SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 28, 1994
PENNZOIL COMPANY
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-5591 74-1597290
(Commission File Number) (IRS Employer Identification No.)
Pennzoil Place, P.O. Box 2967, Houston, Texas 77252-2967
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (713) 546-4000
<PAGE>
Item 5. Other Events.
Effective October 28, 1994, the Board of Directors of Pennzoil
Companym (the "Company") declared a dividend of one right to
purchase preferred stock ("Right") for each outstanding share of
the Company's Common Stock, par value $0.83 1/3 per share ("Common
Stock"), to stockholders of record at the close of business on
November 11, 1994. Each Right entitles the registered holder to
purchase from the Company a unit consisting of one one-hundredth
of a share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $1.00 per share (the "Preferred Stock"), at a
purchase price of $140 per Unit, subject to adjustment (the
"Purchase Price"). The description and terms of the Rights are
set forth in a Rights Agreement dated as of October 28, 1994 as
it may from time to time be supplemented or amended (the "Rights
Agreement") between the Company and Chemical Bank, as Rights
Agent.
Initially, the Rights will be attached to all
certificates representing outstanding shares of Common Stock, and
no separate certificates for the Rights ("Rights Certificates")
will be distributed. The Rights will separate from the Common
Stock and a "Distribution Date" will occur upon the earlier of
(i) ten days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person")
has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common
Stock (the date of the announcement being the "Stock Acquisition
Date"), or (ii) ten business days (or such later date as may be
determined by the Company's Board of Directors before the
Distribution Date occurs) following the commencement of a tender
offer or exchange offer that would result in a person's becoming
an Acquiring Person. Certain inadvertent acquisitions will not
result in a person's becoming an Acquiring Person if the person
promptly divests itself of sufficient Common Stock. Until the
Distribution Date, (a) the Rights will be evidenced by the Common
Stock certificates (together with a copy of a Summary of Rights
or bearing the notation referred to below) and will be
transferred with and only with such Common Stock certificates,
(b) new Common Stock certificates issued after November 11, 1994
will contain a notation incorporating the Rights Agreement by
reference and (c) the surrender for transfer of any certificate
for Common Stock (with or without a copy of the Summary of
Rights) will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on October 28,
1999, unless earlier redeemed or exchanged by the Company as
described below.
As soon as practicable after the Distribution Date,
Rights Certificates will be mailed to holders of record of Common
Stock as of the close of business on the Distribution Date and,
from and after the Distribution Date, the separate Rights
Certificates alone will represent the Rights. All shares of
Common Stock issued prior to the Distribution Date will be issued
with Rights. Shares of Common Stock issued after the
Distribution Date in connection with certain employee benefit
plans or upon conversion of certain securities will be issued
with Rights. Except as otherwise determined by the Board of
Directors, no other shares of Common Stock issued after the
Distribution Date will be issued with Rights.
In the event (a "Flip-In Event") that a person becomes
an Acquiring Person (except pursuant to a tender or exchange
offer for all outstanding shares of Common Stock at a price and
on terms that a majority of the independent directors of the
Company determines to be fair to and otherwise in the best
interests of the Company and its stockholders (a "Permitted
Offer")), each holder of a Right will thereafter have the right
to receive, upon exercise of such Right, a number of shares of
Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a Current Market Price
(as defined in the Rights Agreement) equal to two times the
exercise price of the Right. Notwithstanding the foregoing,
following the occurrence of any Flip-In Event, all Rights that
are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by or transferred to any
Acquiring Person (or by certain related parties) will be null and
void in the circumstances set forth in the Rights Agreement.
However, Rights are not exercisable following the occurrence of
any Flip-In Event until such time as the Rights are no longer
redeemable by the Company as set forth below.
For example, at an exercise price of $140 per Right,
each Right not owned by an Acquiring Person (or by certain
related parties) following an event set forth in the preceding
paragraph would entitle its holder to purchase $280 worth of
Common Stock (or other consideration, as noted above), based upon
its then Current Market Price, for $140. Assuming that the
Common Stock had a Current Market Price of $50 per share at such
time, the holder of each valid Right would be entitled to
purchase 5.6 shares of Common Stock for $140.
