clerk or any Assis-
tant Clerk of the Company and to apply to such officers
for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suf-
fered to be taken by it in good faith in accordance with
instructions of any such officer. Any application by the
Rights Agent for written instructions from the Company
may, at the option of the Rights Agent, set forth in
writing any action proposed to be taken by, or omission
of, the Rights Agent under this Agreement and the date on
or after which such action shall be taken or such omis-
sion shall be effective. The Rights Agent shall not be
liable for any action taken by, or omission of, the
Rights Agent in accordance with a proposal included in
any such application on or after the date specified in
such application (which date shall not be less than five
Business Days after the date the Company actually re-
ceives such application, unless the Company shall have
46
/53
consented in writing to an earlier date) unless, prior to
taking any such action (or prior to the effective date in
the case of an omission), the Rights Agent shall have
received written instructions in response to such appli-
cation 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 any of the Rights or other securi-
ties of the Company, become pecuniarily interested in any
transaction in which the Company may be interested,
contract with or lend money to the Company or otherwise
act as fully and freely as though the Rights Agent 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
shall not be answerable or accountable for any act,
default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct; provided,
however, reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall
require the Rights Agent to expend or risk its own funds
or otherwise incur any financial liability in the perfor-
mance of any of its duties hereunder (other than internal
costs incurred by the Rights Agent in providing services
to the Company in the ordinary course of its business as
Rights Agent) or in the exercise of its rights if there
shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such
risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Cer-
tificate surrendered to the Rights Agent for exercise or
transfer, the certificate contained in the form of as-
signment or form of election to purchase, as the case may
be, has either not been completed or indicates an affir-
mative response to clause 1 or clause 2 thereof, the
Rights Agent shall not take any further action with
47
/54
respect to such requested exercise or transfer without
first consulting with the Company.
Section 21. Change of Rights Agent. The
Rights Agent or any successor Rights Agent may resign and
be discharged from its duties under this Agreement upon
30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Stock of the Company by
registered or certified mail and to the holders of the
Rights Certificates, if any, by first-class mail. The
Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing mailed to
the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock of
the Company by registered or certified mail and to the
holders of the Rights Certificates, if any, by first-
class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights
Agent. If the Company shall fail to make such appoint-
ment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or inca-
pacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then
any registered holder of any Rights Certificate may apply
to any court of competent jurisdiction for the appoint-
ment of a new Rights Agent. If no successor Rights Agent
shall have been appointed within 30 days from the effec-
tiveness of such removal, resignation or incapacity and
no registered holder of any Rights Certificate has ap-
plied pursuant to this Agreement for the appointment of a
new Rights Agent, the Company automatically shall be
designated as successor Rights Agent. Any successor
Rights Agent appointed by the Company or by such a court
shall be (a) a corporation organized and doing business
under the laws of the United States or of any state of
the United States, in good standing, which is authorized
to do business as a banking institution in such state, is
authorized under such laws to exercise corporate trust
powers, is subject to supervision or examination by
federal or state authority and has at the time of its
appointment as Rights Agent a combined capital and sur-
plus of at least $100,000,000 or (b) an Affiliate of a
corporation described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be
48
/55
vested with the same powers, rights, duties and responsi-
bilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor
Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereun-
der and shall execute and deliver, if applicable, any
further assurance, conveyance, act or deed necessary for
that purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock of the Company, and
shall mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any
notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity
of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case
may be.
Section 22. Issuance of New Rights Certifi-
cates. Notwithstanding any of the provisions of this
Agreement or of the Rights Certificates to the contrary,
the Company may, at its option, issue new Rights Certifi-
cates evidencing Rights in such form as may be approved
by the Board to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares
or other securities or property purchasable under the
Rights Certificates made in accordance with the provi-
sions of this Agreement. In addition, in connection with
the issuance or sale of shares of Common Stock of the
Company following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock of the
Company so issued or sold pursuant to the exercise of
stock options or under any employee plan or arrangement
or upon the exercise, conversion or exchange of securi-
ties hereafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the
Board, issue Rights Certificates representing the appro-
priate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Cer-
tificate shall be issued if and to the extent that the
Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such
Rights Certificate would be issued and (ii) no such
Rights Certificate shall be issued if and to the extent
49
/56
that appropriate adjustment shall otherwise have been
made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board may, at its option, at any
time prior to the earlier of (i) the Close of Business on
the tenth Business Day (or such specified or unspecified
later date as may be determined by the Board before the
Rights cease being redeemable) following the Stock Acqui-
sition Date (or, if the Stock Acquisition Date shall have
occurred prior to the Record Date, the Close of Business
on the tenth Business Day following the Record Date) or
(ii) the Final Expiration Date, direct the Company to,
and if directed, the Company shall, redeem all but not
less than all of the then outstanding Rights at a redemp-
tion price of $.01 per Right, as such amount may be
appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred
to as the "Redemption Price"). The Company may, at its
option, pay the Redemption Price in shares of Common
Stock of the Company (based on the Current Market Price
of the Common Stock of the Company at the time of redemp-
tion), cash or any other form of consideration deemed
appropriate by the Board. Notwithstanding anything con-
tained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event until such time as the Company's
right of redemption hereunder has expired.
