SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
OVERSEAS SHIPHOLDING GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2637623
(State of incorporation or org (IRS Employer Identification No.)
1114 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10036
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each Name of each exchange on
class to be so which each class is to be
registered registered
---------------- -----------------------------
Common Stock New York Stock Exchange
Purchase Rights Pacific Exchange, Inc.
Securities to be registered pursuant to Section 12(g) of the Act: None
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Item 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
On October 20, 1998, the Board of Directors of Overseas Shipholding Group,
Inc. (the "CORPORATION" or the "COMPANY") declared a dividend distribution of
one right (a "RIGHT") to purchase one one-tenth of a share of the Common Stock,
$1.00 par value, of the Corporation (the "COMMON SHARES") for each outstanding
share of Common Stock, payable to the stockholders of record on November 9, 1998
(the "RECORD DATE"). The Board of Directors also authorized and directed the
issuance of one Right with respect to each Common Share issued thereafter until
the Distribution Date (as defined below) and, in certain circumstances, with
respect to Common Shares issued after the Distribution Date. Except as set forth
below, each Right, when it becomes exercisable, entitles the registered holder
to purchase from the Corporation one one-tenth of a Common Share at a price of
$70 per whole Common Share (the "PURCHASE PRICE"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"RIGHTS AGREEMENT") between the Corporation and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (the "RIGHTS AGENT"), dated as of October 20,
1998.
Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares upon the earliest
to occur of (i) a person or entity (a "PERSON") or group of affiliated or
associated Persons (a "GROUP") having acquired beneficial ownership of 10% or
more of the outstanding Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined); or (ii) 10 business days (or such later date as the Board
of Directors may determine) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in a Person or Group becoming an Acquiring Person (as hereinafter
defined) (the earliest of such dates being called the "DISTRIBUTION DATE"). A
Person or Group whose acquisition of Common Shares causes a Distribution Date
pursuant to clause (i) above is an "ACQUIRING PERSON." The date that a Person or
Group becomes an Acquiring Person is the "SHARES ACQUISITION DATE."
Notwithstanding the foregoing, certain stockholders who currently own in excess
of 10% of the outstanding Common Shares and their affiliates, associates and
permitted transferees will not be deemed to be Acquiring Persons and their
ownership will not cause a Distribution Date unless they acquire additional
Common Shares equal to more than 20% of the number of Common Shares owed by them
on the date of the Rights Agreement. Furthermore, a Person who acquires Common
Shares pursuant to a tender or exchange offer which is for all outstanding
Common Shares at a price and on terms which the Board of Directors determines
(prior to acquisition) to be adequate and in the best interests of the
Corporation and its stockholders (other than such Person, its affiliates and
associates) (a "PERMITTED OFFER") will not be deemed to be an Acquiring Person
and such Person's ownership will not constitute a Distribution Date.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon the transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or
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expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("RIGHT CERTIFICATES") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date (and to each initial record holder of certain Common Shares
issued after the Distribution Date), and such separate Right Certificates alone
will evidence the Rights.
THE RIGHTS ARE NOT EXERCISABLE UNTIL THE DISTRIBUTION DATE, and will expire
at the close of business on November 9, 2008, unless earlier redeemed by the
Corporation as described below.
In the event that any person becomes an Acquiring Person, each holder of
Rights (other than Rights that have become null and void as described below)
will thereafter have the right (the "FLIP-IN RIGHT") to receive, upon exercise
of such Rights, the number of Common Shares (or, in certain circumstances, other
securities of the Corporation) having a value (immediately prior to such
triggering event) equal to two times the aggregate exercise price of such
Rights. (So that, for example, if a Person became an Acquiring Person at a time
when the current per share market price of the Company's Common Shares is $20.00
(and prior to any antidilution adjustment as described below), each holder of a
Right (other than a Right which has become null and void as described herein)
would have the right to receive upon exercise of the Right seven Common Shares
upon payment of an exercise price of $70.00.) The Board, at its option, may
exchange each Right (other than those that have become null and void as
described below) for one Common Share in lieu of the Flip-In Right, provided no
Person is the beneficial owner of 50% or more of the Common Shares at the time
of such exchange. Notwithstanding the foregoing, following the occurrence of the
event described above, all Rights that are or (under certain circumstances
specified in the Rights Agreement) were beneficially owned by any Acquiring
Person or any affiliate or associate thereof or certain transferees thereof will
be null and void.
Under the Rights Agreement, the Board of Directors may take such reasonable
actions and may establish such reasonable procedures as it may deem desirable in
connection with the exercise, exchange or transfer of Rights in order to
reasonably assure, in the judgment of the Board of Directors, the preservation
of the Company's status as a United States citizen within the provisions of
Section 2 of the Shipping Act of 1916, as amended, or any successor statute
applicable to the business being conducted by the Company (the "CITIZENSHIP
PROVISIONS"), including without limitation restricting the issuance of shares of
the Company pursuant to or in exchange for the Rights to United States citizens
or limiting such issuance to non-United States citizens to such degree as shall,
in the judgment of the Board of Directors, reasonably assure compliance with the
Minimum U.S. Ownership percentage established from time to time by the Board of
Directors under the Company's By-laws to maintain the Company's status as a
United States citizen. The provisions of this paragraph will not, however,
prevent the transfer after the Distribution Date of any Right by a non-United
States citizen to a United States citizen, including for the purpose of
permitting the exercise of the Right by the United States citizen, provided that
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any such transfer (or exercise) is consistent with such reasonable procedures as
may be established by the Board to reasonably assure compliance with the
Citizenship Provisions and to otherwise carry out the provisions of the Rights
Agreement.
In the event that, at any time following the Shares Acquisition Date, (i)
the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Corporation's assets or earning power is sold or transferred, then each holder
of Rights (except Rights which previously have been voided as set forth above)
shall thereafter have the right (the "FLIP-OVER RIGHT") to receive, upon
exercise of such Rights, common shares of the acquiring company (or in certain
circumstances, its parent) having a value equal to two times the aggregate
exercise price of the Rights; provided, however, that the Flip Over Right shall
not apply to any transaction described in clause (i) if (x) such transaction is
with a Person or Persons (or a wholly owned subsidiary of any such Person or
Persons) that acquired Common Shares pursuant to a Permitted Offer and (y) the
price and form of consideration offered in such transaction is the same as that
paid to all holders of Common Shares whose shares were purchased pursuant to the
Permitted Offer. The holder of a Right will continue to have the Flip-Over Right
whether or not such holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Shares, (ii) upon
the grant to holders of the Common Shares of certain rights or warrants to
subscribe for or purchase Common Shares at a price, or securities convertible
into Common Shares with a conversion price, less than the then current market
price of the Common Shares, or (iii) upon the distribution to holders of the
Common Shares of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Shares on the last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Corporation may
redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), which redemption shall be effective at such time, on such
basis and with such conditions as the Board of Directors may establish in its
sole discretion. The Corporation may, at its option, pay the Redemption Price in
Common Shares.
All of the provisions of the Rights Agreement may be amended by the Board
of Directors prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights
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Agreement may be amended by the Board in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or, subject
to certain limitations, to shorten or lengthen any time period under the Rights
Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to stockholders of the Corporation, stockholders may, depending
upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors. The Rights should not interfere
with any merger or other business combination approved by the Board of
Directors, as the Rights may be redeemed by the Company at $.01 per Right prior
to the time that a person or group has acquired beneficial ownership of 10% or
more of the Common Shares and, moreover, are not triggered by a Permitted Offer
approved by the Board of Directors as described herein.
The Rights Agreement is attached hereto as an exhibit and is incorporated
herein by reference. The foregoing description of the Rights is qualified in its
entirety by reference to such exhibit.
Item 2. EXHIBITS.
4.1. Rights Agreement dated as of October 20, 1998 between Overseas
Shipholding Group, Inc. and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent, with the form of Right Certificate attached as
Exhibit A thereto and the Summary of Rights to Purchase Shares
attached as Exhibit B thereto. Pursuant to the Rights Agreement,
printed Right Certificates will not be mailed until as soon as
practicable after the earlier of the date of public announcement that
a person or group has acquired beneficial ownership of 10% or more of
the Common Shares or the tenth business day (or such later date as may
be determined by action of the Corporation's Board of Directors) after
a person commences or announces its intention to commence a tender or
exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 10% or more of the Common
Shares.
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SIGNATURE
Pursuant to the requirement of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: November 9, 1998
OVERSEAS SHIPHOLDING GROUP, INC.
By: /s/ Robert N. Cowen
_______________________________
Name: Robert N. Cowen
Title: Senior Vice President and
Secretary
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EXHIBIT LIST
4.1. Rights Agreement dated as of October 20, 1998 between Overseas Shipholding
Group, Inc. and ChaseMellon Shareholder Services, LLC, as Rights Agent,
with the form of Right Certificate attached as Exhibit A thereto and the
Summary of Rights to Purchase Shares attached as Exhibit B thereto.
Pursuant to the Rights Agreement, printed Right Certificates will not be
mailed until as soon as practicable after the earlier of the date of public
announcement that a person or group has acquired beneficial ownership of
10% or more of the Common Shares or the tenth business day (or such later
date as may be determined by action of the Corporation's Board of
Directors) after a person commences or announces its intention to commence
a tender or exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 10% or more of the Common
Shares.