In the event (a "Flip-Over Event") that, at any time
from and after the time an Acquiring Person becomes such, (i) the
Company is acquired in a merger or other business combination
transaction (other than certain mergers that follow a Permitted
Offer), or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except
Rights that previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, a number of
shares of common stock of the acquiring company having a Current
Market Price equal to two times the exercise price of the Right.
Flip-In Events and Flip-Over Events are collectively referred to
as "Triggering Events."
The Purchase Price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are
granted certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than the current market
price of the Preferred Stock, or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at
least 1% of the Purchase Price. No fractional Units are required
to be issued and, in lieu thereof, an adjustment in cash may be
made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise. Pursuant to the
Rights Agreement, the Company reserves the right to require prior
to the occurrence of a Triggering Event that, upon any exercise
of Rights, a number of Rights be exercised so that only whole
shares of Preferred Stock will be issued.
At any time until ten days following the first date of
public announcement of the occurrence of a Flip-In Event, the
Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right, payable, at the option of the Company,
in cash, shares of Common Stock or such other consideration as
the Board of Directors may determine. Immediately upon the
effectiveness of the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the $.01
redemption price.
At any time after the occurrence of a Flip-In Event and
prior to a person's becoming the beneficial owner of 50% or more
of the shares of Common Stock then outstanding, the Company may
exchange the Rights (other than Rights owned by an Acquiring
Person or an affiliate or an associate of an Acquiring Person,
which will have become void), in whole or in part, at an exchange
ratio of one share of Common Stock, and/or other equity
securities deemed to have the same value as one share of Common
Stock, per Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights should not be
taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the
event that the Rights become exercisable for Common Stock (or
other consideration) of the Company or for the common stock of
the acquiring company as set forth above or are exchanged as
provided in the preceding paragraph.
Other than the redemption price, any of the provisions
of the Rights Agreement may be amended by the Board of Directors
of the Company as long as the Rights are redeemable.
Thereafter, the provisions of the Rights Agreement may be amended
by the Board of Directors in order to cure any ambiguity, defect
or inconsistency, to make changes that do not materially
adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person), or to shorten or lengthen
any time period under the Rights Agreement; provided, however,
that no amendment to lengthen the time period governing
redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as Exhibit 1 hereto. A copy
of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to
the Rights Agreement, which is incorporated herein by reference.
The Rights will have certain anti-takeover effects.
The Rights will cause substantial dilution to any person or group
that attempts to acquire the Company without the approval of the
Company's Board of Directors. As a result, the overall effect of
the Rights may be to render more difficult or discourage any
attempt to acquire the Company even if such acquisition may be
favorable to the interests of the Company's stockholders.
Because the Company's Board of Directors can redeem the Rights or
approve a Permitted Offer, the Rights should not interfere with a
merger or other business combination approved by the Board of
Directors of the Company.
The information set forth in the Company's press
release dated October 28, 1994 is contained in Exhibit 2 hereto
and is incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Description Page
1. Rights Agreement dated as of October 28, 1994
between Pennzoil Company and Chemical Bank, as
Rights Agent, which includes as Exhibit A the
Form of Certificate of Designations of Series
A Junior Participating Preferred Stock of
Pennzoil Company, as Exhibit B the Form of
Rights Certificate and as Exhibit C the Summary
of Rights to Purchase Preferred Stock. (Pursuant
to the Rights Agreement, Rights Certificates will
not be mailed to holders of Rights until after
the Distribution Date (as defined in the Rights
Agreement).)
