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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF
SECURITIES PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
CLEVELAND-CLIFFS INC
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(Exact name of registrant as specified in its charter)
OHIO 34-1464672
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(State of incorporation or organization) (IRS Employer
Identification No.)
1100 Superior Avenue, Cleveland, Ohio 44114
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(Address of principal executive offices) (Zip Code)
If this form relates to the If this form relates to the
registration of a class of registration of a class of
securities pursuant to securities pursuant to
Section 12(b) of the Section 12(g) of the
Exchange Act and is Exchange Act and is
effective pursuant to effective pursuant to
General Instruction A.(c), General Instruction A.(d),
please check the following please check the following
box. [X] box. [ ]
Securities Act registration file number to which this form relates, (if
applicable): ________________________
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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Rights to Purchase Common Shares New York Stock Exchange,
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Chicago Stock Exchange
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Securities to be registered pursuant to Section 12(g) of the Act:
None
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Title of class
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ITEM 1. DESCRIPTION OF SECURITIES TO BE REGISTERED.
On September 9, 1997, the Directors of Cleveland-Cliffs Inc (the "Company")
declared a dividend distribution of one right (a "Right") for each Common Share,
par value $1.00 per share (the "Common Shares"), of the Company outstanding at
the close of business on September 19, 1997 (the "Record Date"), pursuant to the
terms of a Rights Agreement, dated as of September 19, 1997 (the "Rights
Agreement"), between the Company and First Chicago Trust Company of New York, as
Rights Agent. The Rights Agreement also provides, subject to specified
exceptions and limitations, that Common Shares issued or delivered from the
Company's treasury after the Record Date will be entitled to and accompanied by
Rights. The Rights are in all respects subject to and governed by the provisions
of the Rights Agreement, a copy of which (including all exhibits thereto) is
filed as Exhibit 4.1 hereto and incorporated herein by this reference. A summary
description of the Rights is set forth in Exhibit B to the Rights Agreement.
ITEM 2. EXHIBITS.
Exhibit
Number Exhibit
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4.1 Rights Agreement (including a Form of Right Certificate as
Exhibit A thereto and a Summary of Rights to Purchase Common
Shares as Exhibit B thereto)
99.1 Form of letter to shareholders, dated September 19, 1997
99.2 Press release, dated September 9, 1997
2
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
CLEVELAND-CLIFFS INC
By: /s/ J. S. Brinzo
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Name: J.S. Brinzo
Title: Executive Vice President
Finance and Planning
Dated: September 19, 1997
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INDEX TO EXHIBITS
Exhibit
Number Exhibit
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4.1 Rights Agreement (including a Form of Right Certificate as
Exhibit A thereto and a Summary of Rights to Purchase Common
Shares as Exhibit B thereto)
99.1 Form of letter to shareholders, dated September 19, 1997
99.2 Press release, dated September 9, 1997
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EXHIBIT 4.1
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CLEVELAND-CLIFFS INC
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
RIGHTS AGREEMENT
Dated as of September 19, 1997
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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<S> <C> <C>
Section 1. Certain Definitions ...................................... 2
Section 2. Appointment of Rights Agent .............................. 7
Section 3. Issue of Right Certificates .............................. 8
Section 4. Form of Right Certificates ............................... 11
Section 5. Countersignature and Registration ........................ 12
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates ....................................... 13
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights ................................ 15
Section 8. Cancellation and Destruction of
Right Certificates ....................................... 17
Section 9. Reservation and Availability of
Common Shares ............................................ 18
Section 10. Common Shares Record Date ................................ 21
Section 11. Adjustment of Purchase Price, Number
and Type of Shares or Number of Rights ................... 22
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares ................................ 41
Section 13. Notice of Adjusted Purchase Price
or Number or Type of Shares to
Holders of Rights ........................................ 42
Section 14. Fractional Rights and Fractional
Shares ................................................... 42
Section 15. Rights of Action ......................................... 44
Section 16. Agreement of Rights Holders .............................. 45
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Section 17. Right Certificate Holder Not Deemed
a Shareholder ............................................. 46
Section 18. Concerning the Rights Agent ............................... 47
Section 19. Merger or Consolidation or Change
of Name of Rights Agent ................................... 48
Section 20. Duties of Rights Agent .................................... 49
Section 21. Change of Rights Agent .................................... 53
Section 22. Issuance of New Right Certificates ........................ 55
Section 23. Redemption ................................................ 56
Section 24. Notice of Certain Events .................................. 58
Section 25. Notices ................................................... 59
Section 26. Supplements and Amendments ................................ 60
Section 27. Exchange .................................................. 62
Section 28. Successors ................................................ 64
Section 29. Benefits of this Agreement ................................ 64
Section 30. Action by Directors ....................................... 64
Section 31. Severability .............................................. 64
Section 32. Governing Law ............................................. 65
Section 33. Counterparts .............................................. 65
Section 34. Descriptive Headings ...................................... 65
Exhibit A . ........................................................... A-1
Exhibit B . ........................................................... B-1
</TABLE>
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Rights Agreement, dated as of September 19, 1997, (this "Agreement"),
between Cleveland-Cliffs Inc, an Ohio corporation (the "Company"), and First
Chicago Trust Company of New York (the "Rights Agent").
RECITALS
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On September 9, 1997, the Directors of the Company authorized and
declared a dividend consisting of one right ("Right") for each Common Share,
$1.00 par value, of the Company (each, a "Common Share") outstanding as of the
Close of business on September 19, 1997 (the "Record Date"), each Right
initially representing the right to purchase one-hundredth of one Common Share
on the terms and subject to the conditions herein set forth, and have further
authorized and directed the issuance of one Right (subject to adjustment as
provided herein) with respect to each Common Share issued or delivered by the
Company (whether originally issued or delivered from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date (in the
case of Common Shares issued upon conversion of the Company's convertible
securities, prior to the tenth day after the Distribution Date), and the
Expiration Date (each as hereinafter defined), or as provided in Section 27.
Notwithstanding anything in this Agreement to the contrary, this Agreement will
not be effective until the opening of business on September 19, 1997.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
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Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (other than the Company
or any Subsidiary or any employee benefit or stock ownership plan of the
Company or of any Subsidiary or any entity holding Common Shares for or
pursuant to any such plan) who or that, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 20% or more of
the Common Shares then outstanding, PROVIDED, HOWEVER, that a Person will
not be deemed to have become an Acquiring Person solely as a result of a
reduction in the number of Common Shares outstanding unless and until (i)
such time as such Person or any Affiliate or Associate of such Person shall
thereafter become the Beneficial Owner of any additional Common Shares,
other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Common Shares
are treated equally, or (ii) any other Person who is the Beneficial Owner
of any Common Shares shall thereafter become an Affiliate or Associate of
such Person. Notwithstanding the foregoing, if the Directors of the Company
determine in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph
(a), has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would
no longer be an Acquiring Person as
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defined pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and to
"beneficially own," any securities:
(i) the beneficial ownership of which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement
or understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise (in each case, other than upon exercise or exchange of the
Rights); PROVIDED, HOWEVER, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, securities tendered
pursuant to an offer to purchase or a tender or exchange offer made by
or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or
exchange; or
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(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has or shares the right to vote or
dispose of, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); or
(iii) of which any other Person is the Beneficial Owner, if such
Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing)
with such other Person (or any of such other Person's Affiliates or
Associates) with respect to acquiring, holding, voting or disposing of
any securities of the Company;
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial Owner
of, or to beneficially own, any security (A) if such Person has the right
to vote such security pursuant to an agreement, arrangement or
understanding (whether or not in writing) which (1) arises solely from a
revocable proxy given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report), or (B) if such beneficial ownership arises solely as
a result of such Person's status as a "clearing agency," as defined in
Section 3(a)(23) of the Exchange Act; and PROVIDED, FURTHER, that nothing
in this paragraph (c) shall cause a Person engaged in business as an
underwriter of
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securities to be the Beneficial Owner of, or to beneficially own, any
securities acquired through such Person's participation in good faith in an
underwriting syndicate until the expiration of 40 calendar days after the
date of such acquisition, or such later date as the Directors of the
Company may determine in any specific case.