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RIGHTS AGREEMENT
DATED AS OF
OCTOBER 20, 1998
BETWEEN
OVERSEAS SHIPHOLDING GROUP, INC.
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
AS RIGHTS AGENT
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions..............................................1
Section 2. Appointment of Rights Agent......................................4
Section 3. Issue of Right Certificates......................................4
Section 4. Form of Right Certificate........................................5
Section 5. Countersignature and Registration................................6
Section 6. Transfer, Split-up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificate...........6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights....7
Section 8. Cancellation and Destruction of Right Certificates...............9
Section 9. Reservation and Availability of Common Shares....................9
Section 10. Common Shares Record Date.......................................10
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights................................................10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power...................................................15
Section 14. Fractional Rights and Fractional Shares.........................17
Section 15. Rights of Action................................................18
Section 16. Agreement of Right Holders......................................18
Section 17. Right Certificate Holder Not Deemed a Stockholder...............18
Section 18. Concerning the Rights Agent.....................................19
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......19
Section 20. Duties of Rights Agent..........................................19
Section 21. Change of Rights Agent..........................................21
Section 22. Issuance of New Right Certificates..............................22
Section 23. Redemption and Termination......................................22
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Section 24. Exchange........................................................22
Section 25. Notice of Certain Events........................................23
Section 26. Notices.........................................................24
Section 27. Supplements and Amendments......................................25
Section 28. Determination and Actions by the Board of Directors of
the Corporation, etc............................................25
Section 29. Successors......................................................25
Section 30. Benefits of this Agreement......................................25
Section 31. Severability....................................................25
Section 32. Governing Law...................................................26
Section 33. Counterparts....................................................26
Section 34. Descriptive Headings............................................26
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DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person............................................ Section 1(a)
Act......................................................... Section 1(b)
Adjustment Shares........................................... Section 11(a)(ii)
Affiliate................................................... Section 1(c)
Agreement................................................... Preface
Associate................................................... Section 1(d)
Beneficial Owner............................................ Section 1(e)
beneficially own............................................ Section 1(e)
Board of Directors.......................................... Section 1(f)
Business Day................................................ Section 1(g)
Citizenship Provisions...................................... Section 7(g)
common share equivalent..................................... Section 11(a)(iii)
Close of business........................................... Section 1(h)
Common Shares............................................... Section 1(i)
Company..................................................... Preface
Corporation................................................. Preface
current per share market price.............................. Section 11(d)
Distribution Date........................................... Section 1(j)
equivalent common shares.................................... Section 11(b)
Exchange Act................................................ Section 1(k)
Exchange Ratio.............................................. Section 24(a)
Final Expiration Date....................................... Section 7(a)
Grandfathered Stockholder................................... Section 1(m)
Permitted Offer............................................. Section 1(n)
Permitted Transfer.......................................... Section 1(o)
Permitted Transferee........................................ Section 1(p)
Person...................................................... Section 1(q)
Principal Party............................................. Section 13(b)
Proposing Person............................................ Section 1(q)
Purchase Price.............................................. Section 4(a)
Record Date................................................. Preface
Redemption Date............................................. Section 7(a)
Redemption Price............................................ Section 23(a)
Right....................................................... Preface
Right Certificate........................................... Section 3(a)
Rights Agent................................................ Preface
Rights Agreement............................................ Section 3(c)
Section 11(a)(ii) Event..................................... Section 1(s)
Section 13 Event............................................ Section 1(u)
Security.................................................... Section 11(d)
Shares Acquisition Date..................................... Section 1(v)
Subsidiary.................................................. Section 1(w)
Substitution Period......................................... Section 11(a)(iii)
Summary of Rights........................................... Section 3(b)
then outstanding............................................ Section 1(e)
Trading Day................................................. Section 11(d)
Transfer.................................................... Section 1(x)
Triggering Event............................................ Section 1(y)
United States Citizens...................................... Section 7(g)
voting securities........................................... Section 13(a)
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 20, 1998 (the "Agreement"),
between Overseas Shipholding Group, Inc., a Delaware corporation (the
"Corporation" or the "Company") and ChaseMellon Shareholder Services, L.L.C., a
New Jersey limited liability company (the "Rights Agent").
The Board of Directors of the Corporation has authorized and declared
a dividend of one right (a "Right") for each Common Share (as hereinafter
defined) of the Corporation outstanding at the close of business on November 9,
1998 (the "Record Date"), each Right representing the right to purchase one
one-tenth of a Common Share, upon the terms and subject to the conditions herein
set forth, and has further authorized and directed the issuance of one Right
with respect to each Common Share that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date or
Final Expiration Date (as such terms are hereinafter defined); provided,
however, that Rights may be issued with respect to Common Shares that shall
become outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date in accordance with the provisions
of Section 22 of this Agreement.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 10% or more of the then outstanding Common Shares (other than as a result of
a Permitted Offer (as hereinafter defined)) or was such a Beneficial Owner at
any time after the Close of Business on the date hereof, whether or not such
Person continues to be the Beneficial Owner of 10% or more of the then
outstanding Common Shares. Notwithstanding the foregoing, (A) the term
"Acquiring Person" shall not include (i) the Corporation, (ii) any Subsidiary of
the Corporation, (iii) any employee benefit plan of the Corporation or of any
Subsidiary of the Corporation, (iv) any Person or entity organized, appointed or
established by the Corporation for or pursuant to the terms of any such plan, or
(v) any Grandfathered Stockholder and (B) no Person (including, without
limitation, any Grandfathered Stockholder) shall become an "Acquiring Person"
(and no Grandfathered Stockholder shall cease to be a Grandfathered
Stockholder):
(i) as a result of the acquisition of Common Shares by the
Corporation which, by reducing the number of Common Shares outstanding,
increases the proportional number of shares beneficially owned by such Person
together with all Affiliates and Associates of such Person; provided that if (1)
a Person would be or become an Acquiring Person (but for the operation of this
subclause (i)) as a result of the acquisition of Common Shares by the
Corporation, and (2) after such share acquisition by the Corporation, such
Person, or an Affiliate or Associate of such Person, becomes the Beneficial
Owner of any additional Common Shares, then such Person shall be deemed an
Acquiring Person; or
(ii) if the Board of Directors determines in good faith that a
Person who would otherwise be an "Acquiring Person" has become such
inadvertently, and such Person (A) does not attempt to exercise any control over
the business affairs or management of the Corporation, including by means of a
proxy solicitation, and (B) divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no longer be an "Acquiring
Person", then such Person shall not be deemed an "Acquiring Person" for any
purposes of this Agreement.
(b) "Act" shall mean the Securities Act of 1933, as amended and as in
effect on the date of this Agreement.
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(c) An "Affiliate" of, or a Person "affiliated" with, a specified
Person, shall mean a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.
(d) The term "Associate" used to indicate a relationship with any
Person, shall mean: (1) any corporation or organization (other than the Company
or a Subsidiary of the Company) of which such Person is an officer or partner or
is, directly or indirectly, the Beneficial Owner of 10 percent or more of any
class of equity securities, (2) any trust or other estate in which such Person
has a substantial beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity, and (3) any relative or spouse of
such Person, or any relative of such spouse, who has the same home as such
Person.
(e) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding, or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise, provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (other than an agreement to Transfer to a proposed
Permitted Transferee those Common Shares subject to such proposed Permitted
Transfer and customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities)
relating to the acquisition, holding, voting (except to the extent contemplated
by the proviso to Section 1(d)(ii)(B)) or disposing of any securities of the
Corporation.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding", when used with
reference to a Person's Beneficial Ownership of securities of the Corporation,
shall mean the number of such securities then issued and outstanding together
with the number of such securities not then actually issued and outstanding
which such Person would be deemed to own beneficially hereunder.
(f) "Board of Directors" shall mean the Board of Directors of the
Corporation from time to time.
(g) "Business Day" shall mean any day other than a Saturday, Sunday,
federal holiday or day on which commercial banks are authorized or required to
close in New York City.
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(h) "Close of Business" on any given date shall mean 5:00 p.m., New
York time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 p.m., New York time, on the next succeeding Business Day.
(i) "Common Shares" when used with reference to the Corporation shall
mean the shares of Common Stock, par value $1.00, of the Corporation or, in the
event of a subdivision, combination or consolidation with respect to such shares
of Common Stock, the shares of Common Stock resulting from such subdivision,
combination or consolidation. "Common Shares" when used with reference to any
Person other than the Corporation shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
(j) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(k) "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
(l) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(m) "Grandfathered Stockholder" shall mean (i) any Person who or
which, alone or together with any Affiliates or Associates of such Person, at
the Close of Business on the date hereof, shall be the Beneficial Owner of 10%
or more of the Common Shares of the Corporation then outstanding, and (ii) any
Permitted Transferee; provided, however, that any Grandfathered Stockholder
shall cease to be a Grandfathered Stockholder at the time such Person, alone or
together with any Affiliate or Associate of such Person, beneficially owns
additional Common Shares (other than as a result of a stock dividend, stock
split or reclassification) equal to more than twenty percent of the number of
Common Shares (as adjusted to reflect any stock dividend, stock split or
reclassification) beneficially owned by such Person, together with any
Affiliates or Associates of such Person, at the Close of Business on the date
hereof.