2. Press Release issued by the Company dated
October 28, 1994
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
PENNZOIL COMPANY
Date: October 31, 1994 By: \s\ DAVID P. ALDERSON, II
David P. Alderson, II
Group Vice President
-31-
RIGHTS AGREEMENT
This Rights Agreement, dated as of October 28, 1994
(the "Agreement"), between Pennzoil Company, a Delaware
corporation (the "Company"), and Chemical Bank, a New York
banking corporation (the "Rights Agent"),
W I T N E S S E T H:
WHEREAS, effective on October 28, 1994 (the "Rights
Dividend Declaration Date"), the Board of Directors of the
Company authorized and declared a dividend of one Right for each
share of common stock, par value $0.83 1/3 per share, of the Company
(the "Common Stock") outstanding at the close of business on
November 11, 1994 (the "Record Date"), and has authorized the
issuance of one Right (as such number may hereinafter be adjusted
pursuant to the provisions of Section 11(p) hereof) for each
share of Common Stock of the Company issued (whether originally
issued or delivered from the Company's treasury) between the
Record Date and the earlier of the Distribution Date (as
hereinafter defined) and the Expiration Date (as hereinafter
defined), and, in certain circumstances provided for in
Section 22 hereof, after the Distribution Date, each Right
initially representing the right to purchase one one-hundredth of
a share of Series A Junior Participating Preferred Stock of the
Company, upon the terms and subject to the conditions hereinafter
set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby agree
as follows:
Section 1. Certain Definitions. For purposes of
this Agreement, the following terms shall have the meanings
indicated:
"Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall
be the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, but shall not include any Exempt Person;
provided, however, that a Person shall not become an Acquiring
Person if such Person, together with its Affiliates and
Associates, shall become the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding solely as a result of
a reduction in the number of shares of Common Stock outstanding
due to the repurchase of Common Stock by the Company, unless and
until such time as such Person or any Affiliate or Associate of
such Person shall purchase or otherwise become the Beneficial
Owner of additional shares of Common Stock constituting 1% or
more of the then outstanding shares of Common Stock or any other
Person (or Persons) who is (or collectively are) the Beneficial
Owner of shares of Common Stock constituting 1% or more of the
then outstanding shares of Common Stock shall become an Affiliate
or Associate of such Person; and provided, further, that if the
Board of Directors determines in good faith that a Person that
would otherwise be an "Acquiring Person" has become such
inadvertently (including, without limitation, because (i) such
Person was unaware that it beneficially owned a percentage of
Common Stock that would otherwise cause such Person to be an
"Acquiring Person" or (ii) such Person was aware of the extent of
its Beneficial Ownership of Common Stock but had no actual
knowledge of the consequences of such Beneficial Ownership under
this Agreement) and without any intention of changing or
influencing control of the Company, and if such Person divests
itself as promptly as practicable of Beneficial Ownership of a
sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person," then such Person shall
not be deemed to be or to have become an "Acquiring Person" for
any purposes of this Agreement.
"Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof.
"Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement.
"Associate" shall mean, with reference to any Person,
(1) any corporation, firm, partnership, association,
unincorporated organization or other entity (other than the
Company or a Subsidiary of the Company) of which such Person is
an officer or general partner (or officer or general partner of a
general partner) or is, directly or indirectly, the Beneficial
Owner of 10% or more of any class of equity securities, (2) any
trust or other estate in which such Person has a substantial
beneficial interest or as to which such Person serves as trustee
or in a similar fiduciary capacity and (3) any relative or spouse
of such Person, or any relative of such spouse, who has the same
home as such Person.
A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, is the
"beneficial owner" of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act,
as in effect on the date of this Agreement) or otherwise has
the right to vote or dispose of, including pursuant to any
agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own,"
any security under this subparagraph (i) as a result of an
agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding:
(A) arises solely from a revocable proxy or consent given in
response to a public (i.e., not including a solicitation
exempted by Rule 14a-2(b)(2) of the General Rules and
Regulations under the Exchange Act) proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and Regulations
under the Exchange Act and (B) is not then reportable by
such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report);
(ii) that such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the
right or obligation to acquire (whether such right or
obligation is exercisable or effective immediately or only
after the passage of time or the occurrence of an event)
pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of
conversion rights, exchange rights, other rights, warrants
or options, or otherwise; provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a
tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B)
securities issuable upon exercise of Rights at any time
prior to the occurrence of a Triggering Event, or (C)
securities issuable upon exercise of Rights from and after
the occurrence of a Triggering Event which Rights were
acquired by such Person or any of such Person's Affiliates
or Associates prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) or (p) hereof in connection with
an adjustment made with respect to any Original Rights; or
(iii) that are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person or any of such
Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for
the purpose of acquiring, holding, voting (except pursuant
to a revocable proxy or consent as described in the proviso
to subparagraph (i) of this definition) or disposing of any
voting securities of the Company;
provided, however, that nothing in this definition shall cause a
Person engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own," any
securities acquired through such Person's participation in good
faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
"Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive
order to close.