(d) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the States of Ohio or New York
(or such other state in which the principal office of the Rights Agent is
located) are authorized or obligated by law or executive order to close.
(e) "Close of business" on any given date shall mean 5:00 P.M.,
Cleveland, Ohio time, on such date; PROVIDED, HOWEVER, that if such date is
not a Business Day it shall mean 5:00 P.M., Cleveland, Ohio time, on the
next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean
the Common Shares, par value, $1.00 per share, of the Company; PROVIDED
that, if the Company is the continuing or surviving corporation in a
transaction described in Section 11(d)(ii) hereof, "Common Shares" when
used with reference to the Company shall mean the capital stock with the
greatest aggregate voting power of the Company, or, if the Company is a
subsidiary of another corporation or business trust, the corporation or
business trust which ultimately controls the Company. "Common Shares" when
used with reference to any corporation or
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business trust, other than the Company, shall mean the capital stock with
the greatest aggregate voting power of such corporation or business trust,
or, if such corporation or business trust is a subsidiary of another
corporation or business trust, the corporation or business trust which
ultimately controls such first-mentioned corporation or business trust.
(g) "Distribution Date" shall mean the earlier of: (i) the close of
business on the tenth calendar day following the Share Acquisition Date, or
(ii) the close of business on the tenth Business Day (or, unless the
Distribution Date shall have previously occurred, such later date as may be
specified by the Directors of the Company) after the date of the
commencement of a tender or exchange offer by any Person (other than the
Company or any Subsidiary or any employee benefit or stock ownership plan
of the Company or of any Subsidiary or any entity holding Common Shares for
or pursuant to the terms of any such plan), if upon the consummation
thereof such Person would be the Beneficial Owner of 20% or more of the
then-outstanding Common Shares.
(h) "Expiration Date" shall mean the earliest of (i) the close of
business on the Final Expiration Date, (ii) the time at which the Rights
are redeemed as provided in Section 23 hereof, and (iii) the time at which
all exercisable Rights are exchanged as provided in Section 27 hereof.
(i) "Final Expiration Date" shall mean the tenth anniversary of the
Record Date.
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(j) "Flip-in Event" shall mean any event described in clauses (A), (B)
or (C) of Section 11(a)(ii) hereof.
(k) "Flip-over Event" shall mean any event described in clauses (i),
(ii) or (iii) of Section 11(d) hereof.
(l) "Person" shall mean any individual, firm, corporation or other
entity, and shall include any successor (by merger or otherwise) of such
entity.
(m) "Share Acquisition Date" shall mean the first date of public
announcement by the Company (by press release, filing made with the
Securities and Exchange Commission or otherwise) that an Acquiring Person
has become such.
(n) "Subsidiary" shall mean any corporation or other entity of which a
majority of the voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by the Company.
(o) "Triggering Event" shall mean any Flip-in Event or Flip-over
Event.
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
(who, in accordance with Section 3 hereof, shall also be, prior to the
Distribution Date, the holders of the Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment and hereby certifies that it complies with the requirements of the
New York Stock Exchange governing transfer agents and registrars. The Company
may from time to time act as Co-Rights Agent or appoint such Co-Rights Agents as
it may deem
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necessary or desirable. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent. To the extent that any Co-Rights Agent takes any action pursuant to this
Agreement, such Co-Rights Agent shall be entitled to all of the rights and
protections of, and subject to all of the applicable duties and obligations
imposed upon, the Rights Agent pursuant to the terms of this Agreement.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Distribution
Date (x) the Rights will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates for Common Shares registered in the
names of the record holders thereof (which certificates for Common Shares shall
also be deemed to be Right Certificates) and not by separate Right Certificates,
and (y) the Rights will be transferable only in connection with the transfer of
Common Shares in the stock transfer books of the Company maintained by the
Company or its appointed transfer agent. 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 Common Shares as of the close of business
on the Distribution Date, at the address of such holder shown on the records of
the Company, a Right Certificate, in substantially the form of Exhibit A hereto,
evidencing one Right for each Common Share so held, subject to adjustment,
together with a notice setting forth the Purchase Price (as defined in Section 4
hereof) as in effect on the Distribution Date. As of the Distribution
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Date, the Rights will be evidenced solely by such Right Certificates.
Any Right Certificate issued pursuant to this Section 3 that
represents Rights beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Right Certificate issued at any time upon the transfer
of any Rights to an Acquiring Person or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliate, and any Right
Certificate issued pursuant to Sections 6 or 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall be subject to and contain the following legend or such similar
legend as the Company may deem appropriate and as is not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). This Right Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 11(a)(ii) or Section 11(d) of the
Rights Agreement.
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Common Shares, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of Common shares as
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of the close of business on the Record Date, at the address of such holder shown
on the records of the Company as of such date. With respect to certificates for
Common Shares outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates for Common Shares registered
in the names of the holders thereof. Until the earlier of the Distribution Date
and the Expiration Date, the surrender for transfer of any certificate for
Common Shares outstanding on the Record Date shall also constitute the surrender
for transfer of the Rights associated with the Common Shares represented
thereby.
(c) Certificates for Common Shares issued (including, without
limitation, any certificates for Common Shares issued upon conversion of the
Company's convertible securities or upon exercise of stock options) or
surrendered for transfer or exchange after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date, shall have stamped on,
impressed on, printed on, written on or otherwise affixed to them the following
legend or such similar legend as the Company may deem appropriate and as is 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 Common
Shares or the Rights may from time to time be listed, or to conform to usage:
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between
Cleveland-Cliffs Inc and First Chicago Trust Company of New York,
dated as of September 19, 1997 (the "Rights Agreement"), the terms of
which are hereby incorporated herein
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by reference and a copy of which is on file at the principal executive
offices of Cleveland-Cliffs Inc. The Rights are not exercisable prior
to the occurrence of certain events specified in the Rights Agreement.
Under certain circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, may be exchanged, may expire, may be
amended, or may be evidenced by separate certificates and will no
longer be evidenced by this Certificate. Cleveland-Cliffs Inc will
mail to the holder of this Certificate a copy of the Rights Agreement
without charge promptly after receipt of a written request therefor.
Under certain circumstances, Rights that are or were beneficially
owned by an Acquiring Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement) and any subsequent
holder of such Rights may become null and void.
With respect to certificates containing the legend described above, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
surrender for transfer of the Rights associated with the Common Shares
represented thereby.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit A hereto with such
changes, 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 exchange on which the Rights may from time to
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time be listed, or to conform to usage. Subject to the provisions of Section 11
and 22 hereof, the Right Certificates, whenever issued, shall be dated as of the
Record Date, and on their face shall entitle the holders thereof to purchase
such number of Common Shares as shall be set forth therein at the price per
whole share set forth therein (the "Purchase Price"), but the Purchase Price and
the number and kind of securities issuable upon exercise of each Right and the
number of Rights outstanding shall be subject to adjustment as provided herein.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates
shall be executed on behalf of the Company by its Chairman, President or any
Vice President, either manually or by facsimile signature, and have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right 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 Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of
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the execution of such Right Certificate, shall be a proper officer of the
company to sign such Right Certificate, although at the date of the execution of
this Rights Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at the principal office of the Rights Agent designated for such
purpose and at such other offices as may be required to comply with any
applicable law or with any rule or regulations made pursuant thereto or with any
rule or regulation of any stock exchange or on which the Rights may be listed,
books for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. Subject
to the provisions of Sections 7(e) and 14 hereof, at any time after the close of
business on the Distribution Date, and at or prior to the close of business on
the Expiration Date, any Right Certificate or Certificates representing
exercisable rights may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates, entitling the registered holder
to purchase a like number of Common Shares (or other securities, as the case may
be) as the Right Certificate or Right Certificates surrendered then
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entitled such holder (or former holder in the case of a transfer) to purchase.