(b) Immediately upon the action of the
Board directing the Company to make the redemption of the
Rights, evidence of which shall have been filed with the
Rights Agent, and without any further action and without
any notice, the right to exercise the Rights will termi-
nate, and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price for each
Right so held. Promptly after the action of the Board
directing the Company to make the redemption of the
Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstand-
ing Rights by mailing such notice to each record holder
of the Common Stock of the Company at the address of such
holder shown on the records of the Company. Any notice
which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the
50
/57
notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will
be made.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at
any time after the Distribution Date, (i) to pay any
dividend payable in stock of any class to the holders of
Common Stock of the Company or to make any other distri-
bution to the holders of Common Stock of the Company
(other than a regular periodic cash dividend out of
earnings or retained earnings of the Company), (ii) to
offer to the holders of Common Stock of the Company
rights or warrants to subscribe for or to purchase any
additional shares of Common Stock of the Company or
shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification
of the Common Stock of the Company (other than a reclas-
sification involving only the subdivision or split of
outstanding shares of Common Stock of the Company), (iv)
to effect any consolidation, combination or merger into
or with any other Person or Persons (other than a Sub-
sidiary of the Company in a transaction which complies
with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsid-
iaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of more
than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company or any of its
Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof) or (v) to effect the
liquidation, dissolution or winding up of the Company,
then, in each such case, the Company shall give to each
holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25 hereof, a notice of
such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassifi-
cation, consolidation, combination, merger, sale, trans-
fer, liquidation, dissolution or winding up is to take
place and the date of participation therein by the hold-
ers of the shares of Common Stock of the Company, if any
such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or
(ii) above at least 20 days prior to the record date for
51
/58
determining holders of the shares of Common Stock of the
Company for purposes of such action, and in the case of
any such other action, at least 20 days prior to the date
of the taking of such proposed action or the date of
participation therein by the holders of the shares of
Common Stock of the Company, whichever shall be the
earlier.
(b) In case any Section 11(a)(ii) Event
shall occur, then, in any such case, (i) the Company
shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible in
accordance with Section 25 hereof, a notice of the occur-
rence of such event, which shall specify the event and
the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the
preceding paragraph to Common Stock of the Company shall
be deemed thereafter to, if appropriate, other securi-
ties.
Section 25. Notices. Notices or demands
authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the
Rights Agent) as follows:
Ionics, Incorporated
65 Grove Street
Watertown, Massachusetts 02172-2882
Attention: Corporate Clerk
Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Agreement to be given
or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be suffi-
ciently given or made if sent by first-class mail, post-
age prepaid, addressed (until another address is filed in
writing with the Company) as follows:
BankBoston, N.A.
c/o Boston EquiServe Limited Partnership
150 Royall Street
Canton, Massachusetts 02021
Attention: Shareholder Services Division
52
/59
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the
holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of any certificate
representing shares of Common Stock of the Company) shall
be sufficiently given or made if sent by first-class
mail, insured, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry
books of the Company.
Section 26. Supplements and Amendments. Prior
to the Distribution Date, the Company and the Rights
Agent shall, if the Board so directs, supplement or amend
any provision of this Agreement without the approval of
any holders of certificates representing shares of Common
Stock of the Company. From and after the Distribution
Date, the Company and the Rights Agent shall, if the
Board so directs, supplement or amend this Agreement
without the approval of any holders of Rights Certifi-
cates in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be
defective or inconsistent with any other provisions
herein, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions
hereunder in any manner which the Company may deem neces-
sary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates
(other than an Acquiring Person or an Affiliate or Asso-
ciate of an Acquiring Person); provided, that this Agree-
ment may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed or to
modify the ability (or inability) of the Board to redeem
the Rights, in either case at such time as the Rights are
not then redeemable or (B) any other time period unless
such lengthening is for the purpose of protecting, en-
hancing or clarifying the rights of, or the benefits to,
the holders of Rights (other than an Acquiring Person or
an Affiliate or Associate of an Acquiring Person). Upon
the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement
or amendment is in compliance with the terms of this
Section 26, the Rights Agent shall execute such supple-
ment or amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coin-
cident with the interests of the holders of Common Stock
of the Company.
53
/60
Section 27. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns here-
under.