(n) "Permitted Offer" shall mean a tender or exchange offer which is
for all outstanding Common Shares at a price and on terms determined, prior to
the purchase of shares under such tender or exchange offer, by the Board of
Directors to be adequate (taking into account all factors that such directors
deem relevant) and otherwise in the best interests of the Corporation and its
stockholders (other than the Person or any Affiliate or Associate thereof on
whose basis the offer is being made) taking into account all factors that such
directors may deem relevant.
(o) "Permitted Transfer" means any Transfer of Beneficial Ownership of
some or all of the Common Shares beneficially owned by a Grandfathered
Stockholder (i) upon the death of the Grandfathered Stockholder, to his
respective heirs, executors, administrators, testamentary trustees, legatees,
beneficiaries or similar Persons; (ii) to the Grandfathered Stockholder's
siblings or spouse (or to the siblings or spouse of any such siblings or spouse)
or direct lineal descendants of any such Grandfathered Stockholder, siblings or
spouse (any of the foregoing, a "Family Member") or to a trust, the
beneficiaries of which, or to a corporation, partnership or other entity, the
stockholders or limited or general partners or other equity holders of which,
include only the Grandfathered Stockholder and the Grandfathered Stockholder's
Family Member's (a "Grandfathered Stockholder's Trust"), or a Transfer made by
such a Grandfathered Stockholder's Trust to the Grandfathered Stockholder or any
Family Member thereof; (iii) to any charitable entity established by a
Grandfathered Stockholder or a Family Member thereof; or (iv) to any corporation
or other entity controlled by the Grandfathered Stockholder and/or Family
Members thereof.
(p) "Permitted Transferee" means any transferee of Common Shares
pursuant to a Permitted Transfer.
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(q) "Person" shall mean any individual, firm, partnership, limited
liability company, corporation, trust, association, joint venture or other
entity, and shall include any successor (by merger or otherwise) of such entity.
(r) "Proposing Person" means any Person proposing or attempting to
effect a business combination, tender offer, exchange offer or similar
transaction with the Corporation or its stockholders, including, without
limitation, a merger, tender offer or exchange offer, sale of substantially all
of the Corporation's assets, or liquidation of the Corporation's assets.
(s) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(t) "Section 11(a)(ii) Event" shall mean any event described in
Section 11(a)(ii) hereof.
(u) "Section 13 Event" shall mean any event described in clause (x),
(y) or (z) of Section 13(a) hereof.
(v) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to the Exchange Act) by the Corporation or
an Acquiring Person that an Acquiring Person has become such; PROVIDED, THAT, if
such Person is determined not to have become an Acquiring Person pursuant to
Section 1(a)(ii) hereof, then no Shares Acquisition Date shall be deemed to have
occurred.
(w) "Subsidiary" of any Person shall mean any corporation or other
Person of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by such Person.
(x) "Transfer" shall mean any sale, assignment, transfer or other
disposition.
(y) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Corporation hereby
appoints the Rights Agent to act as agent for the Corporation in accordance with
the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the earlier of (i)
the Shares Acquisition Date or (ii) the Close of Business on the tenth Business
Day (or such later date as may be determined by action of the Corporation's
Board of Directors) after the date of the commencement by any Person (other than
the Corporation, any Subsidiary of the Corporation, any employee benefit plan of
the Corporation or of any Subsidiary of the Corporation or any Person or entity
organized, appointed or established by the Corporation for or pursuant to the
terms of such plan) of a tender or exchange offer the consummation of which
would result in any Person becoming an Acquiring Person (including, in the case
of both (i) and (ii), any such date which is after the date of this Agreement
and prior to the issuance of the Rights), the earlier of such dates being herein
referred to as the "DISTRIBUTION DATE", (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates for
Common Shares registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, and (y) the right to receive Rights Certificates will be
transferable only in connection with the transfer of the underlying Common
Shares (including a transfer to the Corporation); PROVIDED, HOWEVER, that if a
tender offer is terminated prior to the occurrence of a Distribution Date, then
no Distribution Date shall occur as a result of such tender offer. As soon as
practicable after the Distribution Date, the Corporation will prepare and
execute, the Rights Agent will countersign and the Corporation will send or
cause to be sent by first-class, postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Distribution Date, at the
address of such holder shown on the records of
<PAGE>
the Corporation, a Right Certificate, substantially in the form of EXHIBIT A
hereto (a "Right Certificate"), evidencing one Right for each Common Share so
held. Notwithstanding the foregoing, each record holder which is a non-United
States Citizen may receive a Right Certificate in the form determined by the
Board of Directors after taking into account the provisions of Section 7(g)
hereof. As of and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) As promptly as practicable following the Record Date, the
Corporation will send a copy of a Summary of Rights to Purchase Common Shares in
the form of EXHIBIT B hereto (the "Summary of Rights"), by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Corporation. With respect to certificates for Common Shares outstanding
as of the Record Date, until the Distribution Date, the Rights will be evidenced
by such certificates registered in the names of the holders thereof together
with a copy of the Summary of Rights attached thereto. Until the Distribution
Date (or the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on the
Record Date shall also constitute the transfer of the Rights associated with
such Common Shares.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the Record Date but prior to the earliest
of the Distribution Date, and the Redemption Date or the Final Expiration Date
shall be deemed also to be certificates for Rights, and shall bear the following
legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement
between Overseas Shipholding Group, Inc. and ChaseMellon
Shareholder Services, L.L.C., dated as of October 20, 1998
(the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of Overseas
Shipholding Group, Inc. Under certain circum stances, as set
forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by
this certificate. Overseas Shipholding Group, Inc. will mail
to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to, or held by, any Person
who is, was or becomes an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement)
and certain related persons, whether currently held by or on
behalf of such Person or by any subsequent holder, may
become null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Corporation purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Corporation shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATE. (a) The Right Certificates (and
the forms of election to purchase and of assignment to be printed on the reverse
thereof) shall be, subject to Section 7(g) hereof, substantially in the form set
forth in EXHIBIT A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Corporation may deem appropriate (which do not affect the duties or
responsibilities of the Rights Agent) and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or as may be
made pursuant to Section 7(g) hereof or with any rule or regulation
<PAGE>
of any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 7(g), Section 11 and
Section 22 hereof, the Right Certificates shall entitle the holders thereof to
purchase such number of tenths of a Common Share as shall be set forth therein
at the price per Common Share set forth therein (the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each Right and
the Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights which are null and void pursuant to Section
7(e) of this Agreement and, provided the Company shall have notified the Rights
Agent that this Section applies, any Right Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Right Certificate and the
Rights represented hereby are null and void.
The provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any such Right
Certificate.
(c) Any Right Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights which are modified pursuant to Section 7(g)
hereof, and any Right Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any other Right
Certificate referred to in this sentence, shall contain (to the extent feasible)
any legends deemed appropriate by the Board of Directors to carry out the
provisions of Section 7(g) hereof. The provisions of Section 7(g) hereof shall
be operative whether or not the foregoing legend is contained on any such Right
Certificate.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Corporation by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Corporation's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Corporation, either manually or by
facsimile signature. The Right Certificates shall be countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned. In case
any officer of the Corporation who shall have signed any of the Right
Certificates shall cease to be such officer of the Corporation before
countersignature by the Rights Agent and issuance and delivery by the
Corporation, such Right Certificates may nevertheless be countersigned by the
Rights Agent and issued and delivered by the Corporation with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Corporation; and any Right Certificate may be signed on
behalf of the Corporation by any person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Corporation to sign
such Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date and receipt by the Rights Agent of any
relevant information, the Rights Agent will keep or cause to be kept, at its
office designated pursuant to Section 26 as the appropriate place for surrender
of such Right Certificate or transfer, books for registration and transfer of
the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the
certificate number and the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATE. 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
<PAGE>
business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates may be transferred, split up, combined
or exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of Common Shares (or, following a
Section 13 Event, other securities, as the case may be) as the Right Certificate
or Right Certificates surrendered then entitled such holder (or former holder in
the case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Corporation shall be obligated to take
any action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Corporation or the Rights Agent shall reasonably
request, including without limitation the citizenship of such Beneficial Owner
(or former Beneficial Owner). Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e) and (g) and Section 14 hereof, countersign and
deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Corporation may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates. The Rights Agent shall have no duty or obligation under this
Section unless and until it is satisfied that all such taxes and/or governmental
charges have been paid.
Upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and, at the Corporation's request, reimbursement
to the Corporation and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Corporation will make and deliver a new Right
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered holder in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) Subject to Section 7(e) and (g) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly and properly executed, to
the Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price for the total number of
Common Shares (or other securities, as the case may be) as to which such
surrendered Rights are exercised, at or prior to the earliest of (i) the close
of business on November 9, 2008 (the "Final Expiration Date"), or (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date").