Any registered holder desiring to transfer, split up, combine or exchange any
Right Certificate, shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent designated for such purpose. Thereupon or as promptly as
practicable thereafter, subject to the provisions of Section 11 and Section 14
hereof, the Company will prepare, execute and deliver to the Rights Agent, and
the Rights Agent will countersign and deliver, a Right Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
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 Right Certificate if mutilated, the Company will prepare, execute and
deliver a new Right Certificate of like tenor to the Rights Agent and the Rights
Agent shall countersign and deliver such new Right
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Certificate to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date and prior to the Expiration Date,
upon surrender of the Right Certificate, with the form of election to purchase
on the reverse side thereof duly executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together with
payment in cash, in lawful money of the United States of America by certified
check or bank draft payable to the order of the Company, equal to the sum of (i)
the exercise price for the total number of securities as to which such
surrendered Rights are exercised and (ii) an amount equal to any applicable
transfer tax required to be paid by the holder of such Right Certificate in
accordance with the provisions of Section 9 hereof.
(b) The Purchase Price shall initially be $160 (equivalent to $1.60
for each one-hundredth of a Common Share), and shall be subject to adjustment
from time to time as provided in Section 11 hereof and shall be payable in
lawful money of the United States of America in accordance with paragraph (c)
below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable
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transfer tax in cash, or by certified check or bank draft payable to the order
of the Rights Agent, the Rights Agent shall thereupon promptly (i) requisition
from any transfer agent of the Common Shares (or make available, if the Rights
Agent is the transfer agent) certificates for the number of whole Common Shares
to be purchased and the Company hereby irrevocably authorizes and directs its
transfer agent to comply with all such requests, (ii) when appropriate,
requisition from the Company the amount of cash to be paid or depositary
receipts to be issued in lieu of the issuance of fractional shares in accordance
with Section 14 hereof or the amount of cash to be paid in lieu of the issuance
of Common Shares in accordance with Sections 11(a)(iii) or 11(d) hereof, (iii)
promptly after receipt of such certificates (or depositary receipts, when
appropriate), cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.
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(e) 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 any purported transfer, split up, combination or exchange
of any Right Certificate pursuant to Section 6 hereof or the exercise of a Right
Certificate as set forth in this Section 7 unless the registered holder of such
Right Certificate shall have (i) completed and signed the certificate following
the form of assignment or form of election to purchase, as applicable, set forth
on the reverse side of the Right Certificate surrendered for such transfer,
split up, combination, exchange or exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall have reasonably requested.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Right 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 Right Certificate purchased
or acquired by the Company otherwise than upon the
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exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Right Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF COMMON SHARES. The Company
covenants and agrees that it will cause to be reserved and kept available out of
its authorized and unissued Common Shares or any authorized and issued Common
Shares held in its treasury, the number of Common Shares that will be sufficient
to permit the exercise pursuant to Section 7 hereof of all outstanding Rights;
such number of Common Shares reserved and kept available shall be adjusted from
time to time, if and to the extent required, upon the occurrence of any of the
events described in Section 11 hereof.
So long as the Company's Common Shares are listed on a national
securities exchange, the Company shall endeavor to cause, from and after such
time as the Rights become exercisable, all Common Shares reserved for issuance
upon exercise of the Rights to be listed on such exchange upon official notice
of issuance.
The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Common Shares delivered upon exercise of
Rights shall be, at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), duly and validly authorized and
issued, fully paid, nonassessable and freely tradeable shares, free and
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<PAGE> 22
clear of any liens, encumbrances and other adverse claims and not subject to any
rights of call or first refusal.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Common Shares upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates for the Common Shares in a name other than
that of, the registered holder of the Right Certificates evidencing Rights
surrendered for exercise, or to issue or deliver any certificates for Common
Shares upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
The Company also shall use its best efforts (i) to file on an
appropriate form, as soon as practicable following the later of the first
occurrence of a Triggering Event or the Distribution Date, a registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities issuable 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
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<PAGE> 23
all times meeting the requirements of the Securities Act) until the earlier of
(A) the date as of which the Rights are no longer exercisable for such
securities and (B) the Expiration Date. The Company shall also take such action
as may be appropriate under, or to ensure compliance with, the securities or
"blue sky" laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time after the
date set forth in clause (i) of the first sentence of this paragraph, the
exercisability of the Rights in order to prepare and file such registration
statement and to permit it to become effective. Upon 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. In addition, if the Company shall
determine that a registration statement should be filed under the Securities Act
or any state securities laws following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights in each relevant
jurisdiction until such time as a registration statement has been declared
effective and, upon 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. Notwithstanding anything in this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction if the requisite
registration or qualification in such jurisdiction shall not have been effected
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<PAGE> 24
or the exercise of the Rights shall not be permitted under applicable law.
Notwithstanding anything in this Agreement to the contrary, after the
later of the Distribution Date and the first occurrence of a Triggering Event,
the Company shall not, except as permitted by Section 23 or Section 26 hereof,
take (or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will eliminate or otherwise
diminish the benefits intended to be afforded by the Rights.
In the event that the Company is obligated to pay cash pursuant to
Sections 11 or 14 hereof, it shall make all arrangements necessary so that such
cash is available for distribution by the Rights Agent, if and when appropriate.
Section 10. COMMON SHARES RECORD DATE. Each person in whose name any
certificate for Common Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Common Shares
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made; PROVIDED,
HOWEVER, that if the date of such surrender and payment is a date upon which the
Common Shares transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Common Shares
transfer books of the Company are
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<PAGE> 25
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a shareholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND TYPE OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and type of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Common Shares payable in
Common Shares, (B) subdivide the outstanding Common Shares, (C) combine the
outstanding Common Shares into a smaller number of shares or (D) issue any
shares of its capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) or in Section 11(d) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and type of shares of capital stock issuable on such date, shall be
proportionately adjusted so
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<PAGE> 26
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Common Shares transfer books of the Company were open, he 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 this Section 11(a)(i) and Section 11(a) (ii)
hereof or Section 11(d) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a) (ii) or Section 11(d) hereof.
(ii) In the event that
(A) any Person becomes an Acquiring Person; or
(B) any Acquiring Person or any Associate or Affiliate
of any Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, shall (1) merge into the Company or otherwise
combine with the Company and the Company shall be the continuing or
surviving corporation of such merger or combination, other than in a
transaction subject to Section 11(d)(ii) hereof, (2) merge or otherwise
combine with any Subsidiary, (3) in one or more transactions, transfer any
assets to the Company or any Subsidiary in exchange (in whole or in part)
for shares of any class of capital stock of the Company or any Subsidiary
or for securities exercisable for or convertible into shares of any class
of capital stock of the Company or any
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<PAGE> 27
Subsidiary, or otherwise obtain from the Company or any Subsidiary, with or
without consideration, any additional shares of any class of capital stock
of the Company or any Subsidiary or securities exercisable for or
convertible into shares of any class of capital stock of the Company or any
Subsidiary (other than as part of a pro rata distribution to all holders of
such shares of any class of capital stock of the Company or any
subsidiary), (4) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose (in one or more transactions), to, from or
with, as the case may be, the Company or any Subsidiary, other than in a
transaction subject to Section 11(d) hereof, assets on terms and conditions
less favorable to the Company than the Company would be able to obtain in
arm's-length negotiation with an unaffiliated third party, (5) receive any
compensation from the Company or any Subsidiary other than compensation for
full-time employment as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (6) receive the
benefit, directly or indirectly (except proportionately as a shareholder),
of any loans, advances, guarantees, pledges or other financial assistance
or any tax credits or other tax advantage provided by the Company or any
Subsidiaries; or
(C) during such time as there is an Acquiring Person, there shall be
any reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the
Company with
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<PAGE> 28
\
any Subsidiary or any other transaction or series of transactions (whether
or not with or into or otherwise involving an Acquiring Person), other than
a transaction subject to Section 11(d) hereof, which has the effect,
directly or indirectly, of increasing by more than 1% the proportionate
share of the outstanding shares of any class of equity securities or of
securities exercisable for or convertible into equity securities of the
Company or any Subsidiary which is directly or indirectly beneficially
owned by any Acquiring Person or any Associate or Affiliate of any
Acquiring Person;
then, and in each such case, proper provision shall be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of such Flip-in Event each holder of a Right, except as
provided below, shall thereafter have a right to receive, upon exercise thereof
in accordance with the terms of this Agreement at an exercise price per Right
equal to the product of one hundred (100) times the then-current Purchase Price
multiplied by the number of Common Shares for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event, such number of
Common Shares as shall equal the result obtained by (x) multiplying the product
of one hundred (100) times the then-current Purchase Price by the number of
Common Shares for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event, and dividing that product by (y) 50% of the
current per share market price of the Common Shares (determined
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<PAGE> 29
pursuant to Section 11(e) hereof) on the date of the first occurrence of a
Triggering Event. Notwithstanding anything in this Agreement to the contrary,
from and after the later of the Distribution Date and the first occurrence of a
Flip-in Event, (1) any Rights that are or were acquired or beneficially owned by
any Acquiring Person (or any Affiliate or Associate of such Acquiring Person)
shall be void and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement, (2) no Right
Certificate shall be issued pursuant to this Agreement that represents Rights
beneficially owned by an Acquiring person or any Affiliate or Associate thereof,
(3) no Right Certificate shall be issued at any time upon the transfer of any
Rights to an Acquiring Person or any Affiliate or Associate thereof or to any
nominee of such Acquiring Person or Affiliate thereof, and (4) any Right
Certificate delivered to the Rights Agent for transfer to an Acquiring Person or
any Affiliate or Associate thereof shall be cancelled.