"close of business" on any given date shall mean 5:00
p.m., New York City time, on such date; provided, however, that
if such date is not a Business Day, it shall mean 5:00 p.m., New
York City time, on the next succeeding Business Day.
"Closing Price" of a security for any day shall mean
the last sales price, regular way, on such day or, in case no
such sale takes place on such day, the average of the closing bid
and asked prices, regular way, on such day, in either case as
reported in the principal transaction reporting system with
respect to securities listed or admitted to trading on the New
York Stock Exchange, or, if such security is not listed or
admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which such security is
listed or admitted to trading, or, if such security is not listed
or admitted to trading on any national securities exchange but
sales price information is reported for such security, as
reported by NASDAQ or such other self-regulatory organization or
registered securities information processor (as such terms are
used under the Exchange Act) that then reports information
concerning such security, or, if sales price information is not
so reported, the average of the high bid and low asked prices in
the over-the-counter market on such day, as reported by NASDAQ or
such other entity, or, if on such day such security is not quoted
by any such entity, the average of the closing bid and asked
prices as furnished by a professional market maker making a
market in such security selected by the Board of Directors of the
Company. If on such day no market maker is making a market in
such security, the fair value of such security on such day as
determined in good faith by the Board of Directors of the Company
shall be used.
"Common Stock" shall mean the common stock, par value
$0.83 1/3 per share, of the Company, except that "Common Stock" when
used with reference to stock issued by any Person other than the
Company shall mean the capital stock of such Person with the
greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of
such Person.
"Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
"Company" shall mean the Person named as the "Company"
in the preamble of this Agreement until a successor Person shall
have become such or until a Principal Party shall assume, and
thereafter be liable for, all obligations and duties of the
Company hereunder, pursuant to the applicable provisions of this
Agreement, and thereafter "Company" shall mean such successor
Person or Principal Party.
"Current Market Price" shall have the meaning set forth
in Section 11(d) hereof.
"Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Distribution Date" shall mean the earlier of (i) the
close of business on the tenth day (or, if such Stock Acquisition
Date results from the consummation of a Permitted Offer, such
later date as may be determined by the Company's Board of
Directors before the Distribution Date occurs) after the Stock
Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the close of
business on the Record Date) or (ii) the close of business on
the tenth Business Day (or such later date as may be determined
by the Company's Board of Directors before the Distribution Date
occurs) after the date that a tender offer or exchange offer by
any Person (other than any Exempt Person) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General
Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be an Acquiring Person,
other than a tender or exchange offer that is determined before
the Distribution Date occurs to be a Permitted Offer. The Board
of Directors of the Company may, to the extent set forth in the
preceding sentence, defer the date set forth in clause (i) or
(ii) of the preceding sentence to a specified later date or to an
unspecified later date to be determined by a subsequent action or
event.
"Equivalent Preferred Stock" shall have the meaning set
forth in Section 11(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Exchange Ratio" shall have the meaning set forth in
Section 24 hereof.
"Exempt Person" shall mean the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, and any Person organized,
appointed or established by the Company for or pursuant to the
terms of any such plan.
"Expiration Date" shall mean the earliest of (i) the
Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, (iii) the time at
which the Rights expire pursuant to Section 13(d) hereof and
(iv) the time at which all Rights then outstanding and
exercisable are exchanged pursuant to Section 24 hereof.
"Final Expiration Date" shall mean the close of
business on October 28, 1999.
"Flip-In Event" shall mean an event described in
Section 11(a)(ii) hereof.
"Flip-In Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) hereof.
"Flip-Over Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.
"NASDAQ" shall mean the National Association of
Securities Dealers, Inc. Automated Quotations System.
"Original Rights" shall have the meaning set forth in
the definition of "Beneficial Owner."