(b) The purchase price (the "Purchase Price") per whole Common Share
at which a holder of Rights may purchase Common Shares or (subject to Section 14
hereof) fractions thereof upon exercise of such Rights shall initially be
$70.00, shall be subject to adjustment 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 Right Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly and
properly executed, accompanied by payment of the Purchase Price for the Common
Shares (or other securities, as the case may be) to be purchased and an amount
equal to any applicable tax or charge required to be paid by the holder of such
Right Certificate in accordance with Section 6 hereof by certified check,
cashier's check or money order payable to the order of the Corporation, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
agent of the Common Shares certificates for the number of Common Shares to be
purchased and the Corporation hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Corporation, in its sole
discretion, shall have elected to
<PAGE>
deposit the Common Shares issuable upon exercise of the Rights hereunder into a
depositary, requisition from the depositary agent depositary receipts
representing such number of Common Shares as are to be purchased (in which case
certificates for the Common Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Corporation
will direct the depositary agent to comply with such requests, (ii) when
appropriate, requisition from the Corporation the amount of cash to be paid in
lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event that the Corporation is obligated to issue other securities of the
Corporation pursuant to Section 11(a) hereof, the Corporation will make all
arrangements necessary so that such other securities are available for
distribution by the Rights Agent, if and when necessary to comply with this
Agreement.
In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii), the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section 11(a)(ii) of the
Rights Agreement and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to include
the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof, or the
Rights Agent shall place an appropriate notation on the Right Certificate with
respect to those Rights exercised.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, (ii) a transferee (including without limitation any transferee
referred to in the last sentence of Section 7(g) hereof) of an Acquiring Person
(or of any Affiliate or Associate thereof) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee (including without
limitation any transferee referred to in the last sentence of Section 7(g)
hereof) of an Acquiring Person (or of any Affiliate or Associate thereof) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has a
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Corporation shall notify the Rights Agent when this Section 7(e)
applies and shall use all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but neither the
Company nor the Rights Agent shall have any liability to any holder of Right
Certificates or other Person as a result of the Company's failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Corporation shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) properly completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the
<PAGE>
Corporation or the Rights Agent shall reasonably request, including without
limitation, the citizenship of such Beneficial Owner (or former Beneficial
Owner).
(g) Notwithstanding anything in this Agreement or any Right
Certificate to the contrary, including without limitation Section 11(a)(ii) and
Section 24(a) hereof, the Board of Directors may take such reasonable actions
and may establish such reasonable procedures (and may make such modifications in
the form of Rights Certificate attached hereto as Exhibit A and the forms of
Assignment, Election to Purchase and Certificates attached thereto) as it may
deem desirable in connection with the exercise, exchange or transfer of Rights
in order to reasonably assure, in the judgment of the Board of Directors, the
preservation of the Company's status as a United States citizen within the
provisions of Section 2 of the Shipping Act of 1916, as amended, or any
successor statute applicable to the business being conducted by the Company (the
"Citizenship Provisions"), including without limitation restricting the issuance
of shares of the Company pursuant to or in exchange for the Rights to citizens
of the United States as defined in the Citizenship Provisions ("United States
Citizens") or limiting such issuance to non-United States Citizens to such
degree as shall, in the judgment of the Board of Directors, reasonably assure
compliance with the Minimum U.S. Ownership percentage established from time to
time by the Board of Directors under the Company's By-laws. The Board of
Directors may establish from time to time reasonable procedures for establishing
the citizenship of holders of Rights and, without limiting the foregoing, may
require that in connection with each issuance of shares under or in exchange for
the Rights or transfer of the Rights the purchaser, transferee or holder of
Rights shall certify his citizenship status and such matters relevant thereto as
the Board may require. In no event shall any provision of this Section 7(g) (but
without limiting the provisions of Section 7(e) or any other provision of this
Agreement) be deemed to prohibit the transfer after the Distribution Date of any
Right by a non-United States Citizen to a United States Citizen, including
without limitation for the purpose of permitting the exercise or exchange of
such Right by such United States Citizen, provided that any such transfer (or
exercise or exchange) is consistent with such reasonable procedures as may be
established by the Board of Directors to reasonably assure compliance with the
Citizenship Provisions and to otherwise carry out the provisions of this
Agreement.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise (other than an
exercise pursuant to Section 11(a)(ii)), transfer, split up, combination or
exchange shall, if surrendered to the Corporation or to any of its agents, be
delivered to the Rights Agent for cancellation or in canceled form, or, if
surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Corporation shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Corporation otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Right Certificates to the Corporation, or shall, at the
written request of the Corporation, destroy such canceled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Corporation.
Section 9. RESERVATION AND AVAILABILITY OF COMMON SHARES. The
Corporation covenants and agrees that at all times after the occurrence of a
Section 11(a)(ii) Event it will, to the extent reasonably practicable, cause to
be reserved and kept available out of its authorized and unissued Common Shares
(and/or other securities), or any authorized and issued Common Shares (and/or
other securities) held in its treasury, the number of Common Shares (or other
securities, as the case may be) that will be sufficient to permit the exercise
in full of all outstanding Rights pursuant to this Agreement.
So long as the Common Shares (or other securities, as the case may be)
issuable upon the exercise of the Rights may be listed on any national
securities exchange, the Corporation shall use its best efforts to cause, from
and after such time as the Rights become exercisable, all shares reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.
<PAGE>
The Corporation covenants and agrees that it will take all such action
as may be necessary to ensure that all Common Shares (or other securities, as
the case may be) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares or other securities (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and non-assessable shares or securities.
The Corporation further covenants and agrees that it will pay when due
and payable any and all U.S. federal and state taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Common Shares (or other securities, as the case may be) upon the exercise of
Rights. The Corporation shall not, however, be required to pay any tax or charge
which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of certificates
or depositary receipts for the Common Shares (or other securities, as the case
may be) in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to issue or to
deliver any certificates or depositary receipts for Common Shares (or other
securities, as the case may be) upon the exercise of any Rights, until any such
tax or charge shall have been paid (any such tax or charge being payable by the
holder of such Right Certificate at the time of surrender) or until it has been
established to the Corporation's reasonable satisfaction that no such tax or
charge is due.
The Corporation shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date (or, if required by law, at
such earlier time following the Distribution Date as so required), a
registration statement under the Act, with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (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 and the rules and regulations
thereunder) until the date of the expiration of the Rights provided by Section
11(a)(ii). The Corporation will also take such action as may be appropriate
under the blue sky laws of the various states.
Section 10. COMMON SHARES RECORD DATE. Each Person in whose name any
certificate for Common Shares (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 the Common Shares (or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable taxes or
charges) was made; provided, however, that, if the date of such surrender and
payment is a date upon which the Common Shares (or other securities, as the case
may be) transfer books of the Corporation are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Common Shares (or
other securities, as the case may be) transfer books of the Corporation are
open.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i)In the event the Corporation shall at any time after the date of
this Agreement (A) declare a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the outstanding
Common Shares into a smaller number of Common Shares or (D) issue any shares of
its capital stock in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) and (g) hereof, (x) the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and (y) the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Common Shares transfer books of the Corporation were
open, such holder would
<PAGE>
have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of any Rights
be less than the aggregate par value of the shares of capital stock of the
Corporation issuable upon exercise of such Rights. If an event occurs which
would require an adjustment under both Section 11(a)(i) and Section 11(a)(ii),
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).
(ii) In the event any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then proper
provision shall be made so that each holder of a Right (except as provided below
and in Section 7(e) and (g) hereof) thereafter be entitled to receive, upon
exercise thereof at a price equal to the then current Purchase Price for a whole
Common Share, in accordance with the terms of this Agreement, such number of
Common Shares as shall equal the result obtained by (x) multiplying the then
current Purchase Price per whole Common Share by the number of one-tenths of a
Common Share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event (e.g., if a Right was exercisable
immediately prior to a Section 11(a)(ii) Event for two one-tenths of a share of
Common Stock and the Purchase Price per whole Common Share was $[X], the product
would be [2X]), and dividing that product by (y) 50% of the then current per
share market price of the Common Shares (determined pursuant to Section 11(d)
hereof) on the date of such first occurrence (such number of shares being
referred to as the "Adjustment Shares"); provided, however, that if the
transaction that would otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13 hereof, then only the provisions of
Section 13 hereof shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii).