(iii) Upon the occurrence of a Flip-In event, if there shall not be
sufficient authorized but unissued Common Shares or authorized and issued Common
Shares held in treasury to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Directors of the Company
shall use their best efforts promptly to authorize additional Common Shares for
issuance upon exercise of the Rights; PROVIDED, HOWEVER, that if at any time
after 90 calendar days after the first occurrence of a Flip-In Event, there
shall not be
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<PAGE> 30
sufficient Common Shares available for issuance upon the exercise of a Right,
then the Company shall deliver, upon the surrender of such Right and without
requiring payment of the Purchase Price, Common Shares (to the extent
available), and then cash (to the extent permitted by applicable law and any
agreements or instruments to which the Company is a party in effect immediately
prior to the first occurrence of any Flip-In Event), which Common Shares and
cash shall have an aggregate value equal to the excess of (1) the aggregate
current per share market price of all the Common Shares (determined pursuant to
Section 11(e) hereof) issuable in accordance with subsection (ii) of this
Section 11(a) upon the exercise of a Right over (2) the product of one hundred
(100) times the then-current Purchase Price multiplied by the number of Common
Shares for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event. To the extent that any legal or contractual
restrictions prevent the Company from paying the full amount of cash payable in
accordance with the foregoing sentence, the Company shall pay to holders of the
Rights as to which such payments are being made all amounts which are not then
restricted on a pro rata basis. The Company shall continue to make payments on a
pro rata basis as funds become available until such payments have been paid in
full.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Common Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to
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<PAGE> 31
subscribe for or purchase Common Shares (or shares having the same rights,
privileges and preferences as the Common Shares ("equivalent common shares")) or
securities convertible into Common Shares or equivalent common shares at a price
per Common Share or equivalent common share (or having a conversion price per
share, if a security convertible into Common Shares or equivalent common shares)
less than the current per share market price of the Common Shares (as determined
pursuant to Section 11(e) hereof) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of Common Shares outstanding on such
record date plus the number of Common Shares which the aggregate offering price
of the total number of Common Shares and/or equivalent common shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price and the
denominator of which shall be the number of Common Shares outstanding on such
record date plus the number of additional Common Shares and/or equivalent common
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). 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 as
determined in good faith by the Directors of the Company, whose determination
shall be described in a statement filed with the Rights Agent and
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<PAGE> 32
shall be conclusive for all purposes. Common Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In the event that the Company shall fix a record date for the
making of a distribution to all holders of Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend at a rate not in
excess of 125% of the rate of the last cash dividend theretofore paid), assets,
stock (other than a dividend payable in Common Shares) or subscription rights,
options or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the current per share market
price of the Common Shares (as determined pursuant to Section 11(e) hereof) on
such record date, less the fair market value (as determined in good faith by the
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes) of the
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<PAGE> 33
portion of the cash, assets, stock or evidences of indebtedness so to be
distributed (in the case of regular periodic cash dividends at a rate in excess
of 125% of the rate of the last cash dividend theretofore paid, only that
portion in excess of 125% of such rate) or of such subscription rights, options
or warrants applicable to one Common Share, and the denominator of which shall
be such current per share market price of the Common Shares. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall again be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d) In the event that, following the Share Acquisition Date,
directly or indirectly:
(i) the Company shall consolidate with, or merge with or into, any
other Person and the Company shall not be the continuing or surviving
corporation of such consolidation or merger; or
(ii) any Person shall consolidate with the Company, or merge with
or into the Company and the Company shall be the continuing or surviving
corporation of such merger or consolidation and, in connection with such
merger or consolidation, all or part of the Common Shares shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property; or
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<PAGE> 34
(iii) the Company shall sell or otherwise transfer (or one or more
Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any
Subsidiaries) representing in the aggregate more than 50% of the assets
or earning power of the Company and the Subsidiaries (taken as a whole)
to any Person or Persons,
then, and in each such case, proper provision shall be made so that (A) except
as provided below, each holder of a Right shall thereafter have the right to
receive, upon the exercise thereof in accordance with the terms of this
Agreement at an exercise price per Right equal to the product of one hundred
(100) times the then-current Purchase Price multiplied by the number of Common
Shares for which a Right was exercisable immediately prior to the first
occurrence of a Triggering Event, such number of validly authorized and issued,
fully paid, nonassessable and freely tradeable Common Shares of such surviving,
resulting or acquiring Person (including the Company as the continuing or
surviving corporation of a transaction described in clause (ii) above), as the
case may be, free and clear of any liens, encumbrances and other adverse claims
and not subject to any rights of call or first refusal, as shall be equal to the
result obtained by (x) multiplying the product of one hundred (100) times the
then-current Purchase Price by the number of Common Shares for which a Right was
exercisable immediately prior to the
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<PAGE> 35
first occurrence of a Triggering Event and dividing that product by (y) 50% of
the current per share market price of the Common Shares of such Person
(determined pursuant to Section 11(e) hereof) on the date of consummation of
such Flip-over Event; (B) the issuer of such Common Shares shall thereafter be
liable for, and shall assume, by virtue of the consummation of such Flip-over
Event, all the obligations and duties of the Company pursuant to this Agreement;
(C) the term "Company" shall thereafter be deemed to refer to such issuer; and
(D) such issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be possible, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights. Notwithstanding the foregoing, if
the surviving, resulting or acquiring Person in any Flip-over Event, is not a
corporation or business trust, then, and in each such case, if such surviving,
resulting or acquiring Person is directly or indirectly wholly owned by a
corporation or business trust, then all references to Common Shares of such
surviving, resulting or acquiring Person in this Section 11(d) shall be deemed
to be references to the Common Shares of the corporation or business trust which
ultimately controls such Person, and if there is no such corporation or business
trust, (Y) proper provision shall be made so that such surviving, resulting or
acquiring Person shall create or otherwise make available for
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<PAGE> 36
purposes of the exercise of the Rights in accordance with the terms of this
Agreement, a type or types of security or securities having a fair market value
at least equal to the economic value of the Common Shares which each holder of a
Right would have been entitled to receive if such surviving, resulting or
acquiring Person had been a corporation or a business trust; and (Z) all other
provisions of this Section 11(d) shall apply to the issuer of such securities as
if such securities were Common Shares. The Company shall not consummate any
Flip-over Event, unless the issuer of the Common Shares or other securities, as
the case may be, shall have a sufficient number of authorized Common Shares or
other securities which have not been issued or reserved for issuance to permit
the exercise in full of the Rights in accordance with this Section 11(d) and
unless prior to such consummation the Company and such issuer shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in this Section 11 and further providing that as
promptly as practicable after the consummation of any Flip-over Event, the
issuer shall:
(I) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities issuable upon exercise
of the Rights on an appropriate form, and shall use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a prospectus
at all times
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<PAGE> 37
meeting the requirements of the Securities Act) until the Expiration
Date;
(II) take all such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the exercisability of the Rights; and
(III) deliver to holders of the Rights historical financial
statements for such issuer and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
Notwithstanding the foregoing, upon the occurrence of any Flip-over Event, any
Rights that are or were at any time beneficially owned by any Acquiring Person
or any Associate or Affiliate of such Acquiring Person (which Acquiring Person,
Associate or Affiliate is, directly or indirectly, causing such Flip-over Event
to occur) after the date upon which such Acquiring Person became such shall
become void and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement. The provisions of
this Section 11(d) shall similarly apply to successive mergers or consolidations
or sales or other transfers. In the event that a Flip-over Event occurs at any
time after the occurrence of a Flip-in Event, the Rights which have not
therefore been exercised shall thereafter become exercisable in the manner
described in this Section 11(d).
