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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
___________________________
For Registration of Certain Classes of Securities
Pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
MATERIAL SCIENCES CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 95-2673173
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
2300 East Pratt Boulevard, Elk Grove Village, IL 60007
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(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check the
following box. [_]
If this Form relates to the registration of a class of debt securities and is to
become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box. [_]
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Preferred Stock Purchase Rights, New York Stock Exchange, Inc.
with respect to Common Stock,
$0.02 par value
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
This document contains 71 pages.
The Exhibit Index is located on page 8.
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Preferred Stock Purchase Rights
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On June 20, 1996, the Board of Directors of Material Sciences Corporation
(the "Company") declared a dividend of one Right for each outstanding share of
Common Stock, $0.02 par value, of the Company (the "Common Stock"). The dividend
is payable on July 2, 1996 to the holders of record of the Common Stock at the
close of business on July 2, 1996 (the "Record Date"). Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
its Series B Junior Participating Preferred Stock (the "Preferred Stock") at a
price of $70.00 (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement dated as of June 20,
1996 (the "Rights Agreement") between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (the "Rights Agent").
Until the date (the "Distribution Date") that is the earlier to occur of
(i) the tenth day after the date (the "Stock Acquisition Date") of a public
announcement that a Person (as defined in the Rights Agreement) who or which
together with the Affiliates (as so defined) and Associates (as so defined) of
such Person (an "Acquiring Person") has become the Beneficial Owner (as defined
in the Rights Agreement) of 20% or more of the shares of Common Stock then
outstanding (as described in the Rights Agreement) or (ii) the tenth day after
the date (the "Offer Date") of the commencement by any Person of, or first
public disclosure of an intention to commence by any Person, a tender offer or
exchange offer the consummation of which would result in any Person having
beneficial ownership of 20% or more of the then outstanding shares of Common
Stock (including any Stock Acquisition Date or Offer Date which is after the
date of the Rights Agreement and prior to the issuance of the Rights), the
Rights will be evidenced, with respect to any of the Common Stock certificates
outstanding as of July 2, 1996, by such Common Stock certificates and not by
separate certificates. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the Common
Stock. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), certificates issued after July 2, 1996 representing
shares of Common Stock outstanding on July 2, 1996 or shares of Common Stock
issued after July 2, 1996, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer of any Common
Stock certificate, with or without a copy of the Summary of Rights mailed to
shareowners of record on the Record Date attached thereto or such notation, will
also constitute the surrender for transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable following
the Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date, and the separate Rights Certificates
alone will evidence the Rights. Each share of Common Stock issued after the
Distribution Date and prior to the earlier of the redemption, exchange or
expiration of the Rights in connection with certain employee benefit plans or
upon conversion of certain securities, will be issued with Rights.
The Rights are not exercisable until after the Distribution Date. The
Rights will expire at the close of business on July 1, 2006, unless earlier
redeemed or exchanged by the Company as described below.
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The Purchase Price payable, and the number and kinds of shares or other
securities, cash and other property 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
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights, options or warrants to subscribe for or purchase Preferred Stock
(or shares having the same rights, privileges and preferences as the Preferred
Stock) or securities convertible into Preferred Stock or such other shares at a
conversion price less than the current market price of the Preferred Stock or
(iii) upon the distribution to holders of the Preferred Stock of securities,
cash, property, evidences of indebtedness or assets (excluding regular periodic
cash dividends, and excluding dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred to in clause (ii)
above).
The number of Rights outstanding and the number of shares of Preferred
Stock issuable upon exercise of each Right are also subject to adjustments in
the event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions or combinations of the
Common Stock occurring, in any such case, prior to the Distribution Date.
The Preferred Stock purchasable upon exercise of the Rights will be non-
redeemable. Each share of Preferred Stock will be entitled to receive a
preferential quarterly dividend payment equal to the greater of $10 per share
and 100 times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will be entitled to receive a
preferential liquidation payment equal to the greater of $100 per share and 100
times the payment made per share of Common Stock. In the event of any merger,
consolidation, or other transaction in which Common Stock is exchanged, each
share of Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. The Preferred Stock will vote together as a
class with the holders of Common Stock with each share of Preferred Stock
entitled to 100 votes. The Preferred Stock will also have special rights to
elect directors in certain circumstances. These rights are protected by
customary anti-dilution provisions.
Because of the nature of the dividend, liquidation and voting rights of the
Preferred Stock, the value of the one one-hundredth of a share of Preferred
Stock purchasable upon exercise of each Right should approximate the value of
one share of Common Stock.
When a Person first becomes an Acquiring Person (a "Triggering Event"),
proper provision will be made so that each holder of a Right (other than the
Acquiring Person or its affiliates and associates) will thereafter have a right
to receive, upon the exercise thereof at the then current Purchase Price, in
lieu of shares of Preferred Stock or other securities receivable upon exercise
prior to the occurrence of a Triggering Event, such number of shares of Common
Stock which at the time of such transaction would have a market value of two
times the exercise price of the Right. Upon the occurrence of a Triggering
Event, any Rights that are beneficially owned by an Acquiring Person (and
certain transferees of an Acquiring Person) will become null and void.
At any time after the first occurrence of a Triggering Event, the Company
may at any time exchange, for all or part of the then-outstanding and
exercisable Rights (which shall not include
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void Rights), Common Stock shares, the equivalent of Common Stock shares, or any
combination thereof, at an exchange ratio of one share of Common Stock or units
representing fractions thereof as would be deemed to have the same value as one
share of Common Stock per Right, subject to adjustment (the "Exchange Ratio").
Immediately upon the effectiveness of the exchange and without any further
action or notice, the right to exercise the Rights will terminate and the only
right of a holder of the Rights will be to receive that number of Common Stock
shares, and/or the equivalent of Common Stock shares, equal to the number of the
Rights held by the holder multiplied by the Exchange Ratio.
In the event that, from and after the occurrence of a Triggering Event, the
Company consolidates with or merges with and into a Person, a Person
consolidates with or merges with and into the Company and in connection
therewith all or part of the Common Stock is changed or exchanged, the Company
effects a share exchange in which all or part of the Common Stock is changed, or
50% or more of the Company's assets or earning power are sold (in one
transaction or a series of transactions), proper provision will be made so that
each holder of a Right (other than the Acquiring Person or its affiliates and
associates) will thereafter have the right to receive, upon the exercise
thereof, that number of shares of common stock of the Principal Party (as
defined in the Rights Agreement) which at the time of the transaction would have
a market value of two times the exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required unless cumulative adjustments would require an adjustment of at least
1% in the Purchase Price. The Company will not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock, which may, at the election of
the Company, be evidenced by depositary receipts). In lieu thereof, at the
Company's option, an adjustment in cash will be made based on the market price
of the Preferred Stock on the last trading date prior to the date of exercise
(or scrip or warrants will be issued).
At any time prior to the earlier to occur of (i) the Stock Acquisition Date
and (ii) the expiration of the Rights, the Company may redeem the Rights in
whole, but not in part, at a price of $0.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
July 2, 1996 (the "Redemption Price"). The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock or any other form of
consideration deemed appropriate by the Company's Board of Directors. As soon as
practicable after the action of the Board of Directors of the Company electing
to redeem the Rights, the Company will make announcement thereof, and from and
after the date of the election, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price per Right.
At any time prior to the Stock Acquisition Date, the Company's Board of
Directors may amend or supplement the Rights Agreement without the approval of
the Rights Agent or any holder of the Rights. Thereafter, the Board of Directors
of the Company may amend or supplement the Rights Agreement without such
approval only to cure ambiguity, correct or supplement any defective or
inconsistent provision or change or supplement the Rights Agreement in any
manner which shall not adversely affect the interests of the holders of the
Rights (other than an Acquiring
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Person or an affiliate or associate thereof). Notwithstanding the foregoing, no
amendment or supplement shall (a) decrease the Redemption Price, (b) change the
Purchase Price or change the number of shares of Preferred Stock, other
securities, cash or other property for which a Right is then exercisable or (c)
provide for an earlier Final Expiration Date. Immediately upon the action of the
Board of Directors providing for any amendment or supplement, such amendment or
supplement will be deemed effective.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group other than an exempt person that
attempts to acquire the Company on terms not approved by its Board of Directors.
The Rights should not interfere with any merger or other business combination
approved by its Board of Directors prior to the time a Person becomes an
Acquiring Person, because until such time the Rights may generally be redeemed
by the Company at $.01 per Right and/or the Rights Agreement may be amended or
supplemented.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement attached as
Exhibit 1.1, which is incorporated in this Registration Statement on Form 8-A by
reference.
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Item 2 Exhibits
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1.1 Rights Agreement, dated as of June 20, 1996, between Material
Sciences Corporation and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent, including the form of Certificate of
Designation, Preferences and Rights of Series B Junior
Participating Preferred Stock attached thereto as Exhibit A, the
form of Rights Certificate attached thereto as Exhibit B and the
Summary of Rights attached thereto as Exhibit C.
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SIGNATURE
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Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
MATERIAL SCIENCES CORPORATION
By: /s/ William H. Vrba
----------------------------------------
Name: William H. Vrba
Title: Senior Vice President,
Chief Financial Officer and
Secretary
Date: June 20, 1996
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
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<C> <S> <C>
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1.1 Rights Agreement, dated as of June 20, 1996, between 9
Material Sciences Corporation and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent, including the form of
Certificate of Designation, Preferences and Rights of
Series B Junior Participating Preferred Stock attached
thereto as Exhibit A, the form of Rights Certificate
attached thereto as Exhibit B and the Summary of Rights
attached thereto as Exhibit C.
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</TABLE>
8
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Material Sciences Corporation
and
ChaseMellon
Shareholder Services, L.L.C.
Rights Agent
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Rights Agreement
Dated as of June 20, 1996
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Table of Contents
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Section Page
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1. Certain Definitions ................................................ 1
2. Appointment of Rights Agent ........................................ 6
3. Issuance of Rights Certificates .................................... 6
4. Form of Rights Certificates ........................................ 7
5. Countersignature and Registration .................................. 8
6. Transfer, Division, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates .......... 9
7. Exercise of Rights; Purchase Price; Expiration Date of Rights ...... 10
8. Cancellation and Destruction of Rights Certificates ................ 12
9. Reservation and Availability of Preferred Stock .................... 12
10. Preferred Stock Record Date ........................................ 14
11. Adjustment of Purchase Price, Number and Kinds of Shares or Number
of Rights ......................................................... 14
12. Certificate of Adjusted Purchase Price or Number of Shares ......... 24
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power ............................................................. 25
14. Additional Covenants ............................................... 28
15. Fractional Rights and Fractional Shares ............................ 28
16. Rights of Action ................................................... 29
17. Agreement of Right Holders Concerning Transfer and Ownership of
Rights ............................................................ 30
18. Rights Certificate Holder Not Deemed a Stockholder ................. 30
19. Concerning the Rights Agent ........................................ 31
20. Merger or Consolidation or Change of Name of Rights Agent .......... 31
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21. Duties of Rights Agent ............................................. 32
22. Change of Rights Agent ............................................. 33
23. Issuance of New Rights Certificates ................................ 34
24. Redemption ......................................................... 34
25. Notice of Certain Events ........................................... 35
26. Notices ............................................................ 36
27. Supplements and Amendments ......................................... 37
28. Successors ......................................................... 38
29. Benefits of This Agreement; Determinations and Actions by the Board
of Directors ...................................................... 38
30. Severability ....................................................... 39
31. Governing Law ...................................................... 39
32. Counterparts ....................................................... 39
33. Descriptive Headings ............................................... 39
34. Grammatical Construction ........................................... 39
Exhibit A -- Form of Certificate of Designation, Preferences and Rights
of Series B Junior Participating Preferred Stock
Exhibit B -- Form of Rights Certificate
Exhibit C -- Summary of Rights to Purchase Stock
<PAGE>
RIGHTS AGREEMENT
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THIS RIGHTS AGREEMENT (this "Agreement") is dated as of June 20, 1996,
between Material Sciences Corporation, a Delaware corporation (the "Company"),
and ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent").
W I T N E S S E T H
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WHEREAS, on June 20, 1996, the Board of Directors of the Company (i)
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each outstanding share of Common Stock, par value $0.02 per share,
of the Company (the "Common Stock") outstanding on July 2, 1996 (the "Effective
Date"), (ii) authorized and directed the issuance of one Right for each share of
Common Stock of the Company that shall become outstanding between the Effective
Date and the earlier of the Distribution Date and the Expiration Date (as such
terms are defined in Section 1 hereof), and (iii) authorized and directed the
issuance of one Right for each share of Common Stock of the Company that shall
become outstanding between the Distribution Date and the Expiration Date by
reason of the exercise of any option, warrant or conversion privilege contained
in any option, warrant, right or convertible security issued by the Company
prior to the Distribution Date, each Right representing the right to purchase a
Fractional Share (as such term is defined in Section 1) of Series B Junior
Participating Preferred Stock of the Company having the rights, powers and
preferences set forth in the form of Certificate of Designation, Preferences and
Rights attached hereto as Exhibit A, upon the terms and subject to the
conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
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, is (or has previously been,
at any time after the date of this Agreement, whether or not such Person(s)
continues to be) the Beneficial Owner of 20% or more of the shares of Common
Stock then outstanding (determined without taking into account any securities
exercisable or exchangeable for, or convertible into, Common Stock, other than
any such securities beneficially owned by the Acquiring Person and Affiliates
and Associates of such Person). However, "Acquiring Person" shall not include
any Exempt Person.