(iii) If the number of Common Shares which are authorized by the
Corporation's certificate of incorporation but not outstanding or reserved for
issuance other than upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii), the
Corporation shall, with respect to each Right, make adequate provision to
substitute for the Adjustment Shares, upon payment of the then current Purchase
Price per whole Common Share, (A) (to the extent available) Common Shares and
then, (B) (to the extent available) other equity securities of the Corporation
which the Board of Directors has determined to be essentially equivalent to
Common Shares in respect to dividend, liquidation and voting rights (such
securities being referred to herein as "common share equivalents") and then, if
necessary (and to the extent feasible), (C) other common equity securities of
the Corporation, (D) a reduction in the Purchase Price, or any combination of
the foregoing, having an aggregate value (as determined by the Board of
Directors) based upon the advice of a nationally recognized investment banking
firm selected by the Board of Directors equal to the value of the Adjustment
Shares; PROVIDED that (x) the Corporation may, and (y) if the Corporation shall
not have made adequate provision as required above to deliver value within 30
days following the first occurrence of a Section 11(a)(ii) Event, then the
Corporation shall be obligated to, deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price (1) (to the extent
available) Common Shares and then (2) (to the extent available) common share
equivalents and then, if necessary (and to the extent feasible), (3) other
common equity securities of the Corporation, or any combination of the
foregoing, having an aggregate value (as determined by the Board of Directors
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors) equal to the excess of the value of the
Adjustment Shares over the Purchase Price. If a majority of the Board of
Directors shall determine in good faith that it is likely that sufficient
additional shares of Common Shares could be authorized for issuance upon
exercise in full of the Rights, the 30 day period set forth above (such period,
as it may be extended, being referred to herein as the "Substitution Period")
may be extended to the extent necessary, but not more then 90 days following the
first occurrence of a Section 11(a)(ii) Event, in order that the Corporation may
seek stockholder approval for the authorization of such additional shares. To
the extent that some action is to be taken pursuant to the first and/or second
sentence of this Section 11(a)(iii), the Corporation (X) shall provide, subject
to Section 7(e) and (g), that such action shall apply uniformly to all
outstanding Rights and (Y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form and value of any
consideration to be delivered as referred to in such first and/or second
sentence. If any such suspension occurs, the Corporation shall issue a public
announcement stating that the exercisability of the Rights
<PAGE>
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect (with prompt notice of such announcement
to the Rights Agent).
(b) In case the Corporation shall fix a record date for the issuance
of rights (other than the Rights), options or warrants to all holders of Common
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Shares (or shares having the
same rights and privileges as the Common Shares ("equivalent common shares")) or
securities convertible into Common Shares or equivalent common shares at a price
per Common Share or equivalent common share (or having a conversion price per
share, if a security convertible into Common Shares or equivalent common shares)
less than the then current per share market price of the Common Shares (as
determined pursuant to Section 11(d) hereof) on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common Shares which the
aggregate offering price of the total number of Common Shares and/or equivalent
common shares so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current per
share market price, and the denominator of which shall be the number of Common
Shares outstanding on such record date plus the number of additional Common
Shares and/or equivalent common shares to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of Rights be less than the aggregate
par value of the shares of capital stock of the Corporation issuable upon
exercise of such Rights. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of Rights.
Common Shares owned by or held for the account of the Corporation shall not be
deemed outstanding for the purpose of any such computation. Such adjustment
shall be made successively whenever such a record date is fixed; and in the
event that such rights, options or warrants are not so issued, the 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 Corporation shall fix a record date for the making of
a distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Common Shares) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the then current per share market price (as determined pursuant
to Section 11(d) hereof) of the Common Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of Rights) of the portion
of the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Common Share and the
denominator of which shall be such current per share market price of the Common
Shares; provided, however, that in no event shall the consideration to be paid
upon the exercise of any Rights be less than the aggregate par value of the
shares of capital stock of the Corporation to be issued upon exercise of such
Rights. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)), including, without limitation the Common Shares, on any date
shall be deemed to be the average of the daily closing prices per share of such
Security for the thirty (30) consecutive Trading Days (as such term is
hereinafter defined) immediately prior to but not including such date; provided,
however, that in the event that the current per share market price of the
Security is determined during a period following the announcement by the issuer
of such Security of (A) a dividend or
<PAGE>
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to but not including the expiration
of thirty (30) Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. 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 Security is not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Security is listed or admitted to trading or, if the Security is
not listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by The NASDAQ Stock Market
("NASDAQ") or such other system then in use, or, if on any such date the
Security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Security selected by the Board of Directors. If on any such date no such
market maker is making a market in the Security, the fair value of the Security
on such date as determined in good faith by the Board of Directors shall be
used. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.
(e) Notwithstanding anything herein to the contrary (except the last
sentence of this Section 11(e)), no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least 1% in the Purchase Price; provided, however, that any adjustments which by
reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 11 shall be made to the nearest cent or to the nearest one
tenthousandth of a Common Share or any other share or security as the case may
be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment or
(ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(i)
or 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Corporation other than
Common Shares, thereafter the number of other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Common Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Corporation subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Corporation shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), 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
Common Shares (calculated to the nearest one tenthousandth of a Common Share)
obtained by (i) multiplying (x) the number of Common Shares covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
<PAGE>
(i) The Corporation 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 Common Shares purchasable upon the exercise of a Right. Each of
the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of Common Shares for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to the adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Corporation shall make a public announcement (with prompt notice thereof to the
Rights Agent) 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 Right Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Corporation shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right 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 Corporation, 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 Corporation, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for herein and shall
be registered in the names of the holders of record of Right 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 Common Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of Common Shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the aggregate par value, if any, of the number of
Common Shares or other securities issuable in respect of the Purchase Price upon
exercise of a Right, the Corporation shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue such number of fully paid and non-assessable Common
Shares or other securities 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 Corporation may elect to defer (with prompt notice thereof
to the Rights Agent) until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the Common Shares or other
securities of the Corporation, if any, issuable upon such exercise over and
above the Common Shares or other securities of the Corporation, if any, issuable
upon exercise on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, the Corporation shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.
(m) Notwithstanding anything in this Section 11 to the contrary, the
Corporation shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustment expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that (i) any consolidation or subdivision of the Common Shares, (ii)
issuance wholly for cash of Common Shares at less than the current market price,
(iii) issuance wholly for cash of Common Shares or securities which by their
terms are convertible into or exchangeable for Common Shares, (iv) stock
dividends, or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Corporation to holders of its Common Shares
shall not be taxable to such shareholders.
<PAGE>
(n) The Corporation 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 Corporation in a transaction which does not violate
Section 11(o) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Corporation in a transaction which does not violate 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
Corporation and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or of its Subsidiaries in one or more
transactions each of which does not violate Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger, sale or transfer there
are any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect or other actions
taken, which would materially 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 or sale, the shareholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates. The Corporation
shall not consummate any such consolidation, merger, sale or transfer unless
prior thereto the Corporation and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11(n).
(o) The Corporation covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 7(g), Section 23 or Section 27
hereof, take (or permit any Subsidiary to take) any action the purpose of which
is to, or if at the time such action is taken it is reasonably foreseeable that
the effect of such action is to materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a)(ii) shall only result
in the loss of rights under Section 11(a)(ii) to the extent so exercised and
shall not otherwise affect the rights represented by the Rights under this
Rights Agreement, including the rights represented by Section 13.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Corporation shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief, reasonably detailed statement of the facts,
computations and methodology accounting for such adjustment, (b) file with the
Rights Agent and with each transfer agent for the Common Shares a copy of such
certificate and (c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 26 hereof. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment therein
contained and shall have no duty with respect to and shall not be deemed to have
knowledge of 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 that, on or following the Shares Acquisition
Date, directly or indirectly, (x) the Corporation shall consolidate with, or
merge with and into, any Person, (y) the Corporation shall consolidate with, or
merge with, any Person, and the Corporation shall be the continuing or surviving
corporation of such consolidation or merger (other than, in a case of any
transaction described in (x) or (y), a merger or consolidation which would
result in all of the securities generally entitled to vote in the election of
directors ("voting securities") of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the voting securities
of the Corporation or such surviving entity outstanding immediately after such
merger or consolidation and the holders of such securities not having changed as
a result of such merger or consolidation), or (z) the Corporation shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole) to any Person (other than
the Corporation or any Subsidiary of the Corporation in one or more transactions
each of which does not violate Section 11(o) hereof), then, and in each such
case, proper provision shall be made so that (i) each holder of a Right, except
as provided in Section 7(e) hereof, shall thereafter have the right to receive,
upon the exercise thereof at a price equal to the then current Purchase Price
<PAGE>
for a whole Common Share, in accordance with the terms of this Agreement and in
lieu of Common Shares, such number of freely tradeable Common Shares of the
Principal Party (as hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall equal
the result obtained by (A) multiplying the then current Purchase Price for a
whole Common Share by the number of one-tenths of a Common Share for which a
Right is then exercisable (without taking into account any adjustment previously
made pursuant to Section 11(a)(ii)) and dividing that product by (B) 50% of the
then current per share market price of the Common Shares of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such Section 13 Event; (ii) such Principal Party shall thereafter be liable for,
and shall assume, by virtue of such Section 13 Event, all the obligations and
duties of the Corporation pursuant to this Agreement; (iii) the term
"Corporation" shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 hereof shall apply
only to such Principal Party following the first occurrence of a Section 13
Event; and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares) 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 the Common Shares thereafter deliverable upon
the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Corporation are converted in such
merger or consolidation, and if no securities are so issued, the Person that is
the other party to such merger or consolidation (including, if applicable, the
Corporation if it is the surviving corporation); and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions; provided, however, that in any of the foregoing
cases, (1) if the Common Shares of such Person are not at such time and have not
been continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Shares 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 Shares having the greatest aggregate market value; and (3) in case 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.