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<PAGE> 38
(e) For the purpose of any computation hereunder, the "current per
share market price" of Common Shares on any date shall be deemed to be the
average of the daily closing prices per share of such Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; PROVIDED, HOWEVER, that in the event that the current per share
market price of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares (i) of a dividend or
distribution on such Common Shares payable in such Common Shares or securities
convertible into such Common Shares or (ii) any subdivision, combination or
reclassification of such Common Shares, and prior to the expiration of 30
Trading Days after the ex-dividend date for such dividend or distribution or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the "current market price" shall be appropriately adjusted to
take into account ex-dividend trading or to reflect the current market price per
Common Share equivalent. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Common Shares are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
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<PAGE> 39
exchange on which the Common Shares are listed or admitted to trading or, if the
Common Shares are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or such other system then in use, or, if on any such date the Common
Shares are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Common Shares selected by the Directors of the Company. The term "Trading
Day" shall mean any day on which the principal national securities exchange on
which the Common Shares are listed or admitted to trading is open for the
transaction of business or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, a Monday, Tuesday, Wednesday,
Thursday or Friday on which banking institutions in the State of New York are
not authorized or obligated by law or executive order to close. If the Common
Shares are not publicly held or not so listed or traded, or not the subject of
available bid and asked quotes, "current per share market price" shall mean the
fair value per share as determined in good faith by the Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(f) Except as set forth below, no adjustment in the Purchase Price
shall be required unless such adjustment would
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<PAGE> 40
require an increase or decrease of at least 1% in such price; PROVIDED, HOWEVER,
that any adjustments which by reason of this Section 11(f) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest thousandth of a share as the case may be. Notwithstanding
the first sentence of this Section 11(f), 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 requires such adjustment and (ii) the Expiration
Date.
(g) If as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Common Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the shares
contained in this Section 11 and the provisions of Sections 7, 9, 10 and 14
hereof with respect to the Common Shares shall apply on like terms to any such
other shares.
(h) 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 Common Shares
purchasable from time to time
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<PAGE> 41
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.
(i) Unless the Company shall have exercised its election as
provided in Section 11(j) hereof, upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares (calculated to the nearest thousandth) obtained by (i) multiplying (x)
the number of shares covered by a Right immediately prior to this adjustment by
(y) the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(j) The Company may elect, on or after the date of any adjustment
of the Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of Common Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of Common Shares for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the
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Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least 10 calendar
days later than the date of the public announcement. If Right Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(j), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
(and 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 Right Certificates
on the record date specified in the public announcement.
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(k) Irrespective of any adjustment or change in the Purchase Price
or the number or type of shares issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price per share and the number of shares which were expressed in the
initial Right Certificate issued hereunder.
(l) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the Common
Shares issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Common Shares at such adjusted Purchase Price.
(m) 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 issuing to the holder of any Right exercised after such record date
the Common Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Common Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
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(n) Anything in Sections 11 (a) through (m), inclusive, hereof to
the contrary 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 it in its sole discretion
shall determine to be advisable in order that any consolidation or subdivision
of the Common Shares, issuance wholly for cash of any of the Common Shares at
less than the current market price, issuance wholly for cash of Common Shares or
securities which by their terms are convertible into or exchangeable for Common
Shares, 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
Common Shares shall not be taxable to such shareholders.
(o) Notwithstanding any other provision of this Agreement, no
adjustment to the Purchase Price, the number of shares of Common Stock (or
fractions of a share) for which a Right is exercisable or the number or Rights
outstanding 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
Sections 11(a)(ii) and 11(d) hereof, unless the terms of this Agreement are
amended so as to preserve such benefits.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Section 11 hereof, the
Company shall promptly prepare a
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certificate setting forth such adjustment, (including a description of any
Rights which have become void as a result thereof), and a brief statement of the
facts accounting for such adjustment and promptly file with the Rights Agent and
with each transfer agent for the Common Shares a copy of such certificate.
Section 13. NOTICE OF ADJUSTED PURCHASE PRICE OR NUMBER OR TYPE OF
SHARES TO HOLDERS OF RIGHTS. Whenever an adjustment is made as provided in
Section 11 hereof after the Distribution Date, the Company shall mail a brief
summary of such adjustment to each holder of a Right Certificate in accordance
with Section 25 hereof.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid as promptly as practicable to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction
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reporting system with respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the Rights are not listed or admitted to trading
on the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Directors of the Company. If on any such date no such market
maker is making a market in the Rights the fair value of the Rights on such date
as determined in good faith by the Directors of the Company shall be used and
shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions of shares
upon exercise of the Rights or to distribute certificates which evidence
fractional shares. Fractions of Common Shares 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
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preferences to which they are entitled as beneficial owners of Common Shares. In
lieu of fractional shares, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
Common Share. For purposes of this Section 14(b), the current market value of a
Common Share shall be the closing price of a Common Share (as determined
pursuant to the second sentence of Section 11(e) hereof) for the Trading Day
immediately prior to the date of such exercise or exchange.
(c) 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 or exchange of a Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), 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 Shares), 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 right to
exercise the Rights evidenced by
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such Right Certificate in the manner provided in such Right Certificate and in
this Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under this
Agreement, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificate or the associated
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Common Share certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary;
(d) Such holder expressly waives any right to receive fractional
Rights and any fractional securities upon exercise or exchange of a Right,
except as otherwise provided in Section 14; and
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; PROVIDED, HOWEVER, that the Company shall use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Common Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained
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herein or in any Right Certificate be construed to confer upon the holder of any
Right Certificate, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof or exchanged pursuant to the provisions of Section 27 hereof.
Section 18. 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 and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, suit, action, proceeding or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability.
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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 Right Certificate or
certificate for Common Shares 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
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
Any 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 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so
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countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
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 Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
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(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 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 any one of the Chairman, the President,
any Vice President, the Treasurer or the Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) 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 Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in
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this Agreement or in any Right Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11 hereof (including any
adjustment which results in Rights becoming void) or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice of any
such adjustment or voidance); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any Common Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Common Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman, the President, the Secretary, the Treasurer, the Chief
Financial Officer or any Assistant General Counsel of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken
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or suffered to be taken by it in good faith in accordance with instructions of
any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof. The Rights Agent shall not be under any duty
or responsibility to insure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer or exchange of Right
Certificates.
(j) The Rights Agent shall promptly remit to the Company any funds
paid to it upon exercise of the Rights pursuant to Section 7 hereof.