A Person shall not become an "Acquiring Person" solely as a result of
(i) an acquisition of the shares of Common Stock by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 20% or more of the shares of Common
Stock then outstanding as determined above, or (ii) such Person becoming the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding
as determined above solely as a result of an Exempt Event; provided, however,
that if a Person becomes the Beneficial Owner of 20% or more of the shares of
Common Stock then outstanding as determined above solely by reason of such a
share acquisition by the Company or the
<PAGE>
occurrence of such an Exempt Event and such Person shall, after becoming the
Beneficial Owner of such shares of Common Stock, become the Beneficial Owner of
any additional shares of Common Stock by any means whatsoever (other than as a
result of the subsequent occurrence of an Exempt Event, a stock dividend or a
subdivision of the shares of Common Stock into a larger number of shares or a
similar transaction), then such Person shall be deemed to be an "Acquiring
Person."
(b) "Adjustment Shares" shall have the meaning given to such term in
Section 11(a)(ii) of this Agreement.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement; provided, however,
that for purposes of this Agreement, the terms "Affiliate" and "Associate" shall
not include any Person that is an Exempt Person.
(d) Except as provided below, a Person is the "Beneficial Owner" of,
and "beneficially owns," any securities:
(i) which such Person or any Affiliate or Associate of such Person
beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right or obligation (whether
or not then exercisable or effective) to acquire pursuant to any
agreement, arrangement or understanding (whether or not in writing),
or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a Person
will not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by or
on behalf of such Person or any Affiliate or Associate of such Person
until such tendered securities are accepted for purchase or exchange;
and provided further, that prior to the occurrence of a Triggering
Event, a Person will not be deemed the Beneficial Owner of, or to
beneficially own, securities obtainable upon exercise of the Rights;
(iii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right (whether or not then
exercisable) to vote, or to direct the voting of, pursuant to any
agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, any security pursuant to this clause
(iii) if the agreement, arrangement or understanding to vote, or to
direct the voting of, such security (A) arises solely from a revocable
proxy or consent given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the Exchange
Act and applicable rules and regulations thereunder and (B) is not
also then reportable under Item 6 (or any comparable or successor
item) of Schedule 13D under the Exchange Act (or any comparable or
successor schedule or report);
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(iv) which such Person or any Affiliate or Associate of such
Person has "beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act or
any successor provision); or
(v) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate or Associate of such other Person with
whom such Person or any Affiliate or Associate of such Person has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in subparagraph (iii) of this Section
1(d)) or disposing of any securities of the Company.
Nothing in this Section 1(d) shall cause a Person engaged in business
as an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for
purposes of this Agreement, no Person shall be deemed the "Beneficial Owner" of,
or to "beneficially own," any securities owned by any other Person that is an
Exempt Person.
(e) "Business Combination" shall mean any of the transactions
described in clauses (i), (ii), (iii) or (iv) of Section 13(a) of this
Agreement.
(f) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the State of Illinois or the State of
New York are authorized or obligated by law or executive order to close.
(g) "Close of Business" shall mean on any given date 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.
(h) "Common Stock" shall mean the Common Stock, par value $0.02 per
share, of the Company (as the same may be changed by reason of any combination,
subdivision or reclassification of the Common Stock). "Common Stock" when used
with reference to any Person other than the Company shall mean the capital stock
or other equity interest with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person or, if such Person is a Subsidiary of another Person,
of the Person which ultimately controls such first-mentioned Person and which
has issued and outstanding such capital stock, equity securities or equity
interests.
(i) "Common Stock Equivalent" shall have the meaning given to such
term in Section 11(a)(iii) of this Agreement.
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(j) "Current Market Price" shall have the meaning given to such term
in Section 11(d) of this Agreement.
(k) "Disinterested Director" shall mean (i) any member of the
Company's Board of Directors who is not , while such Person is a member of the
Company's Board of Directors, an Acquiring Person or an Affiliate or Associate
of an Acquiring Person or a representative, designee or nominee of an Acquiring
Person or of any such Affiliate or Associate, and who was a member of the
Company's Board of Directors on the date of this Agreement, and (ii) any Person
who becomes a member of the Company's Board of Directors after the date of this
Agreement who is not, while such Person is a member of the Company's Board of
Directors, an Acquiring Person or an Affiliate or Associate of an Acquiring
Person or a representative, designee or nominee of an Acquiring Person or any
such Affiliate or Associate, if such Person's nomination or election, to the
Company's Board of Directors is recommended or approved by a majority of
Disinterested Directors then on the Company's Board of Directors.
(l) "Distribution Date" shall mean the earlier of (i) the tenth day
after the Stock Acquisition Date or (ii) the tenth day after the date (the
"Offer Date") of the commencement by any Person (other than an Exempt Person)
of, or first public disclosure of an intention to commence by any Person (other
than an Exempt Person), a tender offer or exchange offer the consummation of
which would result in any Person having beneficial ownership of 20% or more of
the then outstanding shares of Common Stock (including any Stock Acquisition
Date or Offer Date which is after the date of this Agreement and prior to the
issuance of the Rights).
(m) "Effective Date" shall have the meaning given to such term in the
preamble of this Agreement.
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute.
(o) "Exchange Date" shall mean the time at which the Rights are
exchanged pursuant to Section 11(a)(iv) of this Agreement.
(p) "Exchange Ratio" shall have the meaning given to such term in
Section 11(a)(iv) of this Agreement.
(q) "Exempt Event" shall mean with respect to any Person, the
acquisition by such Person of Beneficial Ownership of shares of Common Stock
solely as a result of the occurrence of a Triggering Event and the effect of
such Triggering Event on the last proviso of clause (ii) of the definition of
Beneficial Owner, other than a Triggering Event in which such Person becomes an
Acquiring Person.
(r) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the Company or of any Subsidiary
of the Company, and (iv) any Person holding Common Stock for any such employee
benefit plan or for employees of the
<PAGE>
Company or of any Subsidiary of the Company pursuant to the terms of any such
employee benefit plan.
(s) "Expiration Date" shall mean the earliest of (i) the Final
Expiration Date, (ii) the time all the Rights are redeemed as provided in
Section 24 of this Agreement and (iii) the time at which all Rights then
outstanding and exercisable are exchanged pursuant to Section 11(a)(iv) of this
Agreement.
(t) "Final Expiration Date" shall mean the Close of Business on July
1, 2006.
(u) "Fractional Share" shall mean one-one hundredth of a share of
Preferred Stock.
(v) "Person" shall mean any individual, firm, corporation,
partnership, joint venture, association, trust unincorporated organization or
other entity, and shall include any "group" as that term is used in Rule 13d-
5(b) under the Exchange Act (or any successor provision).
(w) "Preferred Stock" shall mean shares of Series B Junior
Participating Preferred Stock, par value $1.00 per share, of the Company.
(x) "Principal Party" shall have the meaning given to such term in
Section 13(b) of this Agreement.
(y) "Purchase Price" shall have the meaning given to such term in
Section 7(c) of this Agreement.
(z) "Redemption Price" shall have the meaning given to such term in
Section 24(a) of this Agreement.
(aa) "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor statute.
(bb) "Stock Acquisition Date" shall mean the first date (including,
without limitation, any such date which is on or after the date of this
Agreement and prior to the issuance of the Rights) of public announcement by the
Company, an Acquiring Person or otherwise that an Acquiring Person has become
such.
(cc) "Subsidiary" of any Person shall have the meaning given to such
term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act,
as in effect on the date of this Agreement.
(dd) "Summary of Rights" shall mean a summary of the Rights, in
substantially the form attached hereto as Exhibit C.
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(ee) "Trading Day" shall mean a day on which the principal United
States national securities exchange on which such security is listed or admitted
to trading is open for the transaction of business or, if such security is not
listed or admitted to trading on any United States national securities exchange,
but is traded in the over-the-counter market and reported by NASDAQ, then any
day for which NASDAQ reports the high bid and low asked prices in the over-the-
counter market, or if such security is not traded in the over-the-counter market
and reported by NASDAQ, then a Business Day.
(ff) "Triggering Event" shall mean when a Person becomes an Acquiring
Person.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
in accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such Co-
Rights Agents as it may deem necessary or desirable. In the event the Company
appoints one or more Co-Rights Agents, the respective duties of the Rights
Agents and any Co-Rights Agents shall be as the Company shall determine.
Section 3. Issuance of Rights Certificates. (a) Until the Distribution
Date: (i) the Rights will be issued in respect of and will be evidenced (subject
to the provisions of paragraph (c) of this Section 3) by the certificates
representing the shares of Common Stock issued and outstanding on the Effective
Date and shares of Common Stock issued after the Effective Date and prior to the
earlier of the Distribution Date and the Expiration Date (which certificates for
Common Stock shall be deemed also to be certificates evidencing the Rights) and
not by separate certificates, (ii) the registered holders of such shares of
Common Stock shall also be the registered holders of the Rights associated with
such shares, and (iii) the Rights will be transferable only in connection with
the transfer of the associated shares of Common Stock and the surrender for
transfer of any certificate for such shares of Common Stock shall also
constitute the surrender for transfer of the Rights associated with such shares.
As soon as practicable after the Distribution Date, the Rights Agent will send
by first-class, insured, postage prepaid mail, to each record holder of the
Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Rights
certificate, in substantially the form of Exhibit B hereto (individually the
"Rights Certificate" and collectively the "Rights Certificates"), evidencing one
Right (as adjusted from time to time pursuant to this Agreement) for each share
of Common Stock so held. As of and after the Distribution Date, the Rights will
be evidenced solely by the Rights Certificates. In the event that an adjustment
in the number of Rights per share of Common Stock has been made pursuant to
Section 11(n) of this Agreement, at the time of distribution of the Rights
Certificates, the Company may make the necessary and appropriate adjustments (in
accordance with Section 15(a) of this Agreement) so that Rights Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights.
(b) As soon as practicable following the Effective Date, the Company
will send a copy of a Summary of Rights by first-class, postage prepaid mail, to
each record holder of the Common Stock as of the Close of Business on the
Effective Date, at the address of such holder shown on the records of the
Company.
<PAGE>
(c) Certificates issued after the Effective Date representing shares
of Common Stock outstanding on the Effective Date or shares of Common Stock
issued after the Effective Date, but prior to the earlier of the Distribution
Date and the Expiration Date, shall be deemed also to constitute certificates
for Rights, and shall have impressed, printed, or written on, or otherwise
affixed to them a legend substantially in the following form:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Material Sciences
Corporation and ChaseMellon Shareholder Services, L.L.C. (the "Rights
Agent") dated as of June 20, 1996 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and a copy of which is on
file at the principal offices of Material Sciences Corporation. Under
certain circumstances, as set forth in the Rights Agreements, such Rights
will be evidenced by separate certificates and will no longer be evidenced
by this certificate. Material Sciences Corporation will mail to the holder
of this certificate a copy of the Rights Agreement without charge within
five days after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights that were, are
or become beneficially owned by Acquiring Persons or their Associates or
Affiliates (as such terms are defined in the Rights Agreement) may become
null and void and the holder of any such Rights (including any subsequent
holder) shall not have any right to exercise such Rights.
(d) In addition, in connection with the issuance or sale of shares of
Common Stock by the Company following the Distribution Date and prior to the
Expiration Date, the Company shall, with respect to Common Stock so issued or
sold pursuant to (i) the exercise of stock options issued prior to the
Distribution Date or under any employee plan or arrangement created prior to the
Distribution Date, or (ii) upon the exercise, conversion or exchange of
securities issued by the Company prior to the Distribution Date, issue Rights
and Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (x) no such
Rights and Rights Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued and (y) no such Rights
and Rights Certificates shall be issued, if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 4. Form of Rights Certificates. (a) The Rights Certificates
(and the forms of election to purchase shares and form of assignment to be
printed on the reverse thereof) shall each be substantially in the form set
forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or as
may be appropriate to conform to usage. Subject to the provisions of Section 11
and Section 23 hereof, the Rights Certificates, whenever issued, shall be dated
as of the Effective Date,
<PAGE>
and on their face shall entitle the holders thereof to purchase such number of
shares of Preferred Stock as shall be set forth therein at the Purchase Price,
but the number of such shares and the Purchase Price shall be subject to
adjustment as provided herein.