(c) The Corporation shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of its authorized Common Shares which have not been issued or reserved
for issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Corporation and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date of
any consolidation, merger, sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense shall:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, and 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 Final Expiration Date;
<PAGE>
(ii) use its best efforts to qualify or register the rights and
the securities purchasable upon exercise of the Rights under the blue sky laws
of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraph
(x) or (y) of Section 13(a) if: (i) such transaction is consummated with a
Person or Persons which acquired Common Shares pursuant to a Permitted Offer (or
a wholly owned Subsidiary of any such Person or Persons); (ii) the price per
Common Share offered in such transaction is not less than the price per Common
Share paid to all holders of Common Shares whose shares were purchased pursuant
to such Permitted Offer; and (iii) the form of consideration offered in such
transaction is the same as the form of consideration paid pursuant to such
Permitted 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
Corporation shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors.
If on any such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by the Board
of Directors shall be used.
(b) The Corporation shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of fractional Common Shares, the Corporation
shall pay to the registered holders of Right 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 Common Share. For the purposes of
this Section 14(b), the current market value of a Common Share shall be the
closing price of a Common Share (as determined pursuant to Section 11(d) hereof)
for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Rights or any fractional share upon
exercise of a Right (except as provided above).
<PAGE>
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holder of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate form
fully executed;
(c) subject to Section 6 and Section 7(f) hereof, the Corporation and
the Rights Agent may deem and treat the Person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Shares certificate made by anyone
other than the Corporation or the Rights Agent) for all purposes whatsoever, and
neither the Corporation nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any liability to any
holder of a Right or a beneficial interest in a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree,
judgment or ruling (whether interlocutory or final) issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Corporation must use its
best efforts to have any such order, decree, judgment or ruling lifted or
otherwise overturned as soon as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Corporation which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Corporation or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or other distributions or to exercise any preemptive or subscription rights, or
otherwise, until the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.
<PAGE>
Section 18. CONCERNING THE RIGHTS AGENT. The Corporation agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration, preparation, delivery and execution of this Agreement and the
exercise and performance of it duties hereunder. The Corporation also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, damage, judgment, fine, penalty, claim, demand, settlement
(reasonably consented to by the Corporation), or reasonable cost or expense,
incurred without gross negligence, bad faith or willful misconduct on the part
of the Rights Agent, for any action taken, suffered or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement,
including without limitation the reasonable costs and expenses of defending
against any claim of liability in the premises. In no event shall the Rights
Agent be liable for special, indirect, punitive or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action. The indemnity provided for herein shall
survive the expiration of the Rights, the resignation or removal of the Rights
Agent and the termination of this Agreement.
The Rights Agent shall be authorized and protected and shall incur no
liability for, or in respect of, any action taken, suffered or omitted by it in
connection with, the acceptance and administration of this Agreement in reliance
upon any Right Certificate delivered to the Rights Agent pursuant to Sections 6
and 7 hereof for Common Shares or for other securities of the Corporation,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any Person resulting from any
merger or consolidation to which the Rights Agent or any successor Rights Agent
shall be a party, or any Person succeeding to the shareholder services business
of the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Right Certificates so countersigned; and in case at that time any
of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes only
those duties and obligations expressly imposed by this Agreement (and no implied
duties or obligations) upon the following terms and conditions, by all of which
the Corporation and the holders of Right Certificates, by their acceptance
thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation), and the advice or opinion of such counsel shall be
full and complete authorization and protection to
<PAGE>
the Rights Agent and the Rights Agent shall incur no liability for or in respect
of any action taken, suffered or omitted by it in good faith and in accordance
with such advice or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of an Acquiring Person and the
determination of the current market price of any Security) be proved or
established by the Corporation prior to taking, suffering or omitting any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent; and such
certificate shall be full authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability in respect of any action taken,
suffered or omitted 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 gross
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 Right
Certificates (except its countersignature on such Right Certificates) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any liability or
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 Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Corporation of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void
pursuant to Section 7(e) hereof or any action taken by the Board of Directors
pursuant to Section 7(g) hereof) or 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 ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of the certificate described in
Section 12 hereof); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any Common
Shares to be issued pursuant to this Agreement or any Right Certificate or as to
whether any Common Shares will, when issued, be validly authorized and issued,
fully paid and non-assessable.
(f) The Corporation agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer or the Secretary of the Corporation, and to
apply to such officers for advice or instructions in connection with its duties,
and such instructions shall be full authorization and protection to the Rights
Agent and the Rights Agent shall incur no liability for or in respect of any
action taken, suffered or omitted by it in good faith or lack of action in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. Any application by the Rights Agent for
written instructions from the Corporation may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken, suffered or omitted
by the Rights Agent under this Rights Agreement and the date on or after which
such action shall be taken or suffered or such omission shall be effective. The
Rights Agent shall not be liable for any action taken or suffered by, or
omission of, the Rights Agent in accordance with a proposal included in any
<PAGE>
such application on or after the date specified in such application (which date
shall not be less than five Business Days after the date any officer of the
Corporation actually receives such application, unless any such officer shall
have consented in writing to an earlier date) unless, prior to taking or
suffering any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instruction in response to such
application specifying the action to be taken, suffered or omitted.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract with or lend
money to the Corporation or otherwise act as fully and freely as though it were
not Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Corporation 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 Corporation or any other Person resulting from any
such act, default, neglect or misconduct, absent gross negligence, bad faith or
willful misconduct in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
it believes in good faith that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the
Corporation.
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 thirty (30) days' notice in writing mailed to the Corporation and to the
transfer agent of the Common Shares by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Corporation may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent or any successor Rights Agent, as the case may be, and to the transfer
agent of the Common Shares by registered or certified mail, and, subsequent to
the Distribution Date, to holders of the Right Certificates by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Corporation shall appoint a successor to the Rights
Agent. If the Corporation shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the
Corporation), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Corporation or by such a
court, shall be (i) a Person organized and doing business under the laws of the
United States or of the State of New York (or of any other state of the United
States so long as such Person is authorized to do business in the State of New
York), in good standing, having an office in the State of New York, which is
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50,000,000 or (ii) an Affiliate thereof. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any
<PAGE>
such appointment, the Corporation shall file notice thereof in writing with the
predecessor Rights Agent and the transfer agent of the Common Shares, and,
subsequent to the Distribution Date, mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the successor
Rights Agent or the appointment of the Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the
Corporation may, at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by the Board of Directors 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 upon exercise of the Rights
made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Common Shares
following the Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date, the Corporation (a) shall with respect to Common
Shares so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Corporation, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors, issue
Right Certificates representing the appropriate number of Rights in connection
with such issuance or sale, provided, however, that (i) the Corporation shall
not be obligated to issue any such Right Certificates if, and to the extent
that, the Corporation shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the
Corporation or the Person to whom such Right Certificate would be issued or
material adverse consequences to the Corporation's status as a United States
Citizen, and (ii) no Right Certificate shall be issued if, and to the extent
that, appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof.
Section 23. REDEMPTION AND TERMINATION. (a) The Board of Directors
may, at its option, redeem all but not less than all the then outstanding Rights
at a redemption price of $0.01 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"), at any time prior to the earlier of (x)
the time that any Person becomes an Acquiring Person, or (y) the Final
Expiration Date. The Corporation may, at its option, pay the Redemption Price
either in Common Shares (based on the "current per share market price," as
defined in Section 11(d) hereof, of the Common Shares at the time of redemption)
or cash; provided that if the Corporation elects to pay the Redemption Price in
Common Shares, the Corporation shall not be required to issue any fractional
Common Shares and the number of Common Shares issuable to each holder of Rights
shall be rounded down to the next whole share. The redemption of the Rights by
the Board of Directors may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion may
establish.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price for each Right so held. The
Corporation shall promptly give notice of any such redemption to the Rights
Agent and the holders of Rights in the manner set forth in Section 26, provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Corporation nor any of
its Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any manner other than that specifically set forth in this
Section 23 and other than in connection with the purchase of Common Shares prior
to the Distribution Date.
Section 24. EXCHANGE. (a) Subject to Section 7(g) and Section 24(d)
hereof, the Board of Directors may, at its option, at any time after the time
that any Person becomes an Acquiring Person, exchange
<PAGE>
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become null and void pursuant to the provisions of
Section 7(e) and Section 11(a)(ii) hereof) for Common Shares of the Corporation
at an exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other
than the Corporation, any Subsidiary of the Corporation, any employee benefit
plan of the Corporation or any such Subsidiary, any entity holding Common Shares
for or pursuant to the terms of any such plan or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors of the
Corporation ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of the
holders of such Rights shall be to receive that number of Common Shares equal to
the number of such rights held by such holder multiplied by the Exchange Ratio,
except as otherwise determined by the Board of Directors in accordance with
Section 7(g) hereof. The Corporation shall promptly give public notice of any
such exchange (with prompt notice thereof to the Rights Agent); provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Corporation promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become null and void pursuant to the
provisions of Section 7(e)) held by each holder of Rights, except as otherwise
determined by the Board of Directors in accordance with Section 7(g) hereof.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued (and not reserved for
issuance other than upon exercise of the Rights) to permit any exchange of
Rights as contemplated in accordance with this Section 24, the (i) Corporation
shall take all such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights, or (ii) the Board of Directors
may determine to exchange Common Shares for then outstanding and exercisable
Rights at such exchange ratio of less than one Common Share per Right,
appropriately adjusted as set forth in Section 24(a) above, so that all (and not
less than all) Common Shares issued but not outstanding or authorized but
unissued (and not reserved for issuance other than upon exercise of the Rights)
are issued in the exchange contemplated by this Section 24.