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(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise, transfer, split up, combination or exchange, either
(i) 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 or 2 thereof, or (ii) any other actual or
suspected irregularity exists, the Rights Agent shall not take any further
action with respect to such requested exercise, transfer, split up, combination
or exchange, without first consulting with the Company, and will thereafter take
further action with respect thereto only in accordance with the Company's
written instructions.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares by registered or certified mail, and to the holders of the
Right 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 Shares by registered or certified mail, and to the holders
of the Right Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
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after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation or other legal entity organized and doing business under
the laws of the United States or of the States of Ohio or New York (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 States of Ohio or New York), in good
standing, having a principal office in the States of Ohio or New York, which is
authorized under such laws to exercise corporate trust powers or stock transfer
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 a
combined capital and surplus of at least $50 million and which shall otherwise
meet any requirements imposed by the New York Stock Exchange on transfer agents
and registrars. 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
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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 Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Directors to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or other securities or
property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale by the Company of Common Shares following the Distribution Date and prior
to the Expiration Date, the Company (a) shall, with respect to Common Shares so
issued or sold pursuant to the exercise, exchange or conversion of securities
(other than Rights) issued prior to the Distribution Date which are exercisable
for or exchangeable for, or convertible into, Common Shares, and (b) may, in any
other case, if deemed necessary, appropriate or desirable by the Directors of
the Company, issue Right Certificates representing an equivalent number of
Rights as
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would have been issued in respect of such Common Shares if they had been issued
or sold prior to the Distribution Date, as appropriately adjusted as provided
herein as if they had been so issued or sold; PROVIDED, HOWEVER, that (i) no
such Right Certificate shall be issued if, and to the extent that, in its good
faith judgment the Directors of the Company shall have determined that the
issuance of such Right Certificate could have a material adverse tax consequence
to the Company or to the Person to whom or which such Right Certificate
otherwise would be issued, and (ii) no such Right Certificate shall be issued
if, and to the extent that, appropriate adjustment otherwise shall have been
made in lieu of the issuance thereof.
Section 23. REDEMPTION. (a) Prior to the Expiration Date, the
Directors of the Company may, at their option, redeem all but not less than all
of the then-outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Redemption Price"), at any
time prior to the close of business on the later of (i) the Distribution Date
and (ii) the first occurrence of a Triggering Event.
(b) Immediately upon the effective date of the action of the
Directors of the Company ordering the redemption of the Rights, and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price, without interest thereon. Promptly
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after the effectiveness of the redemption of he Rights, the Company shall
publicly announce such action and, within ten calendar days thereafter, will
give notice of such redemption to the holders of the then-outstanding Rights by
mailing such notice 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 Shares; provided,
however, that the failure to give, or any defect in, any such notice shall not
affect the validity of the redemption of the Rights. 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. The Company may, at its
option, pay the Redemption Price in cash, Common Shares (based upon the current
per share market price of the Common Shares (determined pursuant to Section
11(e) hereof) at the time of redemption) or any other form of consideration
deemed appropriate by the Directors of the Company (based upon the fair market
value of such other consideration, determined by the Directors of the Company in
good faith) or any combination thereof. The Company may, at its option, combine
the payment of the Redemption Price with any other payment being made
concurrently to holders of Common Shares and, to the extent that any such other
payment is discretionary, may reduce the amount thereof on account of the
concurrent payment of the Redemption Price. If legal or contractual restrictions
prevent the Company from paying the
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Redemption Price (in the form of consideration deemed appropriate by the
Directors) at the time of redemption, the Company shall pay the Redemption
Price, without interest, promptly after such time as the Company ceases to be so
prevented from paying the Redemption Price.
(c) At any time, the Directors of the Company may relinquish their
rights to redeem the Rights under paragraphs (a) or (b) above, or both, by duly
adopting a resolution to that effect. Immediately upon adoption of such
resolution, the rights of the Directors under the portions of this Section 23
specified in such resolution shall terminate without further action and without
any notice.
Section 24. NOTICE OF CERTAIN EVENTS. In case, after the Distribution
Date, the Company shall propose (a) to pay any dividend payable in stock of any
class to the holders of Common Shares or to make any other distribution to the
holders of Common Shares (other than a regular periodic cash dividend at a rate
not in excess of 125% of the rate of the last cash dividend theretofore paid) or
(b) to offer to the holders of Common Shares rights, options or warrants to
subscribe for or to purchase any additional Common Shares or shares of stock of
any class or any other securities, rights or options, or (c) to effect any
reclassification of its Common Shares (other than a reclassification involving
only the subdivision of outstanding Common Shares), or (d) to effect any
consolidation or merger into or with, or to effect any sale or other transfer
(or to permit one or more of its Subsidiaries to effect any sale or other
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transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries, taken as a whole, to any
other Person or Persons, or (e) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 25 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution or offering of rights, options or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of the Common Shares, if any such
date is to be fixed, and such notice shall be so given, in the case of any
action covered by clause (a) or (b) above, at least 20 calendar days prior to
the record date for determining holders of the Common Shares for purposes of
such action, and, in the case of any such other action, at least 20 calendar
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares, whichever shall be
the earlier.
In case any Triggering Event shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to the Rights Agent and
each holder of a Right Certificate, in accordance with Section 25 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights.
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Section 25. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
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:
Cleveland-Cliffs Inc
18th Floor, Diamond Building
1100 Superior Avenue
Cleveland, Ohio 44114-2589
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
525 Washington Boulevard
Suite 4660
Jersey City, New Jersey 07310
Attention: Tenders & Exchange Administration
Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate 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 Rights Agent.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to Section 11 and the last sentence of this Section 26, if the
Company so directs, the Company and
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<PAGE> 64
the Rights Agent shall supplement or amend any provision of this Agreement
without the approval of any holders of certificates representing Common Shares.
From and after the Distribution Date and subject to the last sentence of this
Section 26, if the Company so directs, the Company and the Rights Agent shall
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or inconsistent with any
other provisions herein, (iii) to shorten or lengthen any time period hereunder,
or (iv) to supplement or amend the provisions hereunder in any manner which the
Company may deem desirable, including, without limitation, the addition of other
events requiring adjustment to the Rights under Sections 11(a)(ii) or 11(d)
hereof or procedures relating to the redemption of the Rights, which supplement
or amendment shall not, in the good faith determination of the Directors of the
Company, adversely affect the interests of the holders of Right Certificates
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person). Upon the delivery of a certificate from an officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 26, the Rights Agent shall execute such supplement or amendment;
PROVIDED, HOWEVER, that the failure or refusal of the Rights Agent to execute
such supplement or amendment shall not affect the validity of any supplement or
amendment adopted by the Company, any of which shall be effective in accordance
with the terms thereof. Notwithstanding anything
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<PAGE> 65
in this Agreement to the contrary, no supplement or amendment shall be made
which (x) changes the stated Redemption Price, (y) reduces the number of Common
Shares for which a Right is then exercisable, or (z) modifies a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable.
Section 27. EXCHANGE. (a) The Directors of the Company may, at their
option, at any time after the later of the Distribution Date and the first
occurrence of a Triggering Event, exchange all or part of the then-outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary, any employee benefit plan of the Company or any Subsidiary, or any
entity holding Common Shares for or pursuant to the terms of any such plan), who
or which, together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Common Shares outstanding.
(b) Immediately upon the effective date of the action of the
Directors of the Company ordering the exchange of any Rights pursuant to Section
27(a) hereof, and without any
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<PAGE> 66
further action and without any notice, the right to exercise such Rights shall
terminate and the only right with respect to such Rights thereafter of the
holder of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
Promptly after the action of the Directors of the Company ordering the exchange
of any Rights pursuant to Section 27(a) hereof, the Company shall publicly
announce such action, and within 10 calendar days thereafter shall give notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange shall state the method by which the
exchange of the Common Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 11(a)(ii)
hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 27, the Company, at
its option, may substitute for any Common Share exchangeable for a Right, (i)
cash, (ii) debt securities of the company, (iii) other assets, or (iv) any
combination of the foregoing, in any event having an aggregate value which the
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<PAGE> 67
Directors of the Company shall have determined in good faith to be equal to the
current market value of one Common Share (determined pursuant to Section 11(e)
hereof) on the Trading Day immediately preceding the date of exchange pursuant
to this Section 27.
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. 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 Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (or prior to the Distribution Date, the Common Shares).