(b) Notwithstanding any other provision of this Agreement, (i) any
Rights Certificate issued pursuant to Section 3 of this Agreement that
represents Rights beneficially owned or formerly beneficially owned, on or after
the earlier of the Distribution Date and the Stock Acquisition Date, by a Person
known by the Company to be: (A) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person; (B) a direct or indirect transferee of an
Acquiring Person (or of an Associate or Affiliate of such Acquiring Person) who
becomes or becomes entitled to be a transferee after the Acquiring Person
becomes such; or (C) a direct or indirect transferee of an Acquiring Person (or
of an Associate or Affiliate of such Acquiring Person) who becomes or becomes
entitled to be a transferee prior to or concurrently with the Acquiring Person
becoming such and receives such Rights pursuant to either (x) a direct or
indirect transfer (whether or not for consideration) from the Acquiring Person
(or from an Associate or Affiliate of such Acquiring Person) to holders of
equity interests in such Acquiring Person (or to holders of equity interests in
an Associate or Affiliate of such Acquiring Person) or to any Person with whom
such Acquiring Person (or an Associate or Affiliate of such Acquiring Person)
has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (y) a direct or indirect transfer which a majority of the
Disinterested Directors (or, if no Disinterested Directors are then in office,
the Board of Directors of the Company) has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of Section 7(f) of this Agreement, or (ii) any Rights Certificate
issued pursuant to Section 6, 7(e), 11 or 23 of this Agreement upon transfer,
exchange, replacement or adjustment of any other Rights Certificate beneficially
owned by a Person referred to in this Section 4(b), shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and void
in the circumstances specified in Section 7(f) of the Rights
Agreement.
Section 5. Countersignature and Registration. (a) Each Rights
Certificate shall be executed on behalf of the Company by its Chairman and Chief
Executive Officer, President or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. Each
Rights Certificate shall be countersigned by the Rights Agent either manually
or, if permitted by the Company, by facsimile signature, and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates or who shall have attested the
Company's seal thereon shall cease to be such officer of the Company before
countersignature by
<PAGE>
the Rights Agent and issuance and delivery by the Company, such Rights
Certificates, nevertheless, may be countersigned by the Rights Agent and issued
and delivered by the Company with the same force and effect as though the person
who signed such Rights Certificates had not ceased to be such officer of the
Company; and any Rights Certificates may be signed on behalf of the Company and
the Company's seal may be attested by any Person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the Company
to sign such Rights Certificate, although at the date of the execution of this
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal corporate trust office, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the certificate number and the date of each of the Rights
Certificates.
Section 6. Transfer, Division, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Section 15 hereof, at any time after the Close of
Business on the Distribution Date, and at or prior to the Close of Business on
the Expiration Date, any Rights Certificate or Certificates may be transferred,
divided, combined or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number of
shares of Preferred Stock (or other securities, cash or other property,
following a Triggering Event or a Business Combination, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide, combine
or exchange any Rights Certificate or Rights Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Rights Certificates to be transferred, divided, combined or
exchanged at the principal corporate office of the Rights Agent. Thereupon the
Company will execute and the Rights Agent will countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. As a condition to such transfer, division, combination
or exchange, the Company may require payment by the surrendering holder of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection therewith. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have duly
completed and executed the form of assignment on the reverse side of such Rights
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or such former or proposed Beneficial Owner) thereof or
such Beneficial Owner's Affiliates or Associates as the Company shall reasonably
request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for
<PAGE>
countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the Expiration Date, a Fractional Share of
Preferred Stock, subject to adjustment from time to time as provided in Sections
11 and 13.
(b) The registered holder of any Rights Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Agreement) in
whole or in part (except that no fraction of a Right may be exercised) at any
time after the Distribution Date and prior to the Expiration Date upon surrender
of the Rights Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal corporate trust
office of the Rights Agent, together with payment of the Purchase Price for each
Fractional Share of Preferred Stock (or other securities, cash or other assets,
following a Triggering Event or a Business Combination, as the case may be) as
to which the Rights are exercised.
(c) The purchase price (the "Purchase Price") for each Fractional
Share of Preferred Stock pursuant to the exercise of a Right shall initially be
$70.00, subject to adjustment from time to time as provided in Sections 11 and
13 hereof, and shall be payable in lawful money of the United States of America
in accordance with paragraph (d) of this Section 7.
(d) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase contained therein duly executed,
accompanied by payment of the Purchase Price per Fractional Share of Preferred
Stock (or following a Triggering Event or a Business Combination, other
securities, cash or other assets, as the case may be) to be purchased and an
amount in cash, or by certified check or bank draft payable to the order of the
Company, equal to any applicable transfer tax (as determined by the Rights
Agent), the Rights Agent shall, subject to the provisions of this Agreement,
thereupon promptly (i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the total number of Fractional Shares of Preferred Stock (or
other securities, as the case may be) to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests, or
(B) if the Company shall have elected to deposit the shares of Preferred Stock
(or other securities, as the case may be) issuable upon exercise of the Rights
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of Fractional Shares of Preferred Stock (or
other securities, as the case may be) as are to be purchased (in which case
certificates for the Preferred Stock (or other securities, as the case may be)
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company shall direct the depositary agent to comply
with such request; (ii) promptly after receipt of such certificates or
depository receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder; (iii) when appropriate, requisition from
the Company the amount of cash, if any, to be paid in lieu of issuance of
fractional shares in accordance with Section 15; and
<PAGE>
(iv) when appropriate, after receipt promptly deliver such cash to or upon the
order of the registered holder of such Rights Certificate. In the event that the
Company is obligated to issue other securities (including shares of Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
this Agreement, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.
(e) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Company, countersigned by the Rights Agent and delivered to the
registered holder of such Rights Certificate or to his duly authorized assigns,
subject to the provisions of Section 6 and Section 15 hereof.
(f) Notwithstanding anything in this Agreement to the contrary, upon
the occurrence of a Triggering Event, any Rights that are beneficially owned by
(i) an Acquiring Person or an Affiliate or Associate of the Acquiring Person,
(ii) a direct or indirect transferee of an Acquiring Person (or of an Associate
or Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee after the Acquiring Person becomes such, or (iii) a direct or
indirect transferee of an Acquiring Person (or of an Associate or Affiliate of
such Acquiring Person) who becomes or becomes entitled to be a transferee prior
to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a direct or indirect transfer (whether or not for
consideration) from the Acquiring Person (or from an Associate or Affiliate of
such Acquiring Person) to holders of equity interests in such Acquiring Person
(or to holders of equity interests in any Associate or Affiliate of such
Acquiring Person) or to any Person with whom the Acquiring Person (or an
Associate or Affiliate of such Acquiring Person) has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a direct or
indirect transfer which a majority of the Disinterested Directors (or, if no
Disinterested Directors are then in office, the Board of Directors of the
Company) determines is part of a plan, arrangement or understanding which has as
a primary purpose or effect the avoidance of this Section 7(f), shall,
immediately upon the occurrence of a Triggering Event and without any further
action, shall become null and void and no holder of such Rights shall have any
rights whatsoever with respect to such Rights whether under this Agreement or
otherwise, provided, however, that, in the case of transferees under clause (ii)
or clause (iii) above, any Rights beneficially owned by such transferee shall be
null and void only if and to the extent such Rights were formerly beneficially
owned by a Person who was, at the time such Person beneficially owned such
Rights, or who later became, an Acquiring Person or an Affiliate or Associate of
such Acquiring Person. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(f) and Section 4(b) are complied with, but
shall have no liability to any holder of a Rights Certificate or to any other
Person as a result of the Company's failure to make, or any delay in making
(including any such failure or delay by the Disinterested Directors and/or the
Board of Directors of the Company) any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(g) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the
<PAGE>
registered holder of a Rights Certificate upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former or proposed Beneficial Owner) thereof or the
Affiliates or Associates of such Beneficial Owner (or former or proposed
Beneficial Owner) as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, division,
combination or exchange shall, if surrendered to the Company 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 Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire any other Rights Certificate purchased or otherwise acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available at all times out of its authorized and unissued shares of Preferred
Stock or its authorized and issued shares of Preferred Stock held in its
treasury (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares of Common Stock and/or other securities held in
its treasury), free from preemptive rights or any right of first refusal, a
sufficient number of shares of Preferred Stock (and, following the occurrence of
a Triggering Event, shares of Common Stock and/or other securities) that will
permit the exercise in full of all outstanding Rights.
(b) The Company further covenants and agrees, so long as the Preferred
Stock (and, following the occurrence of a Triggering Event, shares of Common
Stock and/or other securities) issuable upon the exercise of Rights may be
listed on any United States national securities exchange, to use its best
efforts to cause, from and after the time that the Rights become exercisable,
all such shares and/or other securities reserved for such issuance to be listed
on such exchange upon official notice of issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) delivered upon the exercise of
Rights shall, at the time of delivery of the certificates for such shares and/or
such other securities upon payment of the Purchase Price, be duly and validly
authorized and issued and fully paid and nonassessable shares, freely tradeable,
not subject to liens or
<PAGE>
encumbrances, and free of preemptive rights, rights of first refusal or any
other restrictions or limitations on the transfer or ownership thereof, of any
kind or nature whatsoever.
(d) The Company further covenants and agrees that, subject to Sections
6 and 7(d), that it will pay when due and payable any and all federal and state
original issue or transfer taxes and charges which may be payable in respect of
the original issuance or delivery of the Rights Certificates or of any
certificates for a number of Fractional Shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to (i) pay any transfer tax which
may be payable in respect of any transfer involved in the issuance or delivery
of any Rights Certificates or the issuance or delivery of any certificates for a
number of Fractional Shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) to a Person other than, or in a name other than
that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or (ii) transfer or deliver any Rights Certificate or
issue or deliver any certificates for a number of Fractional Shares of Preferred
Stock (or Common Stock and/or other securities as the case may be) upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
(e) The Company shall use its best efforts (i) as soon as practicable
following a Triggering Event (provided the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) of this Agreement), or as soon as is required by law
following the Distribution Date, as the case may be, to prepare and file a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (ii) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which Rights are no longer exercisable
for such securities and (B) the Expiration Date. The Company shall also use its
best efforts to take such action as may be necessary or appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercise of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date of a
Triggering Event described in clause (i) of the first sentence of this paragraph
9(e), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall make a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until any required
registration statement has been declared effective.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for a number of Fractional Shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such shares (fractional or otherwise) of Preferred Stock (or Common
<PAGE>
Stock and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (and/or such other securities, as the case may be) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open.
Section 11. Adjustment of Purchase Price, Number and Kinds of Shares
or Number of Rights. The Purchase Price, the number and kinds of shares or other
securities, cash and other property obtainable upon exercise of each Right and
the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a)(i) In the event the Company shall at any time on or after the date
of this Agreement (A) declare a dividend or make a distribution on the
Preferred Stock payable in shares of Preferred Stock, (B) subdivide (by a
stock split or otherwise) the outstanding shares of Preferred Stock into a
larger number of shares, (C) combine (by a reverse stock split or
otherwise) the outstanding shares of Preferred Stock into a smaller number
of shares or (D) issue any securities in a reclassification of the
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then in each such event, except as otherwise provided in this
Section 11(a), the Purchase Price as is in effect on the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification, and the number and kinds of shares of
capital stock issuable thereafter pursuant to the exercise of the Rights,
shall be proportionately adjusted so that the holder of any Right exercised
after such date shall be entitled to receive, upon payment of the Purchase
Price then in effect, the aggregate number and kinds of shares of capital
stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of the Company
were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification. 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) Subject to Sections 11(a)(iv) and 24, upon the first occurrence
of a Triggering Event, proper provision shall be made so that each holder
of a Right, except as provided below in Sections 11(a)(iii) and in Section
7(f) hereof, shall thereafter have a right to receive, and the Company
shall issue, upon exercise thereof at the then current Purchase Price
required to be paid to exercise a Right in accordance with the terms of
this Agreement, in lieu of shares of Preferred Stock or other securities
receivable upon exercise of a Right prior to the occurrence of a Triggering
Event, such number of shares of Common Stock of
<PAGE>
the Company as shall equal the result obtained by (x) multiplying the then-
current Purchase Price by the then number of Fractional Shares of Preferred
Stock or other securities for which a Right is then exercisable (without
giving effect to such Triggering Event) and dividing that product by (y)
50% of the Current Market Price per share of the Common Stock (determined
pursuant to Section 11(d)) on the date of such first occurrence of a
Triggering Event (such number of shares being referred to as the
"Adjustment Shares"); provided, however, that if the transaction or event
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). Upon the occurrence of such Triggering Event, the
Purchase Price required to be paid in order to exercise a Right shall be
unchanged, and the Purchase Price shall be appropriately adjusted to
reflect, and shall thereafter mean, the amount required to be paid per
share of Common Stock upon exercise of a Right.