(d) In any exchange pursuant to this Section 24, the Corporation, at
its option, may substitute common share equivalents (as defined in Section
11(a)(iii)) for Common Shares exchangeable for Rights, at the initial rate of
one common stock equivalent for each Common Share, as appropriately adjusted to
reflect adjustments in dividend, liquidation and voting rights of common share
equivalents pursuant to the terms thereof, so that each common share equivalent
delivered in lieu of each Common Share shall have essentially the same dividend,
liquidation and voting rights as one Common Share.
Section 25. NOTICE OF CERTAIN EVENTS. (a) In case the Corporation
shall propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of its Common Shares or to make any
other distribution to the holders of its Common Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Common Shares
rights or warrants to subscribe for or to purchase any additional Common Shares
or shares of stock of any class or any other securities, rights or options,
(iii) to effect any reclassification of its Common Shares (other than a
reclassification involving only the subdivision of outstanding Common Shares),
(iv) to effect any consolidation or merger into or with any other Person (other
than a Subsidiary of the Corporation in a transaction which does not violate
Section 11(o) hereof), or to effect any sale
<PAGE>
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer) in one or more transactions, of 50% or more of the
assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Corporation and/or any of
its Subsidiaries in one or more transactions each of which does not violate
Section 11(o) hereof), or (v) to effect the liquidation, dissolution or winding
up of the Corporation, then, in each such case, the Corporation shall give to
the Rights Agent and to each holder of the Right Certificate, in accordance with
Section 26 hereof, a notice of such proposed action and file a certificate with
the Rights Agent to that effect, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the Common Shares, if any such date is
to be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least twenty (20) days prior to the record date
for determining holders of the Common Shares for purposes of such action, and in
the case of any such other action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of the Common Shares, whichever shall be the earlier.
(b) Notwithstanding anything in this Agreement to the contrary, prior
to the Distribution Date, a filing by the Corporation with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of the
securities of the Corporation, including the Rights, for purposes of this
Agreement and no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then (i) the Corporation shall
as soon as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
which notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) or Section 13 hereof, as the case may
be, and (ii) all references in the preceding paragraph (a) to Common Shares
shall be deemed thereafter to refer also, if appropriate, to common share
equivalents, as provided for in Section 11(a)(iii).
Section 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Corporation 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:
Overseas Shipholding Group, Inc.
1114 Avenue of the Americas
New York, New York 10036
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Corporation or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Corporation) as follows:
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Ridgefield Park, New Jersey 07660-2108
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the holder of any Right Certificate or, if
prior to the Distribution Date, to the holder of certificates representing
Common Shares, shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Corporation.
<PAGE>
Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution
Date, the Corporation and the Rights Agent shall, if the Board of Directors so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing Common Shares. From and
after the Distribution Date, the Corporation and the Rights Agent shall, if the
Board of Directors so directs, supplement or amend this Agreement without the
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder or (iv) to change or supplement
the provisions hereunder in any manner which the Board of Directors may deem
necessary or desirable and which shall not adversely effect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable; or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Corporation which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment, provided that
such supplement or amendment does not adversely affect, change or increase the
rights, duties, liabilities or obligations of the Rights Agent. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.
Section 28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS OF THE
CORPORATION, ETC. The Board of Directors shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors, or the Corporation, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement and
whether any proposed amendment adversely affects the interests of the holders of
Right Certificates and all determinations pursuant to Section 7(g) hereof). For
all purposes of this Agreement, any calculation of the number of Common Shares
or other securities outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding Common Shares or
any other securities 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 as in effect on the date of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith, shall
(x) be final, conclusive and binding on the Corporation, the Rights Agent, the
holders of the Right Certificates and all other parties, and (y) not subject the
Board of Directors to any liability to the holders of the Right Certificates.
The Rights Agent is entitled to always assume the Corporation's Board of
Directors acted in good faith and shall be fully protected and incur no
liability in reliance thereon.
Section 29. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Corporation or the Rights Agents shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any legal
or equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Corporation, the Rights Agent
and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares).
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder
<PAGE>
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.
Section 32. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State; PROVIDED, HOWEVER, that the
rights, duties and obligations of the Rights Agent hereunder shall be governed
by the laws of the State of New York, without regard to New York choice of law
rules.
Section 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive Headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the date and year first above written.
OVERSEAS SHIPHOLDING GROUP, INC.
By: /s/ Robert N. Cowen
_______________________________________
Name: Robert N. Cowen
Title: Senior Vice President and
Secretary
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By: /s/ Regina Brown
_______________________________________
Name: Regina Brown
Title: Vice President
<PAGE>
EXHIBIT A
[Form of Right Certificate]
No. R- _____________Rights
NOT EXERCISABLE AFTER THE EARLIER OF NOVEMBER 9, 2008 AND
THE DATE ON WHICH THE RIGHTS EVIDENCED HEREBY ARE REDEEMED
OR EXCHANGED BY THE COMPANY AS SET FORTH IN THE RIGHTS
AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN
ACQUIRING PERSON OR AN 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 BE NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BE OR MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.]*
RIGHT CERTIFICATE
OVERSEAS SHIPHOLDING GROUP, INC.
This Right Certificate certifies that _____________________ , or
registered assigns, is the registered holder of the number of Rights set forth
above, each of which entitles the holder (upon the terms and subject to the
conditions set forth in the Rights Agreement dated as of October 20, 1998 (the
"Rights Agreement") between Overseas Shipholding Group, Inc., a Delaware
corporation (the "Company"), and ChaseMellon Shareholder Services, L.L.C., a New
Jersey limited liability company (the "Rights Agent")) to purchase from the
Company, at any time after the Distribution Date and prior to the Expiration
Date, one one-tenth of a fully paid, nonassessable share of the Common Stock,
par value $0.01 (the "Common Shares"), of the Company at a purchase price of
$70.00 per whole Common Share (the "Purchase Price"), payable in lawful money of
the United States of America, upon surrender of this Right Certificate, with the
form of election to purchase and related certificate duly executed, and payment
of the Purchase Price at an office of the Rights Agent designated for such
purpose.
Terms used herein and not otherwise defined herein have the meanings
assigned to them in the Rights Agreement.
The number of Rights evidenced by this Right Certificate (and the
number and kind of shares issuable upon exercise of each Right) and the Purchase
Price set forth above are as of October 20, 1998, and may have been or in the
future be adjusted as a result of the occurrence of certain events, as more
fully provided in the Rights Agreement.
- --------
* If applicable, insert this portion of the legend and delete the preceding
sentence.
A-1
<PAGE>
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Right Certificate are beneficially owned by (a) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (b) a transferee of
a Acquiring Person (or any such Associate or Affiliate thereof) who becomes a
transferee after the Acquiring Person becomes such, or (c) under certain
circumstances specified in the Rights Agreement, a transferee of an Acquiring
Person (or any such Associate or Affiliate thereof) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such, such Rights
shall become null and void without any further action, and no holder hereof
shall have any rights whatsoever with respect to such Rights, whether under any
provision of the Rights Agreement or otherwise.
Under the Rights Agreement, the Board of Directors may,
notwithstanding anything to the contrary in the Rights Agreement or this Rights
Certificate, take such reasonable actions and may establish such reasonable
procedures as it may deem desirable in connection with the exercise, exchange or
transfer of Rights in order to reasonably assure, in the judgment of the Board
of Directors, the preservation of the Company's status as a United States
Citizen, including without limitation restricting the issuance of shares of the
Company pursuant to or in exchange for the Rights to United States Citizens or
limiting such issuance to non-United States Citizens to such degree as shall, in
the judgment of the Board of Directors, reasonably assure compliance with the
Minimum U.S. Ownership percentage established from time to time by the Board of
Directors under the Company's Bylaws.
This Right Certificate is subject to all of the terms, covenants and
restrictions of the Rights Agreement, which terms, covenants and restrictions
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 Right 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.
Upon surrender at the office of the Rights Agent designated for such
purpose and subject to the terms and conditions set forth in the Rights
Agreement, any Rights Certificate or Certificates may be transferred or
exchanged for another Rights Certificate or Certificates evidencing a like
number of Rights as the Rights Certificate or Certificates surrendered.
Subject to the provisions of the Rights Agreement, the Board of
Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i) the time that any
Person becomes an Acquiring Person or (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right (subject to adjustment); or
(b) at any time after the time that any Person becomes an
Acquiring Person (but before such Person, together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding), exchange all or part of
the then outstanding Rights (other than Rights held by the Acquiring
Person and certain related Persons) for Common Shares at an exchange
ratio of one Common Share per Right (subject to adjustment).
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Right Certificate or Certificates for the number of whole Rights not
exercised, or the Rights Agent shall place an appropriate notation on this Right
Certificate with respect to those Rights exercised.
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<PAGE>
No holder of this Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
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 shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal by its authorized officers.
Dated as of _________, 19__
OVERSEAS SHIPHOLDING GROUP, INC.