Section 30. ACTION BY DIRECTORS. Whenever any action hereunder or in
connection with the Rights is required or permitted to be taken by the Directors
of the Company, such action may be taken by the Executive Committee of the
Directors or by any other duly authorized committee thereof.
Section 31. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants
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<PAGE> 68
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated; PROVIDED, HOWEVER, that
nothing contained in this Section 31 shall affect the ability of the Company
under the provisions of Section 26 to supplement or amend this Agreement to
replace such invalid, void or unenforceable term, provision, covenant or
restriction with a legal, valid and enforceable term, provision, covenant or
restriction.
Section 32. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Ohio and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
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<PAGE> 69
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, this 9th day of September, 1997.
CLEVELAND-CLIFFS INC
By: /s/ J.S. Brinzo
------------------------
Name: J.S. Brinzo
Title: Executive Vice President
Finance and Planning
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: /s/ James Kuzmich
------------------------
Name: James Kuzmich
Title: Assistant Vice President
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<PAGE> 70
Exhibit A
---------
Form of Right Certificate
Certificate No. R- ____________Rights
NOT EXERCISABLE AFTER SEPTEMBER 19, 2007 OR EARLIER IF
REDEEMED OR EXCHANGED. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED
BY THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY 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). THIS RIGHT CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 11(a)(ii) OR SECTION
11(d) OF THE RIGHTS AGREEMENT.*]
Right Certificate
CLEVELAND-CLIFFS INC
This certifies that _________________________, or registered assigns,
is the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of September 19, 1997, (the "Rights Agreement"),
between Cleveland-Cliffs Inc, an Ohio corporation (the "Company"), and First
Chicago Trust Company of New York (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Agreement) and prior to 5:00 P.M. (Cleveland, Ohio time) on September 19, 2007
at the principal office of the Rights Agent, or its
- --------------------
* The portion of the legend in brackets shall be inserted only if
applicable.
A-1
<PAGE> 71
successors as Rights Agent, at its principal executive offices designated for
such purpose, one-hundredth of one fully paid nonassessable Common Share, par
value $1.00 per share (a "Common Share") of the Company, at a purchase price of
$160 per whole Common Share (the "Purchase Price"), upon representation and
surrender of this Right Certificate with the Form of Election to purchase and
related Certificate duly executed. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of the Record Date, based on the Common Shares as
constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of Common Shares which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events.
This Right 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 Right Certificates. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent.
A-2
<PAGE> 72
Pursuant to the Rights Agreement, from and after the later of the
Distribution Date and the first occurrence of a Flip-in Event (as such terms are
defined in the Right Agreement), (i) any Rights that are or were beneficially
owned by any Acquiring Person (or any Affiliate or Associate of such Acquiring
Person) shall be void and any holder of such Rights shall thereafter have no
right to exercise such Rights under any provision of the Rights Agreement, (ii)
no Right Certificate shall be issued pursuant to the Rights Agreement that
represents Rights beneficially owned by an Acquiring Person or any Affiliate or
Associate thereof, (iii) no Right Certificate shall be issued at any time upon
the transfer of any Rights to an Acquiring Person or any Affiliate or Associate
thereof, and (iv) any Right Certificate delivered to the Rights Agent for
transfer to an Acquiring Person or any Affiliate or Associate thereof shall be
cancelled.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Common Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
A-3
<PAGE> 73
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right.
Subject to the provisions of the Rights Agreement, the Directors of
the Company may exchange the Rights (other than any Rights which have become
void), in whole or in part, at an exchange ratio of one Common Share per Right
(subject to adjustment).
No fractional Common Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Common Shares
or of any other securities of the Company which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or, to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights
A-4
<PAGE> 74
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _________, ____.
ATTEST: CLEVELAND-CLIFFS INC
________________________ By: _______________________________
Name Name:
Secretary Title:
Countersigned:
By:_____________________
Authorized Signature
A-5
<PAGE> 75
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED, __________________________ hereby sells, assigns
and transfers unto _____________________________
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ____________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: ___________________, ____
_____________________________________
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________, 19__
_____________________________________
Signature
A-6
<PAGE> 76
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate)
To Cleveland-Cliffs Inc:
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Right Certificate to purchase the one one-hundredth
of a Common Share or other securities issuable upon the exercise of such Rights
and requests that certificates for such securities be issued in the name of:
Please insert social security
or other identifying number:_________________________________
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:_________________________________
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated: ____________, 19__
_____________________________________
Signature
Signature Guaranteed:
A-7
<PAGE> 77
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined pursuant
to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: ____________, 19__
_____________________________________
Signature
NOTICE
------
Signatures on the foregoing Form of Assignment and Form of Election to
Purchase and in the related Certificates must correspond to the name as written
upon the face of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
A-8
<PAGE> 78
EXHIBIT B
---------
SUMMARY OF RIGHTS TO PURCHASE
COMMON SHARES
On September 9, 1997, the Directors of Cleveland-Cliffs Inc (the
"Company") declared a dividend distribution of one right (a "Right") for each
outstanding Common Share, $1.00 par value (the "Common Shares"), of the Company.
The distribution was payable on September 19, 1997 (the "Record Date") to the
shareholders of record as of the close of business on the Record Date. Each
Right entitles the registered holder to purchase from the Company one-hundredth
of one Common Share at a price of $160 per whole share, subject to adjustment
(the "Purchase Price"). The description and terms of the Rights are set forth in
a Rights Agreement dated as of September 19, 1997, (the "Rights Agreement"),
between the Company and First Chicago Trust Company of New York, as Rights Agent
(the "Rights Agent").
Until the earliest to occur of (i) the close of business on the tenth
business day following a public announcement that a person or group of
affiliated or associated persons has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding Common Shares (an
"Acquiring Person"), (ii) the close of business on the tenth business day (or
such later date as may be specified by the Directors) following the commencement
of a tender offer or exchange offer by a person or group of affiliated or
associated persons, the consummation of which would result in beneficial
ownership by such person or group of 20% or more of the outstanding Common
Shares, or (iii) the close of business on the tenth business day following the
first date of public announcement of the first occurrence of a Flip-in Event or
a Flip-over Event (as such terms are hereinafter defined) (the earliest of such
dates being hereinafter called the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Share certificates outstanding as
of the Record Date, by such Common Share certificates.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights)
or, in the case of Common Shares issued upon conversion of the Company's
convertible securities, until the tenth day after the Distribution Date, new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares 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
B-1
<PAGE> 79
certificates for Common Shares in respect of which Rights have been issued will
also constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (the "Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 19, 2007 (the "Final Expiration Date"), unless earlier
redeemed or exchanged by the Company as described below.
The Purchase Price payable, and the number of Common Shares or 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 Common Shares; (ii) upon the
grant to holders of the Common Shares of certain rights, options or warrants to
subscribe for Common Shares or convertible securities at less than the current
market price of the Common Shares; or (iii) upon the distribution to holders of
the Common Shares of evidences of indebtedness, cash (excluding regular periodic
cash dividends at a rate not in excess of 125% of the rate of the last cash
dividend theretofore paid), assets, stock (other than dividends payable in
Common Shares) or of subscription rights, options or warrants (other than those
referred to above).
In the event (a "Flip-in Event"), that (i) any person or group or
affiliate or associated persons becomes an Acquiring Person, (ii) any Acquiring
Person merges into or combines with the Company and the Company is the surviving
corporation or any Acquiring Person effects certain other transactions with the
Company, as described in the Rights Agreement, or (iii) during such time as
there is an Acquiring Person, there shall be any reclassification of securities
or recapitalization or reorganization of the Company which has the effect of
increasing by more than 1% the proportionate share of the outstanding shares of
any class of equity securities of the Company or any of its subsidiaries
beneficially owned by the Acquiring Person, proper provision shall be made so
that each holder of a Right, other than Rights that are or were owned
beneficially by the Acquiring Person (which, from and after the later of the
Distribution Date and the date of the earliest of any such events, will be
void), will thereafter have the right to receive, upon exercise thereof at the
then current Purchase Price, that number of Common Shares having a market value
of two times the Purchase Price.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued (other than fractions
which may, at the
B-2
<PAGE> 80
election of the Company, be evidenced by depositary receipts), and in lieu
thereof, a payment in cash will be made based on the market price of the Common
Shares on the last trading day prior to the date of exercise.