(iii) In lieu of issuing shares of Common Stock in accordance with
Section 11(a)(ii), the Company may, if a majority of the Disinterested
Directors (or if no Disinterested Directors are then in office, the Board
of Directors of the Company) determine that such action is necessary or
appropriate and not contrary to the interests of holders of Rights (and, in
the event that the number of shares of Common Stock which are authorized by
the Company's certificate of incorporation but which are not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights,
are not sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii), the Company shall) use its best efforts
to take one or more of the following actions: (A) reduce the Purchase Price
required to be paid in order to exercise a Right by any amount (the
"Reduction Amount"), in which event the number of Adjustment Shares and/or
the amount of any Substitute Consideration (as hereinafter defined)
issuable in respect of each Right (the Adjustment Shares, if any, and the
Substitute Consideration, if any, issuable in respect of a Right are herein
collectively referred to as the "Total Consideration") shall be reduced so
that the aggregate value of the Total Consideration issuable in respect of
each Right is equal to the Current Value (as hereinafter defined) less the
Reduction Amount (herein the "Adjusted Current Value"), and/or (B) make
adequate provision with respect to each Right to substitute for all or part
of the Adjustment Shares otherwise obtainable upon exercise of a Right: (1)
cash, (2) other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock (including,
without limitation, the Preferred Stock) which a majority of the
Disinterested Directors (or if no Disinterested Directors are then in
office, the Board of Directors of the Company) have determined to have the
same value as shares of Common Stock (such shares or units of preferred
stock being referred to as "Common Stock Equivalents"), (3) debt securities
of the Company, (4) other assets, or (5) any combination of the foregoing
(collectively, "Substitute Consideration"), having an aggregate value
which, when added to the value of the Adjustment Shares (if any) in respect
of which no substitution is being made, is equal to the Adjusted Current
Value. If a majority of the Disinterested Directors (or if no Disinterested
Directors are then in office, the Board of Directors) determine to issue or
deliver any equity securities (other than Common Stock or Common Stock
Equivalents), debt securities and/or other assets pursuant to this
<PAGE>
Section 11(a)(iii), the value of such securities and/or assets shall be
determined by a majority of the Disinterested Directors (or if no
Disinterested Directors are then in office, the Board of Directors of the
Company) based upon the advice of a nationally recognized investment
banking firm selected by a majority of the Disinterested Directors (or if
no Disinterested Directors are then in office, the Board of Directors of
the Company). If the Company is required to make adequate provision to
deliver value pursuant to the first sentence of this Section 11(a)(iii) and
the Company shall not have made such adequate provision to deliver value
within ninety (90) days following the first occurrence of a Triggering
Event (the "Substitution Period"), then notwithstanding any provision of
Section 11(a)(ii) or this Section 11(a)(iii) to the contrary, the Company
shall be obligated to deliver, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the excess of the Current Value over
the Purchase Price. If both Common Stock and cash are to be delivered
pursuant to the preceding sentence, amounts of both Common Stock and cash
shall be delivered upon surrender of each Right in a ratio of Common Stock
to cash that bears the same ratio as the total value of all Common Stock to
be delivered (as determined pursuant to this Section 11(a)(iii)) bears to
the total value of all cash to be delivered; provided, however, that the
Company may adjust such ratio to avoid issuing any fractional shares of
Common Stock so long as the method of adjustment is applied consistently to
each holder of Rights entitled to receive value thereon pursuant to this
Section 11(a)(iii). To the extent that the Company determines that some
action is to be taken pursuant to the first and/or third sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(f)
hereof, that such action shall apply uniformly to all outstanding Rights,
and (y) may suspend the exercisability of the Rights but in no event to a
time later than the expiration of the Substitution Period. In the event of
any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer
in effect. Upon any change in the Adjustment Shares obtainable upon
exercise of a Right pursuant to this Section 11(a)(iii), the Purchase Price
shall thereafter mean the amount, if any, required to be paid upon exercise
of a Right for the Adjustment Shares, if any, and the Substitute
Consideration, if any, then issuable or deliverable upon exercise of a
Right, and a majority of the Disinterested Directors (or if no
Disinterested Directors are then in office, the Board of Directors of the
Company) shall make any necessary provisions to ensure that the provisions
of Section 11(f) shall thereafter apply as appropriate to the Total
Consideration. For purposes of this Section 11(a)(iii), (A) "Current Value"
shall be the product derived by multiplying (x) the number of Adjustment
Shares issuable in respect of each Right determined under Section
11(a)(ii), by (y) the Current Market Price per share of Common Stock on the
date of the Triggering Event, and (B) the value of each share of Common
Stock and each share or unit of any "Common Stock Equivalent" shall be
deemed conclusively to be equal to the Current Market Price per share of
the Common Stock on the date of the Triggering Event.
(iv) A majority of the Disinterested Directors (or if no Disinterested
Directors are then in office, the Board of Directors of the Company) may,
at their option, at any time and
<PAGE>
from time to time after the first occurrence of a Triggering Event, cause
the Company to exchange, for all or part of the then-outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(f) hereof), shares of Common Stock
or Common Stock Equivalents or any combination thereof, at an exchange
ratio of one share of Common Stock or such number of Common Stock
Equivalents or units representing fractions thereof as would be deemed to
have the same value as one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Any partial exchange
shall be effected on a pro rata basis based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section
7(f) hereof) held by each holder of Rights.
Immediately upon the effectiveness of the action of a majority of the
Disinterested Directors (or if no Disinterested Directors are then in office,
the Board of Directors of the Company) ordering the exchange of any Rights
pursuant to this Section 11(a)(iv) (the effectiveness of which action may be
conditioned on the occurrence of one or more events or on the existence of one
or more facts or may be effective at some future time) and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock and/or Common Stock Equivalents equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange and in
addition, the Company shall promptly mail a notice of any such exchange to all
of the holders of such Rights in accordance with Section 25 of this Agreement;
provided, however, that the failure to give, any delay in giving or any defect
in, such notice shall not affect the validity of such exchange. Each such
notice of exchange will state the method by which the exchange of the shares of
Common Stock or Common Stock Equivalents 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 as nearly pro rata as possible based upon
the number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(f) hereof) held by each holder of Rights. In the event
that the number of shares of Common Stock and/or Common Stock Equivalents that
are authorized by the Company's certificate of incorporation but not outstanding
or reserved for issuance for a purpose other than exercise of the Rights is not
sufficient to permit any exchange of Rights as contemplated in accordance with
this Section 11(a)(iv), the Board of Directors of the Company shall take all
such action within its power as may be necessary to authorize additional shares
of Common Stock and/or Common Stock Equivalents for issuance upon exchange of
the Rights. The Company shall not be required to issue fractions of shares of
Common Stock or Common Stock Equivalents or to distribute certificates or scrip
which evidence fractional shares of Common Stock or Common Stock Equivalents.
In lieu of such fractional shares of Common Stock or Common Stock Equivalents,
the Company shall pay to the registered holders of the Rights with regard to
which such fractional shares of Common Stock or Common Stock Equivalents would
otherwise be issuable an amount in cash equal to the product derived by
multiplying (x) the subject fraction, by (y) the last sale price of the
Company's Common Stock on the Trading Day immediately prior to the public
announcement of the exchange by the Company, or, in case no such sale takes
place on such day, the average of
<PAGE>
the closing bid and asked prices on such day, in either case on a when issued
basis (taking into account the exchange), as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NYSE (or, if the Company's Common Stock is not so
listed or traded, then at the Current Market Price as determined in accordance
with Section 11(d), adjusted to take into account the exchange). For the
purposes of this Section 11(a)(iv) the value of any Common Stock Equivalent on
any date shall be the same as the value of the Common Stock, as determined
pursuant to the previous sentence, on such date.
(b) If the Company shall at any time on or after the date of this
Agreement fix a record date for the issuance of rights, options or warrants to
holders of Preferred Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase Preferred
Stock (or shares having the same rights, privileges and preferences as the
shares of Preferred Stock ("equivalent preferred stock")) or securities
convertible into Preferred Stock or equivalent preferred stock at a price per
share of Preferred Stock or per share of equivalent preferred stock (or having a
conversion price per share, if a security convertible into Preferred Stock or
equivalent preferred stock) less than the Current Market Price (determined
pursuant to Section 11(d)) per share of Preferred Stock on such record date, the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of shares of Preferred
Stock and equivalent preferred stock (if any) outstanding on such record date,
plus the number of shares of Preferred Stock (or equivalent preferred stock, as
the case may be) which the aggregate exercise and/or conversion price for the
total number of shares of Preferred Stock and/or equivalent preferred stock, as
the case may be, which are obtainable upon exercise and/or conversion of such
rights, options, warrants or convertible securities would purchase at such
Current Market Price and the denominator of which shall be the number of shares
of Preferred Stock and equivalent preferred stock (if any) outstanding on such
record date, plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock, as the case may be) which may be obtained upon
exercise and/or conversion of such rights, options, warrants or convertible
securities. 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 reasonably and with good faith to the holders
of Rights by a majority of the Disinterested Directors (or, if no Disinterested
Directors are then in office, by the Board of Directors of the Company), whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent. Shares of Preferred Stock and equivalent
preferred stock owned by or held for the account of the Company or any
Subsidiary of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued following such adjustment, the Purchase Price shall be readjusted
to be the Purchase Price which would have been in effect if such record date had
not been fixed.
(c) If the Company shall at any time after the date of this Agreement
fix a record date for the making of a distribution to holders of Preferred Stock
(including any such distribution made in connection with reclassification of the
Preferred Stock or a consolidation or merger in which the Company is the
continuing or surviving corporation) of securities (other than Preferred
<PAGE>
Stock and rights, options or warrants referred to in Section 11(b)), cash (other
than a regular periodic cash dividend at an annual rate not in excess of: (x)
125% of the annual rate of the last regular periodic cash dividend paid on the
Preferred Stock during the immediately preceding fiscal year (or, if the
Preferred Stock was not outstanding during such preceding fiscal year, then 125%
of the annual rate of the regular periodic cash dividend paid on the Common
Stock during such year), or (y) in the event that a regular cash dividend was
not paid on the Preferred Stock (or Common Stock) during such preceding fiscal
year, 5% of the Current Market Price of the Preferred Stock (as determined
pursuant to Section 11(d)) on the date such regular cash dividend was first
declared), property, evidences of indebtedness, or assets, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Market Price (determined pursuant to
Section 11(d)) per share of Preferred Stock on such record date, less the fair
market value (as determined reasonably and with good faith to the holders of
Rights by a majority of the Disinterested Directors (or if no Disinterested
Directors are then in office, by the Board of Directors of the Company), whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent) of such securities, cash, property, assets
or evidences of indebtedness to be so distributed in respect of one share of
Preferred Stock, and the denominator of which shall be such Current Market Price
per share of the Preferred Stock on such record date. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that
such distribution is not made following such adjustment, 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)(i) The "Current Market Price" per share of Common Stock on any
date shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the 30 consecutive Trading Days immediately
prior to such date for the purpose of any computation under this Agreement,
except computations made pursuant to Section 11(a)(iv), and for the Trading
Day immediately prior to such date for the purpose of any computation under
Section 11(a)(iv); provided, however, that in the event that the Current
Market Price per share of Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of (1) a
dividend or distribution on such Common Stock other than a regular
quarterly cash dividend or (2) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
30 Trading Day period or one Trading Day period as set forth above after
the "ex-dividend" date for such dividend or distribution or the record date
for such, subdivision, combination or reclassification, then, and in each
such case, the "Current Market Price" per share shall be properly adjusted
to take into account such dividend, distribution, subdivision, combination
or reclassification. The closing price for each Trading Day shall be the
last sale price, regular way, on such day, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, on such day, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted
to trading on the New York Stock Exchange or, if the shares of Common Stock
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal United States national
securities exchange on which the shares of Common Stock
<PAGE>
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any United States national securities
exchange, the last quoted sale price on such day or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market
on such day, as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ") or such other system then in
use, or, if on any such date the shares of Common Stock are not quoted by
any such organization, the average of the closing bid and asked prices on
such day as furnished by a professional market maker making a market in the
Common Stock selected by a majority of the Disinterested Directors (or if
no Disinterested Directors are then in office, the Board of Directors of
the Company) shall be used. If the Common Stock is not publicly held or not
so listed or traded, "Current Market Price" per share shall mean the fair
value per share on each day of the 30-day period or one-day period, as
applicable, as determined reasonably and with good faith to the holders of
Rights by a majority of the Disinterested Directors (or if no Disinterested
Directors are then in office, the Board of Directors of the Company), or
the Board of Directors of the issuer of such Common Stock, whose
determination shall be described in a statement filed with the Rights Agent
and shall be binding and conclusive for all purposes.