Section 28. Determinations and Actions by the
Board, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock of
the Company outstanding at any particular time, including
for purposes of determining the particular percentage of
such outstanding shares of Common Stock of the Company of
which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule
13d 3(d)(1)(i) of the General Rules and Regulations under
the Exchange Act. The Board shall have the exclusive
power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to
the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, in-
cluding without limitation the right and power to (a)
interpret the provisions of this Agreement and (b) make
all determinations deemed necessary or advisable for the
administration of this Agreement (including without
limitation a determination to redeem or not redeem the
Rights or to amend this Agreement). All such actions,
calculations, interpretations and determinations (includ-
ing without limitation for purposes of clause (y) below,
all omissions with respect to the foregoing) which are
done or made by the Board, the Outside Directors or the
Company in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and (y) not subject the
Board or the Outside Directors to any liability to the
holders of the Rights.
Section 29. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to
any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and,
prior to the Distribution Date, registered holders of the
Common Stock of the Company) any legal or equitable
right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of
the Company, the Rights Agent and the registered holders
54
/61
of the Rights Certificates (and, prior to the Distribu-
tion Date, registered holders of the Common Stock of the
Company).
Section 30. Severability. If any term, provi-
sion, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement
to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid lan-
guage from this Agreement would adversely affect the
purpose or effect of this Agreement, the right of redemp-
tion set forth in Section 23 hereof shall be reinstated
and shall not expire until the Close of Business on the
tenth Business Day following the date of such determina-
tion by the Board. Without limiting the foregoing, if
any provision of this Agreement requiring that a determi-
nation be made by the Board or by the Outside Directors
is held by a court of competent jurisdiction or other au-
thority to be invalid, void or unenforceable, such deter-
mination shall then be made by the Board in accordance
with applicable law and the articles of organization and
by-laws of the Company, each as then in effect.
Section 31. Governing Law. This Agreement,
each Right and each Rights Certificate issued hereunder
shall be deemed to be a contract under seal made under
the laws of the Commonwealth of Massachusetts, and for
all purposes this Agreement shall be governed by and con-
strued in accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts made and to be
performed entirely within the Commonwealth of Massachu-
setts.
Section 32. Counterparts. This Agreement may
be executed in any number of counterparts, and each of
such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together
constitute but one and the same instrument.
55
/62
Section 33. Descriptive Headings. Descriptive
headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or
affect the meaning or construction of any of the provi-
sions hereof.
56
/63
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and their
respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ATTEST: IONICS, INCORPORATED
By /s/Stephen Korn By /s/Arthur L. Goldstein
Name: Stephen Korn Name: Arthur L. Goldstein
Title: Clerk Title: Chairman and
Chief Executive Officer
Attest: BANKBOSTON, N.A., as Rights Agent
By /s/Brian P. Frechette By /s/Maragaret Prentice
Name: Brian P. Frechette Name: Margaret Prentice
Title: Account Manager Title: Administration Manager
57
/64
Exhibit A
[Form of Rights Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER AUGUST 19, 2007, SUBJECT TO EARLI-
ER REDEMPTION OR EXPIRATION PURSUANT TO THE RENEWED
RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE
TERMS SET FORTH IN THE RENEWED RIGHTS AGREEMENT. THE
RIGHTS EVIDENCED BY THIS CERTIFICATE SHALL NOT BE EXER-
CISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER
IN ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION
FOR THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH
HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT
HAVE BEEN OBTAINED OR BE OBTAINABLE. UNDER CERTAIN CIR-
CUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF ANY SUCH PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFI-
CATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS
OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSO-
CIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RENEWED RIGHTS AGREEMENT). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]*
* The portion of the legend in brackets shall be
inserted only if applicable and shall replace the
preceding sentence.
/65
Rights Certificate
IONICS, INCORPORATED
This certifies that , or
registered assigns, is the registered owner of the num-
ber of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and
conditions of the Renewed Rights Agreement dated as of
August 19, 1997, as amended, restated, renewed or ex-
tended from time to time (the "Rights Agreement"), be-
tween Ionics, Incorporated, a Massachusetts corporation
(the "Company"), and BankBoston, N.A., a national bank-
ing association (the "Rights Agent"), to purchase from
the Company at any time prior to 5:00 P.M. (Boston,
Massachusetts time) on August 19, 2007, at the office or
offices of the Rights Agent, or its successors as Rights
Agent, designated for such purpose, one fully paid,
nonassessable share of common stock, par value $1.00 per
share, of the Company (the "Common Stock"), at a pur-
chase price of $175 per share (the "Purchase Price"),
upon presentation and surrender of this Rights Certifi-
cate with the Form of Election to Purchase and included
Certificate duly completed and executed. The number of
Rights evidenced by this Rights Certificate (and the
A-2
/66
number of shares of Common Stock which may be purchased
upon exercise thereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price
as of , , based on the Common Stock as
constituted at such date. The Company reserves the
right to require prior to the occurrence of a Triggering
Event (as such term is defined in the Rights Agreement)
that a number of Rights be exercised so that only whole
shares of Common Stock will be issued.