By: _______________________________________
Name:
[SEAL]
Attest:
_________________________
Secretary
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
By______________________________________
Authorized Signature
A-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED_____________________________________________________________
hereby sells, assigns and transfers unto_______________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________, 19__
__________________________________
Signature
Signature Guaranteed:
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<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate ___ are ___ are not
being assigned by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
__ did __ did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person;
(3) the action requested by the undersigned is not prohibited by the
provisions of the Rights Agreement, including, without limitation, the
provisions relating to the (i) transfer, split-up, combination and exchange of
rights which are null and void or (ii) exercise by an Acquiring Person or an
Affiliate or Associate of an Acquiring Person of any Right which by its terms is
null and void.
Dated: _______________, 19__
__________________________________
Signature
--------------
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
--------------
A-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise Rights represented
by the Right Certificate.)
To: OVERSEAS SHIPHOLDING GROUP, INC.
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Right Certificate to purchase shares of Common Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such securities be issued in the name
of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights specified above shall not be all the Rights
evidenced by this Right Certificate, the Rights Agent shall place an appropriate
notation on this Right Certificate with respect to those Rights exercised or a
new Right Certificate for the balance of such Rights shall be registered in the
name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _______________, 19__
__________________________________
Signature
Signature Guaranteed:
A-6
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate are are not being
exercised by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
did did not acquire the Rights evidenced by this Right Certificate from any
Person who is, was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person;
(3) the exercise of the Rights evidenced by this Right Certificate is
not prohibited by the terms of the Rights Agreement, including, without
limitation, the provisions relating to the exercise by an Acquiring Person or an
Affiliate or Associate of an Acquiring Person of any Right which by its terms is
null and void;
Dated: _______________, 19__
__________________________________
Signature
--------------
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
--------------
A-7
<PAGE>
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE SHARES
On October 20, 1998, the Board of Directors of Overseas Shipholding
Group, Inc. (the "CORPORATION" or the "COMPANY") declared a dividend
distribution of one right (a "RIGHT") to purchase one one-tenth of a share of
the Common Stock, $1.00 par value, of the Corporation (the "COMMON SHARES") for
each outstanding share of Common Stock, payable to the stockholders of record on
November 9, 1998 (the "RECORD DATE"). The Board of Directors also authorized and
directed the issuance of one Right with respect to each Common Share issued
thereafter until the Distribution Date (as defined below) and, in certain
circumstances, with respect to Common Shares issued after the Distribution Date.
Except as set forth below, each Right, when it becomes exercisable, entitles the
registered holder to purchase from the Corporation one one-tenth of a Common
Share at a price of $70 per whole Common Share (the "PURCHASE PRICE"), subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "RIGHTS AGREEMENT") between the Corporation and ChaseMellon
Shareholder Services, L.L.C., as Rights Agent (the "RIGHTS AGENT"), dated as of
October 20, 1998.
Initially, the Rights will be attached to all certificates
representing Common Shares then outstanding, and no separate Right Certificates
will be distributed. The Rights will separate from the Common Shares upon the
earliest to occur of (i) a person or entity (a "PERSON") or group of affiliated
or associated Persons (a "GROUP") having acquired beneficial ownership of 10% or
more of the outstanding Common Shares (except pursuant to a Permitted Offer, as
hereinafter defined); or (ii) 10 business days (or such later date as the Board
of Directors may determine) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in a Person or Group becoming an Acquiring Person (as hereinafter
defined) (the earliest of such dates being called the "DISTRIBUTION DATE"). A
Person or Group whose acquisition of Common Shares causes a Distribution Date
pursuant to clause (i) above is an "ACQUIRING PERSON." The date that a Person or
Group becomes an Acquiring Person is the "SHARES ACQUISITION DATE."
Notwithstanding the foregoing, certain stockholders who currently own in excess
of 10% of the outstanding Common Shares and their affiliates, associates and
permitted transferees will not be deemed to be Acquiring Persons and their
ownership will not cause a Distribution Date unless they acquire additional
Common Shares equal to more than 20% of the number of Common Shares owed by them
on the date of the Rights Agreement. Furthermore, a Person who acquires Common
Shares pursuant to a tender or exchange offer which is for all outstanding
Common Shares at a price and on terms which the Board of Directors determines
(prior to acquisition) to be adequate and in the best interests of the
Corporation and its stockholders (other than such Person, its affiliates and
associates) (a "PERMITTED OFFER") will not be deemed to be an Acquiring Person
and such Person's ownership will not constitute a Distribution Date.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon the transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("RIGHT CERTIFICATES") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date (and to each initial record holder of certain Common Shares
issued after the Distribution Date), and such separate Right Certificates alone
will evidence the Rights.
B-1
<PAGE>
THE RIGHTS ARE NOT EXERCISABLE UNTIL THE DISTRIBUTION DATE, and will
expire at the close of business on November 9, 2008, unless earlier redeemed by
the Corporation as described below.
In the event that any person becomes an Acquiring Person, each holder
of Rights (other than Rights that have become null and void as described below)
will thereafter have the right (the "FLIP-IN RIGHT") to receive, upon exercise
of such Rights, the number of Common Shares (or, in certain circumstances, other
securities of the Corporation) having a value (immediately prior to such
triggering event) equal to two times the aggregate exercise price of such
Rights. (So that, for example, if a Person became an Acquiring Person at a time
when the current per share market price of the Company's Common Shares is $20.00
(and prior to any antidilution adjustment as described below), each holder of a
Right (other than a Right which has become null and void as described herein)
would have the right to receive upon exercise of the Right seven Common Shares
upon payment of an exercise price of $70.00.) The Board, at its option, may
exchange each Right (other than those that have become null and void as
described below) for one Common Share in lieu of the Flip-In Right, provided no
Person is the beneficial owner of 50% or more of the Common Shares at the time
of such exchange. Notwithstanding the foregoing, following the occurrence of the
event described above, all Rights that are or (under certain circumstances
specified in the Rights Agreement) were beneficially owned by any Acquiring
Person or any affiliate or associate thereof or certain transferees thereof will
be null and void.
Under the Rights Agreement, the Board of Directors may take such
reasonable actions and may establish such reasonable procedures as it may deem
desirable in connection with the exercise, exchange or transfer of Rights in
order to reasonably assure, in the judgment of the Board of Directors, the
preservation of the Company's status as a United States citizen within the
provisions of Section 2 of the Shipping Act of 1916, as amended, or any
successor statute applicable to the business being conducted by the Company (the
"CITIZENSHIP PROVISIONS"), including without limitation restricting the issuance
of shares of the Company pursuant to or in exchange for the Rights to United
States citizens or limiting such issuance to non-United States citizens to such
degree as shall, in the judgment of the Board of Directors, reasonably assure
compliance with the Minimum U.S. Ownership percentage established from time to
time by the Board of Directors under the Company's By-laws to maintain the
Company's status as a United States citizen. The provisions of this paragraph
will not, however, prevent the transfer after the Distribution Date of any Right
by a non-United States citizen to a United States citizen, including for the
purpose of permitting the exercise of the Right by the United States citizen,
provided that any such transfer (or exercise) is consistent with such reasonable
procedures as may be established by the Board to reasonably assure compliance
with the Citizenship Provisions and to otherwise carry out the provisions of the
Rights Agreement.
In the event that, at any time following the Shares Acquisition Date,
(i) the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Corporation's assets or earning power is sold or transferred, then each holder
of Rights (except Rights which previously have been voided as set forth above)
shall thereafter have the right (the "FLIP-OVER RIGHT") to receive, upon
exercise of such Rights, common shares of the acquiring company (or in certain
circumstances, its parent) having a value equal to two times the aggregate
exercise price of the Rights; provided, however, that the Flip Over Right shall
not apply to any transaction described in clause (i) if (x) such transaction is
with a Person or Persons (or a wholly owned subsidiary of any such Person or
Persons) that acquired Common Shares pursuant to a Permitted Offer and (y) the
price and form of consideration offered in such transaction is the same as that
paid to all holders of Common Shares whose shares were purchased pursuant to the
Permitted Offer. The holder of a Right will continue to have the Flip-Over Right
whether or not such holder exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Shares, (ii) upon
the grant to
B-2
<PAGE>
holders of the Common Shares of certain rights or warrants to subscribe for or
purchase Common Shares at a price, or securities convertible into Common Shares
with a conversion price, less than the then current market price of the Common
Shares, or (iii) upon the distribution to holders of the Common Shares of
evidences of indebtedness or assets (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Shares on the last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Corporation may
redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"), which redemption shall be effective at such time, on such
basis and with such conditions as the Board of Directors may establish in its
sole discretion. The Corporation may, at its option, pay the Redemption Price in
Common Shares.
All of the provisions of the Rights Agreement may be amended by the
Board of Directors prior to the Distribution Date. After the Distribution Date,
the provisions of the Rights Agreement may be amended by the Board in order to
cure any ambiguity, defect or inconsistency, to make changes which do not
adversely affect the interests of holders of Rights (excluding the interests of
any Acquiring Person), or, subject to certain limitations, to shorten or
lengthen any time period under the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to stockholders of the Corporation, stockholders may, depending
upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.
B-3
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