(ii) The "Current Market Price" per share (or Fractional Share) of the
Preferred Stock or equivalent preferred stock shall be determined in the
same manner as set forth above for the Common Stock in clause (i) of this
Section 11(d) (other than the last sentence thereof) except as provided by
the next sentence. If the "Current Market Price" per share (or Fractional
Share) of Preferred Stock or equivalent preferred stock cannot be
determined in the manner provided above (other than the last sentence
thereof), the "Current Market Price" per share (or Fractional Share) of the
Preferred Stock or equivalent preferred stock shall be conclusively deemed
to be an amount equal to the product of (x) the number one divided by the
number of shares of Preferred Stock then constituting a Fractional Share
(as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common
Stock occurring after the date of this Agreement) and (y) the Current
Market Price per share of Common Stock. If neither the Common Stock nor the
Preferred Stock (or equivalent preferred stock) is publicly held or so
listed or traded, "Current Market Price" per share (or Fractional Share) of
Preferred Stock (or equivalent preferred stock) shall mean the fair market
value per share as determined reasonably and with good faith to the holders
of Rights by a majority of the Disinterested Directors (or, if no
Disinterested Directors are then in office, the Board of Directors of the
Company), whose determination shall be described in a statement filed with
the Rights Agent and shall be final, binding and conclusive for all
purposes. For all purposes of this Agreement, the Current Market Price of a
Fractional Share of Preferred Stock shall be equal to the Current Market
Price of one share of Preferred Stock multiplied by the number of shares of
Preferred Stock then constituting a Fractional Share.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by
<PAGE>
reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment; and provided
further, that any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction which
mandates such adjustment or (ii) the Expiration Date. All calculations under
this Section 11 shall be made to the nearest cent or to the nearest ten-
thousandth of a share of Common Stock or to the nearest ten-thousandth of a
share of Preferred Stock, as the case may be.
(f) If, as a result of an adjustment made pursuant to any provision of
Section 11(a) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any securities of the Company other than shares
of Preferred Stock, thereafter the Purchase Price and the number of such other
securities 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 shares of Preferred Stock
contained in this Section 11 and the provisions of Sections 7, 9, 10, 13 and 15
hereof with respect to the shares of Preferred Stock shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Fractional Shares of
Preferred Stock or other securities, cash or other property purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(a)(i), 11(b) and 11(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 Fractional
Shares of Preferred Stock (calculated to the nearest one ten-thousandth of a
Fractional Share of Preferred Stock) obtained by (i) multiplying (x) the number
of Fractional Shares of Preferred Stock 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.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price (or any adjustment to the number of shares of Preferred Stock
for which a Right may be exercised) to adjust the number of Rights, in
substitution for any adjustment in the number of Fractional Shares of Preferred
Stock purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment in the number of Rights shall be exercisable for the
number of Fractional Shares of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right outstanding prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. Such record date
<PAGE>
may be the date on which the Purchase Price is adjusted or any day thereafter,
but if the Rights Certificates have been issued shall be at least 10 days after
the date of such public announcement. If Rights Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of Rights Certificates on such record date a new Rights Certificate
evidencing, subject to Section 15 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number or kind of shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per Fractional Share of Preferred Stock and the number of
Fractional Shares of Preferred Stock which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value, if any, or the stated capital of
the number of Fractional Shares of Preferred Stock or the number of shares of
Common Stock or other securities issuable upon exercise of the Rights, the
Company shall take any corporate action which the Company may determine, in its
sole discretion, to be necessary in order that the Company may validly and
legally issue fully paid and nonassessable such number of Fractional Shares of
Preferred Stock or such number of shares of Common Stock 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 Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the shares of Preferred Stock and other securities, cash or property of the
Company, if any, issuable upon such exercise over and above the shares of
Preferred Stock and other securities, cash or property of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares (fractional or otherwise) or other securities,
cash or property upon the occurrence of the event requiring such adjustment.
(m) Anything to the contrary in this Section 11 notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that the Company in its sole discretion shall determine to be
advisable in order that any combination or subdivision of the Preferred Stock,
<PAGE>
issuance wholly for cash or any shares of Preferred Stock at less than the
Current Market Price, issuance wholly for cash or shares of Preferred Stock or
securities which by their terms are convertible into or exchangeable or
exercisable for shares of Preferred Stock, stock dividends or issuance of
rights, options or warrants referred to hereinabove in this Section 11 hereafter
made by the Company to holders of its Preferred Stock shall not be taxable to
such stockholders.
(n) In the event the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare a dividend or
distribution on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding shares of Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares or (iv)
issue any shares of its capital stock in a reclassification of the outstanding
Common Stock, then in any such case (x) the number of Fractional Shares of
Preferred Stock purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of Fractional Shares of Preferred
Stock so purchasable immediately prior to such event by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, (y) the
Purchase Price following such adjustment shall be determined by multiplying the
Purchase Price in effect immediately prior to such event by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (z) each
share of Common Stock outstanding immediately after such event shall have issued
with respect thereto such number of Rights as each outstanding share of Common
Stock immediately prior to such event had issued with respect to it. The
adjustments provided for in this Section 11(n) shall be made successively
whenever such a dividend is declared or paid or such a subdivision, combination
or reclassification is effected. If an event occurs which would require an
adjustment under Section 11(a)(ii) and this Section 11(n), the adjustment
provided for in this Section 11(n) shall be in addition and prior to any
adjustment required pursuant to Section 11(a)(ii). For example, if the Company
effects a two-for-one stock split at a time when each Right (if it becomes
exercisable) would entitle the holder to purchase one Fractional Share of
Preferred Stock for a Purchase Price of $"Z", then following such stock split
each previous Right would be split into two current Rights and thereafter each
current Right, upon becoming exercisable, would (subject to further adjustment)
entitle the holder to purchase one-half of a Fractional Share of Preferred Stock
or one two-hundredth of a share of Preferred Stock at a Purchase Price of 1/2 x
$"Z."
(o) The Company covenants and agrees that it shall not at any time
that there is an Acquiring Person, (i) consolidate with, (ii) merge with or
into, (iii) effect a share exchange, or (iv) directly or indirectly sell, lease,
exchange, mortgage, pledge, or otherwise transfer or dispose of (in one
transaction or a series of related transactions) assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries taken as a whole, to any other Person if (A) at the time of or
immediately after such consolidation, merger, share exchange, sale, lease,
exchange, mortgage, pledge, transfer or disposition there are any rights,
warrants, securities or other instruments or securities of the Company or any
other Person outstanding or agreements, arrangements or understandings in effect
which would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights, (B) prior to,
<PAGE>
simultaneously with or immediately after such consolidation, merger, share
exchange, sale, lease, exchange, mortgage, pledge, transfer or disposition, the
stockholders (or equity holders) of the Person who constitutes, or would
constitute, the Principal Party in such transaction shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
or Associates or (C) the identity, form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights or
otherwise diminish substantially or eliminate the benefits intended to be
afforded by the Rights. The Company shall not consummate any such
consolidation, merger, share exchange, sale, lease, exchange, mortgage, pledge,
transfer or disposition unless prior thereto the Company and such other Person
shall have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this Section 11(o).
(p) The Company covenants and agrees that, after the Stock Acquisition
Date it will not, except as permitted by Section 11(a)(iv), 27 or 30(b) of this
Agreement, take (or permit any Subsidiary to take) any action if the purpose of
such action is to, or if at the time such action is taken it is reasonably
foreseeable that such action will, directly or indirectly, diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Rights Certificate (or, if no Rights
Certificates have been issued to each holder of a certificate representing
shares of Common Stock), in each case in accordance with Section 26 hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such. Any adjustment to be made pursuant to Sections 11 and 13
shall be effective as of the date of the event giving rise to such adjustment.
The Rights Agent shall be fully protected in relying on any such certificate and
on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, from and after the time of the occurrence
of a Triggering Event, directly or indirectly, (i) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction that complies with Sections 11(o) and 11(p) of this
Agreement) and the Company shall not be the continuing or surviving corporation
of such consolidation or merger, (ii) any Person (other than a Subsidiary of the
Company in a transaction that complies with Sections 11(o) and 11(p) of this
Agreement) shall consolidate with, or merge with and into, the Company and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of the Company or any other Person or cash or any
other property, (iii) the Company shall effect a share exchange in which all or
part of the Common Stock shall be changed (including, without limitation, any
conversion into or exchange for securities of any other Person, cash or any
other property), or (iv) the Company shall sell, lease, exchange, mortgage,
pledge or otherwise
<PAGE>
transfer or dispose of (or one or more of its Subsidiaries shall sell, lease,
exchange, mortgage, pledge or otherwise transfer or dispose of), in one or more
transaction or series of related transactions, other than in the ordinary course
of business, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company or any of its Subsidiaries in
one or more transactions each and all of which comply with Sections 11(o) and
11(p) of this Agreement), then, and in each such case, proper provision shall be
made so that each holder of a Right, except as provided in Section 7(f) hereof,
shall thereafter have the right to receive, upon the exercise thereof at the
Purchase Price in effect immediately prior to the first occurrence of a
Triggering Event in accordance with the terms of this Agreement, such number of
shares of freely tradeable Common Stock of the Principal Party (as such term is
hereinafter defined), free and clear of liens, encumbrances or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the Purchase
Price in effect immediately prior to the first occurrence of a Triggering Event
by the number of Fractional Shares of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Triggering Event and
dividing that product by (2) 50% of the Current Market Price per share of the
Common Stock of such Principal Party (determined pursuant to Section 11(d)
hereof) immediately prior to the consummation of such Business Combination;
provided that the Purchase Price and the number of shares of Common Stock of
such Principal Party issuable upon exercise of each Right shall be further
adjusted to reflect any events occurring after the date of such first occurrence
of a Triggering Event or after the date of such Business Combination, as
applicable. After the consummation of any Business Combination, (A) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Business Combination without the necessity of any further act, all the
obligations and duties of the Company pursuant to this Agreement; (B) the term
"Company" shall thereafter be deemed to refer to such Principal Party, it being
specifically intended that the provisions of Section 11 hereof shall apply to
such Principal Party; and (C) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its Common Stock in accordance with Section 9 hereof) in connection with such
consummation of such Business Combination as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clauses (i), (ii) or
(iii) of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which shares of Common Stock of the Company
are converted or for which they are exchanged in such transaction, or if
there is more than one such issuer, the issuer of Common Stock with the
greatest aggregate market value, or (B) if no securities are so issued, (x)
the Person that survives or results from such transaction or if there is
more than one such Person, the Person having Common Stock with the greatest
aggregate market value or (y) if the Person that is the other party to the
merger does not survive the merger, the Person that does survive the merger
(including the Company if it survives); and
<PAGE>
(ii) in the case of any transaction described in clause (iv) 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 or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or
earning power so transferred, or if the Person receiving the greatest
portion of the assets or earning power cannot be determined, the Person
having Common Stock with the greatest market value;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, "Principal Party" shall refer to such other Person; (2)
in case such Person is a Subsidiary, directly or indirectly, of more than one
Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value; and (3)
if the Common Stock of none of such other Persons has been so registered,
"Principal Party" refers to whichever of such other Persons (other than an
individual) is the Person which has the equity securities with the greatest
aggregate market value. 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 above apply to each of the
chains of ownership having an interest in such joint venture as if such Person
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 Section 13 in
the same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any Business Combination unless
prior thereto: (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance (other than shares reserved for issuance pursuant to this Agreement to
the holders of Rights) to permit the exercise in full of the Rights in
accordance with this Section 13; (ii) the Company, the Principal Party and each
other Person who is a party to such Business Combination shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that the terms
and obligations of this Section 13 will be promptly performed and that such
Business Combination will not result in a default or event of default by the
Principal Party under this Agreement or any other instrument and further
providing that, as soon as practicable after the date of such Business
Combination mentioned in paragraph (a) of this Section 13, the Principal Party
at its own expense will:
(A) prepare and file, if necessary, a registration statement on an
appropriate form under the Securities Act, with respect to the Rights and
the securities purchasable upon exercise of the Rights, will use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date,
<PAGE>
(B) use its best efforts to qualify or register the securities
purchasable upon exercise of the Rights under the blue sky laws of such
jurisdictions as may be necessary or appropriate,
(C) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
material respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act,
(D) use its best efforts to list the Rights and the securities
purchasable upon exercise of the Rights on a United States national
securities exchange, and
(E) obtain waivers of any rights of first refusal or preemptive rights
in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights;
(iii) the Company and the Principal Party shall have furnished to the Rights
Agent an opinion of independent counsel stating that such supplemental agreement
is a legal, valid and binding agreement of the Principal Party enforceable
against the Principal Party in accordance with its terms; and (iv) the Company
and the Principal Party shall have filed with the Rights Agent a certificate of
a nationally recognized firm of independent accountants setting forth the number
of shares of Common Stock of such issuer which may be purchased upon the
exercise of each Right after the consummation of such Business Combination.
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall be
consummated at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable for
the consideration and in the manner described in Section 13(a). Following a
Business Combination, the provisions of Section 11(a)(ii) of this Agreement
shall be of no effect. Without limiting the generality of this Section 13, in
the event the nature of the organization of any Principal Party shall preclude
or limit the acquisition of Common Stock of such Principal Party upon exercise
of the Rights as required by Section 13(a) as a result of a Business
Combination, it shall be a condition to such Business Combination that such
Principal Party shall take such steps (including, but not limited to, a
reorganization) as may be necessary to ensure that the benefits intended to be
derived under this Section 13 upon the exercise of the Rights are assured to the
holders thereof.
Section 14. Additional Covenants. Notwithstanding any other provision
of this Agreement, no adjustment to the Purchase Price, the number of Fractional
Shares of Preferred Stock or other securities, cash or other property for which
a Right is exercisable or the number of Rights outstanding associated with each
share of Common Stock or any similar or other adjustment shall be made or be
effective if such adjustment would have the effect of reducing or limiting the
benefits the holders of the Rights would have had absent such adjustment,
including, without limitation, the benefits under Section 11(a) and Section 13,
unless the terms of this Agreement are amended so as to preserve such benefits.