As more fully set forth in the Rights Agree-
ment, from and after the first occurrence of a Section
11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Cer-
tificate are beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Per-
son (as such terms are defined in the Rights Agreement),
which is determined to have been involved in or caused
or facilitated, directly or indirectly, such Section
11(a)(ii) Event, (ii) a transferee of such Acquiring
Person (or of any such Associate or Affiliate) or
(iii) under certain circumstances specified in the
Rights Agreement, a transferee of such Acquiring Person
(or of any such Associate or Affiliate who becomes a
transferee prior to or concurrently with such Acquiring
A-3
/67
Person becoming such, such Rights shall become null and
void without any further action, and no holder hereof
shall have any right with respect to such Rights whether
under the Rights Agreement or otherwise.
As provided in the Rights Agreement, the Pur-
chase Price and the number and kind of shares of Common
Stock or other securities, which may be purchased upon
the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment
upon the happening of certain events, including Trigger-
ing Events (as defined in the Rights Agreement).
This Rights Certificate is subject to all of
the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part
hereof and to which Rights Agreement reference is hereby
made for a full description of the rights, limitations
of rights, obligations, duties and immunities 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
Rights Agreement. Reference is also made to the Rights
Agreement for definitions of capitalized terms used and
A-4
/68
not defined herein. Copies of the Rights Agreement are
on file at the above-mentioned office of the Rights
Agent and are also available upon written request to the
Rights Agent.
This Rights Certificate, with or without other
Rights Certificates upon surrender at the office or of-
fices of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing
Rights entitling the holder to purchase a like aggregate
number of shares of Common Stock as the Rights evidenced
by the Rights Certificate or Rights Certificates surren-
dered 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 here-
of another Rights Certificate or Rights Certificates for
the number of whole Rights not exercised.
Subject to the provisions of the Rights Agree-
ment, the Rights evidenced by this Certificate may be
redeemed by the Company at its option at a redemption
price of $.01 per Right at any time prior to the earlier
of (i) the Close of Business on the tenth Business Day
following the Stock Acquisition Date (as such time peri-
od may be extended pursuant to the Rights Agreement) and
A-5
/69
(ii) the Final Expiration Date (as defined in the Rights
Agreement).
If the Company so determines, no fractional
shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one share of
Common Stock (which may, at the election of the Company,
be evidenced by depository receipts), but in lieu there-
of, a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Rights Certificate, as such,
shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Company which
may at any time be issuable on the exercise hereof, nor
shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate
action, or, to receive notice of meetings or other ac-
tions affecting stockholders (except as provided in the
Rights Agreement), or to receive dividend or subscrip-
A-6
/70
tion rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been
countersigned by the Rights Agent.
A-7
/71
WITNESS the facsimile signature of the proper
officers of the Company and its corporate seal.
Dated as of ,
ATTEST: IONICS, INCORPORATED
By By
Secretary Title:
Countersigned:
BANKBOSTON, N.A.
By
Authorized Signature
A-8
/72
[Form of Reverse Side of Rights Certificate]
ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title
and interest herein, and does hereby irrevocably consti-
tute and appoint Attorney, to transfer the
within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated: ,
Signature
Signature Guaranteed:
/73
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 Affili-
ate or Associate of any such Acquiring Person (as such
terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowl-
edge of the undersigned, the undersigned did did not
acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
Dated: ,
Signature
Signature Guaranteed:
NOTICE
The signatures 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 whatso-
ever.
/74
ELECTION TO PURCHASE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To IONICS, INCORPORATED:
The undersigned hereby irrevocably elects to
exercise Rights represented by this Rights Certif-
icate to purchase the shares of Common Stock issuable
upon the exercise of the Rights (or such other securi-
ties of the Company or of any other Person which may be
issuable or such other assets which may be deliverable
upon the exercise of the Rights) and requests that cer-
tificates for any such shares or securities be issued in
the name of and delivered to:
(Please print name and address)
Please insert social security
or other identifying number:
If such number of Rights shall not be all the
Rights evidenced by this Rights Certificate, a new
Rights Certificate for the balance of such Rights shall
be registered in the name of and delivered to:
(Please print name and address)
Please insert social security
or other identifying number:
Dated: ,
Signature
Signature Guaranteed:
/75
Certificate
The undersigned hereby certifies by checking
the appropriate boxes that:
(1) the Rights evidenced by this Rights Cer-
tificate are are not being exercised by or on behalf
of a Person who is or was an Acquiring Person or an Af-
filiate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowl-
edge of the undersigned, the undersigned did did not
acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Per-
son 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.
/76