In the event (a "Flip-over Event") that, following the first date of
public announcement that a person has become an Acquiring Person, (i) the
Company merges with or into any person and the Company is not the surviving
corporation, (ii) any person merges with or into the Company and the Company is
the surviving corporation, but its Common Shares are changed or exchanged, or
(iii) 50% or more of the Company's assets or earning power, including without
limitation securities creating obligations of the Company, are sold, proper
provision shall be made so that each holder of a Right, other than Rights that
are or were beneficially owned by the Acquiring Person after the date upon which
the Acquiring Person became such (which will thereafter be void), shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock (or,
under certain circumstances, an economically equivalent security or securities)
of such other person which at the time of such transaction would have a market
value of two times the Purchase Price of the Right.
At any time after the later of the Distribution Date and the first
occurrence of a Flip-in Event or a Flip-over Event and prior to the acquisition
by any person or group of affiliated or associated persons of 50% or more of the
outstanding Common Shares, the Directors of the Company may exchange the Rights
(other than any Rights which have become void), in whole or in part, at an
exchange ratio of one Common Share per Right (subject to adjustment).
The Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"), at any time prior to the close
of business on the later of (i) the Distribution Date and (ii) the first
occurrence of a Flip-in Event or a Flip-over Event. Immediately upon the
effective date of action of the Directors electing to redeem the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price. The Company will give notice of
such redemption to the holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear on the
registry books of the Rights Agent.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights Agreement may be amended by the Company without the
approval of any holders of Rights, including amendments which add other events
requiring adjustment to the
B-3
<PAGE> 81
Purchase Price payable and the number of Common Shares or other securities
issuable upon the exercise of the Rights or which modify procedures relating to
the redemption of the Rights, provided that no amendment may be made which (i)
changes the stated Redemption Price, (ii) reduces the number of Common Shares
for which a Right is then exercisable, or (iii) modifies a time period relating
to when the Rights may be redeemed at such time as the Rights are not then
redeemable.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Form 8-A dated September 19, 1997. 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 hereby
incorporated herein by reference.
B-4
<PAGE> 1
EXHIBIT 99.1
September 19, 1997
To Our Shareholders:
We are pleased to inform you that your Company has adopted a new share
purchase rights plan. The new rights plan replaces the Company's former existing
rights plan, which expired on September 18, 1997.
This action was taken after careful study and was not taken in response
to any pending takeover or proposed change in control of the Company. Like the
Company's former rights plan, the new plan is intended to protect the Company
and its shareholders from potentially coercive takeover practices or takeover
bids which are inconsistent with the interests of the Company and its
shareholders. The plan is not intended to deter unsolicited offers that would
provide superior long-term value to all of the Company's shareholders. The
adoption of a share purchase rights plan has become common practice in major
American companies and a well accepted approach to ensuring that all
shareholders receive a fair price and are treated equally in the event of a
takeover.
To effect the plan, the Board of Directors declared a dividend of one
share purchase right for each outstanding share of the Company's common stock.
The distribution is being made to shareholders of record as of the close of
business on September 19, 1997.
Under the plan, the rights will initially trade together with the
Company's common stock and will not be exercisable. In the absence of further
Board action, the rights generally will become exercisable and allow the holder
to acquire the Company's common stock at a discounted price if a person or group
acquires 20 percent or more of the Company's common stock. Rights held by
persons who exceed the applicable threshold will be void. Under certain
circumstances, the rights will entitle the holder to buy shares in an acquiring
entity at a discounted price.
The plan also includes an exchange option. In general, after the rights
become exercisable, the Board of Directors may, at its option, effect an
exchange of part or all of the rights (other than rights that have become void)
for shares of the Company's common stock. Under this option, the Company would
issue one share of common stock for each right, subject to adjustment in certain
circumstances.
<PAGE> 2
The Company's Board of Directors may, at its option, redeem all rights
for $.01 per right, generally at any time prior to the rights becoming
exercisable. The rights will expire September 19, 2007, unless earlier redeemed,
exchanged or amended by the Directors.
The issuance of the rights is not a taxable event, will not affect the
Company's reported financial condition or results of operations (including
earnings per share), should not interfere with the Company's operating,
financing or investing activities and will not change the way in which the
Company's common stock is currently traded.
A summary of the share purchase rights plan (which explains the terms
and nature of the rights) is enclosed. Shareholders are urged to review the
summary carefully and retain it with their permanent records.
In adopting the share purchase rights plan, the Board has expressed its
confidence in the Company's future and its determination that you, our
shareholders, be given every opportunity to participate fully in that future.
On Behalf of the Directors,
M. Thomas Moore
Chairman and Chief Executive Officer
Attachment
<PAGE> 1
Exhibit 99.2
CLEVELAND-CLIFFS INC
--------------------
ANNOUNCES NEW SHARE PURCHASE RIGHTS PLAN
----------------------------------------
CLEVELAND, SEPTEMBER 9, 1997 - Cleveland-Cliffs Inc today announced
that its Board of Directors has adopted a new share purchase rights plan which
will replace Cleveland-Cliffs' existing rights plan expiring on September 18,
1997. The plan provides for rights to be issued to stockholders of record as of
the close of business on September 19, 1997.
The Company said, "This action was taken after careful study by the
Board of Directors, and was not taken in response to any pending takeover or
proposed change in control of the Company. Like the Company's existing rights
plan, the new rights plan is intended to protect the Company and its
stockholders from potentially coercive takeover practices or takeover bids which
are inconsistent with the interests of the Company and its stockholders. The
adoption of a share purchase rights plan has become common practice in major
American companies and a well-accepted approach to ensuring that all
stockholders receive a fair price and are treated equally in the event of a
takeover."
Under the plan, the rights will initially trade together with
Cleveland-Cliffs' common stock and will not be exercisable. In the absence of
further Board action, the rights generally will become exercisable and allow the
holder to acquire Cleveland-Cliffs' common stock at a discounted price if a
person or group acquires 20 percent or more of the outstanding shares of
Cleveland-Cliffs' common stock.
<PAGE> 2
Rights held by persons who exceed the applicable threshold will be void. Under
certain circumstances, the rights will entitle the holder to buy shares in an
acquiring entity at a discounted price.
The plan also includes an exchange option. In general, after the rights
become exercisable, the Directors may, at their option, effect an exchange of
part of all of the rights -- other than rights that have become void -- for
shares of Cleveland-Cliffs' common stock. Under this option, Cleveland-Cliffs
would issue one share of common stock for each right, subject to adjustment in
certain circumstances.
Cleveland-Cliffs' Directors may, at their option, redeem all rights for
$.01 per right, generally at any time prior to the rights becoming exercisable.
The rights will expire on September 19, 2007, unless earlier redeemed, exchanged
or amended by the Directors.
The issuance of the rights is not a taxable event, will not affect
Cleveland-Cliffs' financial condition or results of operations (including
earnings per share) and will not change the way in which Cleveland-Cliffs'
common stock is currently traded.
Cleveland-Cliffs, which is celebrating its 150th anniversary in 1997,
is the largest supplier of iron ore products to the North American steel
industry. Its subsidiaries manage six iron ore mines in North America. It has
equity interests in
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five of the mines, holds a major iron ore reserve position in the United States,
is a substantial iron ore merchant, and is constructing a joint venture plant in
Trinidad to produce high-quality iron briquettes.
Contacts
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Media: David L. Gardner, Director-Public Relations
(216) 694-5407
Financial
Community: Fred B. Rice, Manager-Investor Relations
(800) 214-0739
To obtain faxed copies of Cleveland-Cliffs Inc news releases dial
1-800-778-3888. News releases and other information on the Company are available
on the Internet at http://www.businesswire.com/cnn/clf.htm.