<PAGE>
Section 15. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractional Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional Rights
the Company may at its option pay to the registered holders of the Rights
Certificates with respect to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the Current Market
Price of a whole Right. For the purposes of this Section 15(a), the Current
Market Price of a whole Right shall be the closing price of a Right for the
Trading Day immediately prior to the date on which such fractional Right would
have been otherwise issuable. The closing price of the Rights for any Trading
Day shall be the last sale price on such day, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, on such day, 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 United States 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 United States national securities exchange, the last
quoted sale price on such day or, if not so quoted, the average of the high bid
and low asked prices on such day 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 system, the average of the closing bid and asked prices
on such day as furnished by a professional market maker making a market in the
Rights selected by a majority of the Disinterested Directors (or if no
Disinterested Directors are then in office, the Board of Directors of the
Company). If on any such date no such market maker is making a market in the
Rights, the Current Market Price of a whole Right shall mean fair value of the
Rights on such date as determined reasonably and with good faith to the holders
of Rights by a majority of the Disinterested Directors (or if no Disinterested
Directors are then in office, the Board of Directors of the Company) whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding and conclusive for all purposes.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of a
Fractional Share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of a Fractional Share of
Preferred Stock). Fractions of shares of Preferred Stock may, at the election of
the Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Stock. In lieu of fractional shares of
Preferred Stock that are not integral multiples of a Fractional Share of
Preferred Stock, the Company may at its option (i) issue scrip or warrants in
registered form (either represented by a certificate or uncertificated) or in
bearer form (represented by a certificate) which shall entitle the holder to
receive a full Fractional Share of Preferred Stock upon the surrender of such
scrip or warrants aggregating a full Fractional Share of Preferred Stock, or
(ii) pay to the registered holders of Rights Certificates at the time such
Rights Certificates are exercised as provided in this Agreement an amount in
cash equal to the same fraction of the Current Market Price of a share of
Preferred Stock. For purposes of this
<PAGE>
Section 15(b), the Current Market Price of one share of Preferred Stock shall be
the closing price of one share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or Common Stock Equivalents or to distribute certificates which
evidence fractional shares of Common Stock or Common Stock Equivalents. In lieu
of such fractional shares of Common Stock or Common Stock Equivalents, the
Company may at its option pay to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock or
Common Stock Equivalents would otherwise be issuable an amount in cash equal to
the product derived by multiplying (x) the subject fraction, by (y) Current
Market Price of the Company's Common Stock (as determined pursuant to Section
11(d)).
(d) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right ( except as otherwise provided in this Agreement).
Section 16. Rights of Action. Except as otherwise provided in this
Agreement, all rights of action in respect of this Agreement are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his rights to exercise the Rights in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement. Holders of Rights shall be entitled to recover the reasonable costs
and expenses, including attorneys' fees, incurred by them in any action to
enforce the provisions of this Agreement.
Section 17. Agreement of Right Holders Concerning Transfer and
Ownership of Rights. Every holder of a Right, by accepting the same, consents
and agrees with the Company and the Rights Agent and with every other holder of
a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent and only if
surrendered at the principal corporate trust office of the Rights Agent, duly
endorsed or accompanied by a proper instrument of transfer; and
<PAGE>
(c) the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Common Stock certificate
made by anyone other than the Company, the transfer agent for the Common Stock
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
Section 18. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, exercise
any preemptive rights, receive dividends or distributions or be deemed for any
purpose the holder of the shares of Preferred Stock or any other securities,
cash or other property which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company, including, without
limitation, any right (i) to vote for the election of directors or upon any
matter submitted to a vote of stockholders at any meeting thereof, (ii) to give
or withhold consent to any corporate action, (iii) to receive notice of meetings
or other actions affecting stockholders (except as provided in Section 25
hereof), (iv) to receive dividends, distribution or subscription rights, or (v)
to institute as a holder of Preferred Stock or other securities issuable on
exercise of the Rights represented by any Rights Certificate, any derivative
action on behalf of the Company, or otherwise, until and only to the extent that
the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
Section 19. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, counsel fees and disbursements and other disbursements incurred in
the administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith, willful misconduct or breach of
this Agreement on the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and administration of this
Agreement, including the reasonable costs and expenses of defending against any
claim of liability arising therefrom, directly or indirectly. In no case will
the Rights Agent be liable for special, indirect, incidental or consequential
losses or damages of any kind whatsoever, even if the Rights Agent has been
advised of the possibility of such damage.
The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Preferred Stock or Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document reasonably believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the proper Person or
Persons.
<PAGE>
Section 20. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust
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 22 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 21. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, to all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel selected by it
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and an accordance
with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or the determination of
"Current Market Price") be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by
the Chairman, Chief Executive Officer, the President, any Vice President,
the Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or
<PAGE>
suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith, willful misconduct or breach of this Agreement by it
or its attorneys or agent.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Rights Certificates (except as to the fact that it has countersigned the
Rights 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
Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor shall it be responsible for any change or
adjustment in the terms of the Rights (including the manner, method or
amount thereof) provided for in Sections 3, 11, 13 or 24 hereof or the
ascertaining of the existence of facts that would require any such change
or adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any change or adjustment is
required); nor shall it be responsible for any determination by the Board
of Directors of the Company of the Current Market Price of the Rights, the
Preferred Stock or the Common Stock pursuant to any provisions of this
Agreement; nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Preferred Stock, Common Stock or other securities to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any
shares of Preferred Stock, Common Stock or other securities will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performance 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 and
certificates delivered pursuant to any provision hereof from the Chairman,
Chief Executive Officer, the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer or any Assistant Treasurer of the
Company, and is authorized to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
<PAGE>
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity.
(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.
(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 there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting
with the Company.
Section 22. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company, and to each transfer
agent of the Common Stock and Preferred Stock, by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Stock and Preferred Stock by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. Notwithstanding any other provision of this Agreement, in no
event shall the resignation or removal of a Rights Agent be effective until a
successor Rights Agent shall have been appointed and have accepted such
appointment. If the Company shall fail to make such appointment within 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 any holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the incumbent Rights
Agent or the registered holder of any Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the State of Illinois (or of any other state of the United States
so long as such corporation is authorized to do business as a banking
institution in the State of Illinois), in good standing, having a principal
office in the State of Illinois, which is
<PAGE>
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent (together with its Affiliates) a
combined capital and surplus of at least $100,000,000. 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 such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 22, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 23. Issuance of New Rights Certificates. Notwithstanding
any of the provisions of this Agreement or of the Rights Certificates to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing new Rights in such form as may be approved by a majority of the
Disinterested Directors (or if no Disinterested Directors are then in office, by
the Board of Directors of the Company) to reflect any adjustment or change in
the Purchase Price per share and the number or kind or class of securities, cash
or other property purchasable under the Rights Certificates made in accordance
with the provision of this Agreement.
Section 24. Redemption. (a) The Board of Directors of the Company
may, at its option, at any time prior to the Close of Business on the earlier of
(i) the Stock Acquisition Date and (ii) the Final Expiration Date, redeem all
but not less than all of the then outstanding Rights at a redemption price of
$0.01 per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price as so adjusted being hereinafter referred to as the "Redemption Price").
The Company may, at its option, pay the Redemption Price in cash, shares
(including fractional shares) of Common Stock (based on the Current Market Price
of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(b) At the time and date of effectiveness of the redemption, as set
forth in any resolution of the Board of Directors of the Company ordering the
redemption of the Rights, evidence of which shall be filed with the Rights Agent
and without any further action and without any further 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 per Right, provided, however,
that such resolution of the Board of Directors of the Company may be revoked,
rescinded or otherwise modified at any time prior to the time and date of
effectiveness set forth in such resolution, in which event the right to exercise
will not terminate at the time and date originally set for such termination by
the Board of Directors of the Company. As soon as practicable after the action
of the Board of Directors of the Company ordering the redemption of the Rights,
the Company shall give notice of such redemption to the Rights Agent and to the
holders of the then-outstanding Rights by mailing such notice
<PAGE>
to the Rights Agent and to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the transfer agent for the Common Stock. Any
notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
will state the method by which the payment of the Redemption Price will be made.
In any case, failure to give such notice by mail, or any defect in the notice,
to any particular holder of Rights shall not affect the sufficiency of the
notice to other holders of Rights. In the case of a redemption permitted under
this Section 24, the Company may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release announcing
the manner of redemption of the Rights and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their last addresses
as they appear on the registry books of the Rights Agent or, prior to the
issuance of the Rights Certificates, on the registry books of the transfer agent
for the Common Stock, and upon such action, all outstanding Rights Certificates
shall be null and void without any further action by the Company. Neither the
Company nor any of its Affiliates or Associates may redeem, acquire or purchase
for value any Rights at any time in any manner other than specifically set forth
in this Section 24 and other than in connection with the purchase of shares of
Common Stock prior to the earlier of the Distribution Date and the Final
Expiration Date.
Section 25. Notice of Certain Events. In case the Company shall
propose to (a) pay any dividend payable in stock of any class to the holders of
Preferred Stock or make any other distribution to the holders of Preferred Stock
(other than a regular periodic cash dividend at an annual rate not in excess of
125% of the annual rate of the last regular periodic cash dividend paid on the
Preferred Stock during the immediately preceding fiscal year (or, if the
Preferred Stock was not outstanding during such preceding year, then not in
excess of 125% of the annual rate of the regular cash dividend paid on the
Common Stock during such year) or in the event that a regular cash dividend was
not paid in the Preferred Stock (or Common Stock) during such preceding year,
not in excess of 5% of the Current Market Price of the Preferred Stock (as
determined pursuant to Section 11(d))), or (b) offer to the holders of Preferred
Stock rights, options or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (c) effect any reclassification of its
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock, a change in the par value of such
Preferred Stock or a change from par value to no par value), or (d) directly or
indirectly effect any consolidation or merger into or with, or to effect any
sale, lease, exchange or other transfer or disposition (or to permit one or more
of its Subsidiaries to effect any sale, lease, exchange or other transfer or
disposition, in one or more transactions or a series of related transactions, of
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, or (e) effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate (or, prior to the Distribution
Date, to each holder of Common Stock), in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution. of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, lease,
exchange, transfer, disposition, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the holders of the shares of
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any
<PAGE>
action covered by clause (a) or (b) above at least 20 days prior to the record
date for determining holders of the shares of Preferred Stock for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein, if any, by the holders of the shares of Preferred Stock, whichever
shall be the earlier. The failure to give notice as required by this Section 25
or any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
In case any Triggering Event or Business Combination shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate (or, prior to the Distribution Date, to
each holder of Common Stock), in accordance with Section 26 hereof, a notice of
the occurrence of such Triggering Event or Business Combination, which shall
specify the Triggering Event or Business Combination and the consequences
thereof to holders of Rights under Sections 11(a)(ii) or 13.
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 Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Material Sciences Corporation
2300 East Pratt Boulevard
Elk Grove Village, Illinois 60007
Attention: Secretary
Subject to the provisions of Section 22, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate (or, prior to the Distribution Date, by the holder of any Common
Stock), 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 Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
111 Founders Plaza
East Hartford, CT 06108
Attention: Lynore LeConche
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, prior
to the Distribution Date, to the holder of any Common Stock) shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
<PAGE>
Section 27. Supplements and Amendments.
(a) At any time prior to the Stock Acquisition Date, a majority of the
Disinterested Directors (or, if no Disinterested Directors are then in office,
the Board of Directors of the Company) may, except as provided in Section 27(c),
and the Rights Agent shall, if so directed by the Company, supplement or amend
any provision of this Agreement without the approval of any holders of Rights or
holders of Common Stock.
(b) From and after the Stock Acquisition Date, a majority of the
Disinterested Directors (or, if no Disinterested Directors are then in office,
the Board of Directors of the Company) may, except as provided in Section 27(c),
and the Rights Agent shall, if so directed by the Company, amend this Agreement
without the approval of any holders of Rights Certificates (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained in this
Agreement which may be defective or inconsistent with any other provision of
this Agreement, or (iii) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Rights Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person).
(c) No supplement or amendment to this Agreement shall be made which
(i) changes the Purchase Price or the number of shares of Preferred Stock, other
securities, cash or other property for which a Right is then exercisable, (ii)
decreases the Redemption Price or (iii) provides for an earlier Final Expiration
Date.
(d) Immediately upon the action of a majority of the Disinterested
Directors (or, if no Disinterested Directors are then in office, the Board of
Directors) providing for any amendment or supplement pursuant to this Section
27, and without any further action and without notice, such amendment or
supplement shall be deemed effective. Promptly following the adoption of any
amendment or supplement pursuant to this Section 27, the Company shall deliver
to the Rights Agent a copy, certified by the Secretary or any Assistant
Secretary of the Company, of resolutions of a majority of the Disinterested
Directors (or, if no Disinterested Directors are then in office, the Board of
Directors of the Company) adopting such amendment or supplement and the Rights
Agent shall execute such supplement or amendment. Upon such delivery, the
amendment or supplement shall be administered by the Rights Agent as part of
this Agreement in accordance with the terms of this Agreement, as so amended or
supplemented.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of This Agreement; Determinations and Actions
by the Board of Directors. Nothing in this Agreement shall be construed to give
to any Person other than the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date, the
Common Stock) any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company, the
<PAGE>
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the Common Stock).
For purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time 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 (or any successor provision); provided,
however, that any such calculation made for purposes of determining the
particular percentage of outstanding shares of Common Stock of which any Person
is the Beneficial Owner shall also include any such other securities not then
actually issued and outstanding which such Person would be deemed to be the
Beneficial Owner of, or to "beneficially own," pursuant to Section 1(c) of this
Agreement. The Board of Directors of the Company (or, where specifically
provided for herein, a majority of the Disinterested Directors) shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Disinterested Directors, the Board
of Directors of the Company or the Company, or as may be necessary or advisable
in the administration of this Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights, to
exchange or not exchange the Rights for Common Stock or other securities of the
Company, or to amend or supplement 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 of the Company (or, where specifically provided
for herein, a majority of the Disinterested Directors) in good faith, shall (x)
be final, conclusive and binding on the Company, the Rights Agent, the holders
of the Rights and all other Persons, and (y) not subject the Board of Directors
of the Company or the Disinterested Directors to any liability to the holders of
the Rights.
Section 30. Severability. (a) If any term, provision, covenant or
restriction of this Agreement or the application thereof to any Person or to any
circumstance is held by a court of competent jurisdiction or other authority to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
(b) If legal counsel to the Company delivers to the Company a written
opinion to the effect that, as a result of changes in federal law or Delaware
law, any term, provision, covenant or restriction of this Agreement may be
invalid, void, or unenforceable, then, notwithstanding any other provision of
this Agreement, the Company and the Rights Agent may amend this Agreement to
modify, revise or delete such term, provision, covenant or restriction to the
extent necessary to comply with such law as so changed.
Section 31. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the internal laws of such State applicable to
contracts to be made and to be performed entirely within such State.
<PAGE>
Section 32. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 34. Grammatical Construction. Throughout this Agreement,
where such meanings would be appropriate, (a) any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms (e.g., references
to "he" shall also include "she" and "it" and references to "who" and "whom"
shall also include "which"), and (b) the plural form of nouns and pronouns shall
include the singular and vice-versa (e.g., references to "Disinterested
Directors" shall also mean "Disinterested Director" if there be only one
Disinterested Director at the relevant time).
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
Material Sciences Corporation
By /s/ William H. Vrba
----------------------------------------
Name: William H. Vrba
Title: Senior Vice President, Chief
Financial Officer, and
Secretary
ChaseMellon Shareholder Services, L.L.C.
By /s/ Lynore LeConche
----------------------------------------
Name: Lynore LeConche
Title: Assistant Vice President
<PAGE>
EXHIBIT A
---------
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
of
MATERIAL SCIENCES CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Material Sciences Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware, in accordance with
the provisions of Section 103 thereof, DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation of the said Corporation, as amended, the
said Board of Directors on June 20, 1996, adopted a resolution creating a series
of 1,000,000 shares of Preferred Stock designated as "Series B Junior
Participating Preferred Stock";
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Certificate of Incorporation, as amended, a series of Preferred Stock of this
Corporation is hereby created and that the designation and amount thereof and
the voting powers, preferences and relative participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series B Junior Participating Preferred Stock" (the "Series B
Preferred Stock"), and the number of shares constituting such series shall be
1,000,000. Such number of shares may be increased by resolution of the Board of
Directors.
Section 2. Dividends and Distributions.
(A)(i) Subject to the prior rights of any other series of Preferred
Stock ranking prior to the Series B Preferred Stock as to dividends, the holders
of shares of Series B Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the last day of May, August,
November, and February in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series B Preferred Stock, in an amount per share
<PAGE>
(rounded to the nearest cent) equal to the greater of (a) $10.00 or (b) the
Adjustment Number (as defined below) times the aggregate per share amount of all
cash dividends, and the Adjustment Number times the aggregate per share amount
(payable in kind), of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock, par value $0.02 per share, of the Corporation (the "Common Stock")
since the immediately preceding Quarterly Dividend Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series B Preferred Stock. The "Adjustment
Number" shall initially be 100. In the event the Corporation shall at any time
on or after July 2, 1996 (i) declare or pay any dividend on Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock
(by reclassification or otherwise) into a greater number of shares of Common
Stock or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Adjustment Number in effect to which holders
of shares of Series B Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such Adjustment Number in effect by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(ii) The Corporation shall declare a dividend or distribution on the
Series B Preferred Stock as provided in this paragraph (A) immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $10.00 per share on the Series B Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series B Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series B Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series B Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series B Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 60 days prior to the date fixed
for the payment thereof.
2
<PAGE>
Section 3. Voting Rights. The holders of shares of Series B
Preferred Stock shall have the following voting rights:
(A) Each share of Series B Preferred Stock shall entitle the holder
thereof to a number of votes equal to the Adjustment Number on all matters
submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in the Corporation's
Certificate of Incorporation, as amended, or by-laws, as amended, or by
law, the holders of shares of Series B Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C)(i) If at any time dividends on any shares of Series B Preferred
Stock shall be in arrears in an amount equal to at least six quarterly
dividends thereon, the occurrence of such contingency shall mark the
beginning of a period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all previous
quarterly dividend periods and for the current quarterly dividend period on
all shares of Series B Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period,
the holders of Preferred Stock (including holders of the Series B Preferred
Stock) upon which these or like voting rights have been conferred and are
exercisable (the "Voting Preferred Stock") with dividends in arrears in an
amount equal to six quarterly dividends thereon, voting as a class,
irrespective of series, shall have the right to elect two Directors.
(ii) During any default period, such voting right of the holders of
Series B Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting right nor the right of the holders of
Series B Preferred Stock as hereinafter provided to increase in certain
cases the authorized number of Directors shall be exercised unless the
holders of one-third in number of shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The absence of a
quorum of the holders of Common Stock shall not affect the exercise by the
holders of Voting Preferred Stock of such voting right. At any meeting at
which the holders of Voting Preferred Stock shall initially exercise such
voting right during an existing default period, they shall have the right,
voting separately as a class, to elect Directors to fill such vacancies, if
any, in the Board of Directors as may then exist up to two Directors or, if
such voting right is exercised at an annual meeting, to elect two
Directors. If the number of Directors which may be otherwise elected at
any annual meeting or a special meeting does not permit the holders of the
Voting Preferred Stock to elect two Directors as provided herein, the
holders of Voting Preferred Stock, voting separately as a class, shall have
the right to make such increase in the number of
3
<PAGE>
Directors as shall be necessary to permit the election by them of the
required number. After the holders of Voting Preferred Stock shall have
exercised their right to elect Directors in any default period and during
the continuance of such default period, the number of Directors shall not
be increased or decreased except with the approval of the holders of Voting
Preferred Stock voting separately as a class.
(iii) Unless the holders of Voting Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 10% of the total number
of shares of Voting Preferred Stock then outstanding may request, the
calling of a special meeting of the holders of Voting Preferred Stock,
which meeting shall thereupon be called by the Chairman and Chief Executive
Officer, any Vice President or the Secretary of the Corporation. Notice of
any such meeting and of any annual meeting at which holders of Voting
Preferred Stock are entitled to specially elect Directors pursuant to this
paragraph (C) shall be given to each holder of record of Voting Preferred
Stock by mailing a copy of such notice to him at his last address as the
same appears on the books of the Corporation. Such meeting shall be called
for a time not earlier than 20 days and not later than 60 days after such
request, or in default of the calling of such meeting within 60 days after
such order or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than 10% of
the total number of shares of Voting Preferred Stock then outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such special
meeting shall be called during the period within 60 days immediately
preceding the date fixed for the next annual meeting of the stockholders.
(iv) During any default period after the holders of Voting Preferred
Stock shall have exercised their rights to elect Directors voting as a
class, (x) the Directors so elected by the holders of Voting Preferred
Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and
(y) any vacancy in the Board of Directors may be filled by vote of a
majority of the remaining Directors theretofore elected by the holders of
the class or classes of stock which elected the Director whose office shall
have become vacant. References in this paragraph (C) to Directors elected
by the holders of a particular class or classes of stock shall include
Directors elected by such Directors to fill vacancies as provided in clause
(y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right
of the holders of Voting Preferred Stock as a class to elect two Directors
shall cease, (y) the term of any Directors so elected by the holders of
Voting Preferred Stock as a class shall terminate and (z) the number of
Directors shall be such number as may be provided for in the Corporation's
by-laws, as amended, or the Certificate of Incorporation, as amended,
without regard to any increase made pursuant to the provisions of paragraph
(C) of this Section 3 (such number being subject, however,
4
<PAGE>
to change thereafter in any manner provided by law or in the Certificate of
Incorporation or the by-laws). Any vacancies in the Board of Directors
effected by the provisions of clauses (y) and (z) in the preceding sentence
may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series B Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series B Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock,
except dividends paid ratably on the Series B Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration any
shares of any stock ranking on junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Stock,
except the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (both as to dividends and upon
dissolution, liquidation or winding up) to the Series B Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series B Preferred Stock, or any shares of stock ranking on a parity with
the Series B Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the
5
<PAGE>
Corporation could, under paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred stock
to be created by resolution or resolutions of the Board of Directors subject to
the conditions and restrictions on issuance set forth in the Certificate of
Incorporation.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (A) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received the greater of (i) $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, and (ii) an aggregate amount per
share equal to the Adjustment Number (as adjusted from time to time pursuant to
Section 2(A) hereof) times the aggregate amount to be distributed per share to
holders of Common Stock, or (B) to the holders of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series B Preferred Stock, except distributions made ratably on the Series B
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock,
securities, cash or other property, then in any such case the shares of Series B
Preferred Stock then outstanding shall at the same time be similarly exchanged
or changed in an amount per share equal to the Adjustment Number (as adjusted
from time to time pursuant to Section 2(A) hereof) times the aggregate amount of
stock, securities, cash or other property (payable in kind), as the case may be,
into which or for which each share of Common Stock is changed or exchanged.
Section 8. No Redemption. The shares of Series B Preferred Stock
shall not be redeemable.
Section 9. Ranking. The Series B Preferred Stock shall rank junior
to, or pari passu with, all other series of the Corporation's Preferred Stock
subsequently issued, with respect to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise, and shall rank senior to the Common Stock as to such matters.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation, as heretofore amended, shall not be amended in any manner which
would materially alter or change the powers, preferences or special rights of
the Series B Preferred Stock so as to affect them
6
<PAGE>
adversely without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Series B Preferred Stock, voting together as a single
class.
IN WITNESS WHEREOF, Material Sciences Corporation has caused this
Certificate to be duly executed in its corporate name on this ____ day of June,
1996.
ATTEST: MATERIAL SCIENCES CORPORATION
By: By:
------------------------------- ------------------------------
Name: Name:
Title: Title:
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<PAGE>
EXHIBIT B
----------
Form of Rights Certificate
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER JULY 1, 2006 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE AT THE
OPTION OF THE COMPANY AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SECTION 7(f) OF THE RIGHTS
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(f) OF THE RIGHTS AGREEMENT.)]
Rights Certificate
MATERIAL SCIENCES CORPORATION
This certifies that _________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of June 20, 1996 (the "Rights Agreement") between
Material Sciences Corporation, a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent"), unless notice of
redemption shall have been previously given by the Company, to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M. (New York time) on July 1, 2006 at the
principal corporate trust office of the Rights Agent, or its successor as Rights
Agent, in Chicago, Illinois, one one-hundredth of a fully paid non-assessable
share (a "Fractional Share") of the Series B Junior Participating Preferred
Stock, par value $1.00 per share of the Company (the "Preferred Stock"), at a
purchase price of $70.00 per one one-hundredth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase duly executed. The number of Rights evidenced by
this Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per Fractional Share
set forth above, are the number and Purchase Price as of July 2, 1996, based on
the Preferred Stock as constituted at such date. The Purchase Price may be paid
in cash or by certified bank check or bank draft payable to the order of the
Company.
<PAGE>
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock (or other securities, cash or other property) which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
Upon the occurrence of a Triggering Event, the Rights evidenced by
this Rights Certificate are beneficially owned by (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person or (ii) certain direct or indirect
transferees of an Acquiring Person (or of any Associate or Affiliate of an
Acquiring Person), such Rights shall become null and void, in which event the
holder of any such Right (including any subsequent holder) shall not have any
right with respect to such Right.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive office of the Company and the office of the Rights Agent
and are also available upon written request to the Company.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal corporate trust office of the Rights Agent, may
be exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock evidenced by the Rights Certificate or
Rights Certificates so surrendered entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate, (a) may be redeemed by the Board of Directors of
the Company at its option at a redemption price of $.01 per Right subject to
adjustment, payable, at the election of the Company, in cash or shares
(including fractional shares) of Common Stock or such other consideration as
the Board of Directors may determine, at any time prior to the earlier of (i)
12:00 a.m. (midnight, New York, New York time) on the Stock Acquisition Date,
and (ii) the Final Expiration Date, or, (b) may be exchanged after the first
occurrence of a Triggering Event by the Board of Directors of the Company at its
option in whole or in part for shares of the Company's Common Stock or other
Common Stock Equivalents.
The Company shall not be required to issue fractional Rights or to
distribute Rights Certificates which evidence fractional Rights, but in lieu
thereof the Company may at its option make a cash payment, as provided in the
Rights Agreement. No fractional shares of Preferred Stock (other than fractions
which are integral multiples of a Fractional Share of Preferred Stock, which
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<PAGE>
may, at the election of the Company, be evidenced by depository receipts) are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
but in lieu thereof the Company may elect to (i) issue scrip or warrants in
registered form (either represented by a certificate or uncertificated) or in
bearer form (represented by a certificate) which shall entitle the holder to
receive a full Fractional Share of Preferred Stock upon the surrender of such
scrip or warrants aggregating a full Fractional Share of Preferred Stock, or
(ii) make a cash payment, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or to receive dividends on, or shall be deemed for any purpose the holder
of, shares of Preferred Stock or of any other securities, cash or property which
may at any time be issuable on the exercise hereof, nor shall anything contained
in the Rights Agreement or this Certificate be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company,
including, without limitation, any right to vote for the election of directors
or upon any other matter submitted to a vote of stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Rights Agreement) or to receive dividends, distributions or subscription
rights, or to institute as a holder of Preferred Stock or other securities
issuable on exercise of the Rights represented by this Certificate, any
derivative action on behalf of the Company, or otherwise, until and only to the
extent that the Right or Rights evidenced by this Rights Certificate shall have
been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
3
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ______________, 19__.
ATTEST: Material Sciences Corporation
By:__________________________________ By:__________________________________
Name: Name:
Title: Title:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By:__________________________________
Authorized Signature
4
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Rights Certificate.)
FOR VALUE RECEIVED the undersigned ____________________________
_________________________ hereby sells, assigns and transfers unto ____________
_______________________________________________________________________________
_______________________________________________________________________________
__________________________
(Please print name and address of transferee)
_________________ Rights evidenced by this Rights Certificate, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint _________________________ with a power of attorney to transfer the said
Rights and Rights Certificate evidencing such Rights on the books of the within-
named Company, with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of such
Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to (complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the undersigned):
Please insert Social Security or
other identifying number of transferee: ________________________
______________________________________________________________________________
___________
(Please print name and address)
______________________________________________________________________________
___________
Dated: ___________, 19__
_______________________________________
Signature
Signature Guaranteed:
5
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate or any Rights evidenced hereby [_]
are [_] are not being sold, assigned and transferred by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [_] did [_] did not acquire any of the Rights evidenced by this
Rights Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: ___________________________
____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Assignment must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
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<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder
desires to exercise the
Rights Certificate.)
To MATERIAL SCIENCES CORPORATION
The undersigned hereby irrevocably elects to exercise ____________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock or other securities, cash or other property issuable upon the
exercise of such Rights and requests that certificates for such shares or other
securities be issued in the name of, and such cash or other property be paid to:
Please insert social security
or other identifying number: ________________________
______________________________________________________________________________
_____________
(Please print name and address)
______________________________________________________________________________
_____________
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby exercised shall be mailed to and registered in the name
of the undersigned unless such person requests that such Rights Certificate be
registered in the name of and mailed to (complete only if Rights Certificate
evidencing any remaining balance of Rights is to be registered in a name other
than the undersigned):
Please insert social security
or other identifying number: ________________________
______________________________________________________________________________
_____________
(Please print name and address)
______________________________________________________________________________
_____________ The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock or other securities, cash or other property issuable upon the
exercise of such Rights and requests that certificates for such shares or other
securities be issued in the name of, and such cash or other property be paid to:
7
<PAGE>
Please insert social security
or other identifying number: ________________________
______________________________________________________________________________
_____________
(Please print name and address)
______________________________________________________________________________
_____________
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby exercised shall be mailed to and registered in the name
of the undersigned unless such person requests that such Rights Certificate be
registered in the name of and mailed to (complete only if Rights Certificate
evidencing any remaining balance of Rights is to be registered in a name other
than the undersigned):
Please insert social security
or other identifying number: ________________________
______________________________________________________________________________
_____________
(Please print name and address)
______________________________________________________________________________
_____________
8
<PAGE>
EXHIBIT C
---------
SUMMARY OF RIGHTS
TO PURCHASE STOCK
On June 20, 1996, the Board of Directors of Material Sciences
Corporation (the "Company") declared a dividend of one Right for each
outstanding share of Common Stock, $0.02 par value, of the Company (the "Common
Stock"). The dividend is payable on July 2, 1996 to the holders of record of the
Common Stock at the close of business on July 2, 1996. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
its Series B Junior Participating Preferred Stock (the "Preferred Stock") at a
price of $70.00 (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement dated as of June 20,
1996 (the "Rights Agreement") between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (the "Rights Agent").
Until the date (the "Distribution Date") that is the earlier to occur
of (i) the tenth day after the date (the "Stock Acquisition Date") of a public
announcement that a Person (as defined in the Rights Agreement) who or which
together with the Affiliates (as so defined) and Associates (as so defined) of
such Person (an "Acquiring Person") has become the Beneficial Owner (as defined
in the Rights Agreement) of 20% or more of the shares of Common Stock then
outstanding (as described in the Rights Agreement) or (ii) the tenth day after
the date (the "Offer Date") of the commencement by any Person of, or first
public disclosure of an intention to commence by any Person, a tender offer or
exchange offer the consummation of which would result in any Person having
beneficial ownership of 20% or more of the then outstanding shares of Common
Stock (including any Stock Acquisition Date or Offer Date which is after the
date of the Rights Agreement and prior to the issuance of the Rights), the
Rights will be evidenced, with respect to any of the Common Stock certificates
outstanding as of July 2, 1996, by such Common Stock certificates and not by
separate certificates. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the Common
Stock. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), certificates issued after July 2, 1996 representing
shares of Common Stock outstanding on July 2, 1996 or shares of Common Stock
issued after July 2, 1996, will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption,
exchange or expiration of the Rights), the surrender for transfer of any Common
Stock certificate, with or without a copy of this Summary of Rights attached
thereto or such notation, will also constitute the surrender for transfer of the
Rights associated with the Common Stock represented by such certificate. As soon
as practicable following the Distribution Date, separate certificates evidencing
the Rights ("Rights Certificates") will be
<PAGE>
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date, and the separate Rights Certificates alone will evidence
the Rights. Each share of Common Stock issued after the Distribution Date and
prior to the earlier of the redemption, exchange or expiration of the Rights in
connection with certain employee benefit plans or upon conversion of certain
securities, will be issued with Rights.
The Rights are not exercisable until after the Distribution Date. The
Rights will expire at the close of business on July 1, 2006, unless earlier
redeemed or exchanged by the Company as described below.
The Purchase Price payable, and the number and kinds of shares or
other securities, cash and other property 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 Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights, options or warrants to subscribe for or purchase Preferred Stock
(or shares having the same rights, privileges and preferences as the Preferred
Stock) or securities convertible into Preferred Stock or such other shares at a
conversion price less than the current market price of the Preferred Stock or
(iii) upon the distribution to holders of the Preferred Stock of securities,
cash, property, evidences of indebtedness or assets (excluding regular periodic
cash dividends, and excluding dividends payable in Preferred Stock) or of
subscription rights or warrants (other than those referred to in clause (ii)
above).
The number of Rights outstanding and the number of shares of Preferred
Stock issuable upon exercise of each Right are also subject to adjustments in
the event of a stock split of the Common Stock or a stock dividend on the Common
Stock payable in shares of Common Stock or subdivisions or combinations of the
Common Stock occurring, in any such case, prior to the Distribution Date.
The Preferred Stock purchasable upon exercise of the Rights will be
non-redeemable. Each share of Preferred Stock will be entitled to receive a
preferential quarterly dividend payment equal to the greater of $10 per share
and 100 times the dividend declared per share of Common Stock. In the event of
liquidation, the holders of the Preferred Stock will be entitled to receive a
preferential liquidation payment equal to the greater of $100 per share and 100
times the payment made per share of Common Stock. In the event of any merger,
consolidation, or other transaction in which Common Stock is exchanged, each
share of Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. The Preferred Stock will vote together as a
class with the holders of Common Stock with each share of Preferred Stock
entitled to 100 votes. The Preferred Stock will also have special
2
<PAGE>
rights to elect directors in certain circumstances. These rights are protected
by customary anti-dilution provisions.
Because of the nature of the dividend, liquidation and voting rights
of the Preferred Stock, the value of the one one-hundredth of a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.
When a Person first becomes an Acquiring Person (a "Triggering
Event"), proper provision will be made so that each holder of a Right (other
than the Acquiring Person or its affiliate and associates) will thereafter have
a right to receive, upon the exercise thereof at the then current Purchase
Price, in lieu of shares of Preferred Stock or other securities receivable upon
exercise prior to the occurrence of a Triggering Event, such number of shares of
Common Stock which at the time of such transaction would have a market value of
two times the exercise price of the Right. Upon the occurrence of a Triggering
Event, any Rights that are beneficially owned by an Acquiring Person (and
certain transferees of an Acquiring Person) will become null and void.
At any time after the first occurrence of a Triggering Event, the
Company may at any time exchange, for all or part of the then-outstanding and
exercisable Rights (which shall not include void Rights), Common Stock shares,
the equivalent of Common Stock shares, or any combination thereof, at an
exchange ratio of one share of Common Stock or units representing fractions
thereof as would be deemed to have the same value as one share of Common Stock
per Right, subject to adjustment (the "Exchange Ratio"). Immediately upon the
effectiveness of the exchange and without any further action or notice, the
right to exercise the Rights will terminate and the only right of a holder of
the Rights will be to receive that number of Common Stock shares, and/or the
equivalent of Common Stock shares, equal to the number of the Rights held by the
holder multiplied by the Exchange Ratio.
In the event that, from and after the occurrence of a Triggering
Event, the Company consolidates with or merges with and into a Person, a Person
consolidates with or merges with and into the Company and in connection
therewith all of part of the Common Stock is changed or exchanged, the Company
effects a share exchange in which all or part of the Common Stock is changed, or
50% or more of the Company's assets or earning power are sold (in one
transaction or a series of transactions), proper provision will be made so that
each holder of a Right (other than the Acquiring Person or its affiliates and
associates) will thereafter have the right to receive, upon the exercise
thereof, that number of shares of common stock of the Principal Party (as
defined in the Rights Agreement) which at the time of the transaction would have
a market value of two times the exercise price of the Right.
3
<PAGE>
With certain exceptions, no adjustment in the Purchase Price will be
required unless cumulative adjustments would require an adjustment of at least
1% in the Purchase Price. The Company will not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock, which may, at the election of
the Company, be evidenced by depositary receipts). In lieu thereof, at the
Company's option, an adjustment in cash will be made based on the market price
of the Preferred Stock on the last trading date prior to the date of exercise
(or scrip or warrants will be issued).
At any time prior to the earlier to occur of (i) the Stock Acquisition
Date and (ii) the expiration of the Rights, the Company may redeem the Rights in
whole, but not in part, at a price of $0.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
July 2, 1996 (the "Redemption Price"). The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock or any other form of
consideration deemed appropriate by the Company's Board of Directors. As soon as
practicable after the action of the Board of Directors of the Company electing
to redeem the Rights, the Company will make announcement thereof, and from and
after the date of the election, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price per Right.
At any time prior to the Stock Acquisition Date, the Company's Board
of Directors may amend or supplement the Rights Agreement without the approval
of the Rights Agent or any holder of the Rights. Thereafter, the Board of
Directors of the Company may amend or supplement the Rights Agreement without
such approval only to cure ambiguity, correct or supplement any defective or
inconsistent provision or change or supplement the Rights Agreement in any
manner which shall not adversely affect the interests of the holders of the
Rights (other than an Acquiring Person or an affiliate or associate thereof).
Notwithstanding the foregoing, no amendment or supplement shall (a) decrease the
Redemption Price, (b) change the Purchase Price or change the number of shares
of Preferred Stock, other securities, cash or other property for which a Right
is then exercisable or (c) provide for an earlier Final Expiration Date.
Immediately upon the action of the Board of Directors providing for any
amendment or supplement, such amendment or supplement will be deemed effective.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group other than an exempt person that
attempts to acquire the Company on terms not approved by its Board of Directors.
The Rights should not interfere with any merger or other business combination
approved by its Board of Directors prior to the time a Person becomes an
4
<PAGE>
Acquiring Person, because until such time the Rights may generally be redeemed
by the Company at $.01 per Right and/or the Rights Agreement may be amended or
supplemented.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
MATERIAL SCIENCES CORPORATION
By
----------------------------------
5