"Permitted Offer" shall mean a tender offer or an
exchange offer for all outstanding shares of Common Stock at a
price and on terms determined by at least a majority of the
members of the Board of Directors who are not officers or
employees of the Company and who are not representatives,
nominees, Affiliates or Associates of an Acquiring Person, after
receiving advice from one or more investment banking firms, to be
(a) at a price and on terms that are fair to stockholders (taking
into account all factors that such members of the Board deem
relevant including, without limitation, prices that could
reasonably be achieved if the Company or its assets were sold on
an orderly basis designed to realize maximum value) and
(b) otherwise in the best interests of the Company and its
stockholders.
"Person" shall mean any individual, firm, corporation,
partnership, association, trust, unincorporated organization or
other entity.
"Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the
Company having the rights, powers and preferences set forth in
the form of Certificate of Designations attached hereto as
Exhibit A and, to the extent that there is not a sufficient
number of shares of Series A Junior Participating Preferred Stock
authorized to permit the full exercise of the Rights, any other
series of Preferred Stock, par value $1.00 per share, of the
Company designated for such purpose containing terms
substantially similar to the terms of the Series A Junior
Participating Preferred Stock.
"Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
"Purchase Price" shall have the meaning set forth in
Section 4(a) hereof.
"Record Date" shall have the meaning set forth in the
recitals clause at the beginning of this Agreement.
"Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
"Rights" shall have the meaning set forth in the
recitals clause at the beginning of this Agreement.
"Rights Agent" shall mean the Person named as the
"Rights Agent" in the preamble of this Agreement until a
successor Rights Agent shall have become such pursuant to the
applicable provisions hereof, and thereafter "Rights Agent" shall
mean such successor Rights Agent. If at any time there is more
than one Person appointed by the Company as Rights Agent pursuant
to the applicable provisions of this Agreement, "Rights Agent"
shall mean and include each such Person.
"Rights Certificates" shall mean the certificates
evidencing the Rights.
"Rights Dividend Declaration Date" shall have the
meaning set forth in the recitals clause at the beginning of this
Agreement.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
"Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition and
Section 23, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by the Company or
an Acquiring Person that an Acquiring Person has become such.
"Subsidiary" shall mean, with reference to any Person,
any corporation or other Person of which an amount of voting
securities sufficient to elect at least a majority of the
directors or other persons performing similar functions is
beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
"Substitution Period" shall have the meaning set forth
in Section 11(a)(iii) hereof.
"Summary of Rights" shall mean the Summary of Rights to
Purchase Preferred Stock sent pursuant to Section 3(b) hereof.
"Trading Day" with respect to a security shall mean a
day on which the principal national securities exchange on which
such security is listed or admitted to trading is open for the
transaction of business, or, if such security is not listed or
admitted to trading on any national securities exchange but is
quoted by NASDAQ, a day on which NASDAQ reports trades, or, if
such security is not so quoted, a Business Day.
"Triggering Event" shall mean any Flip-In Event or any
Flip-Over Event.
Section 2. Appointment of Rights Agent. The
Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such Co-Rights Agents as it may
deem necessary or desirable.
Section 3. Issue of Rights 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 Stock registered in the
names of the holders of the Common Stock and not by separate
certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common
Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will
send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on
the Distribution Date, at the address of such holder shown on the
records of the Company, one or more Rights Certificates,
evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per share of Common Stock has
been made pursuant to Section 11(p) hereof, at the time of
distribution of the Right Certificates, the Company shall make
the necessary and appropriate rounding adjustments (in accordance
with Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed and
cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by
such Rights Certificates.
(b) As promptly as practicable following the Record
Date, the Company will send a copy of a Summary of Rights to
Purchase Preferred Stock, in substantially the form attached
hereto as Exhibit C, by first-class, postage prepaid mail, to
each record holder of Common Stock as of the close of business on
the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for Common
Stock outstanding as of the Record Date, until the Distribution
Date or the earlier surrender for transfer thereof or the
Expiration Date, the Rights associated with the shares of Common
Stock represented by such certificates shall be evidenced by such
certificates for Common Stock together with a copy of the Summary
of Rights, and the registered holders of the Common Stock shall
also be the registered holders of the associated Rights. Until
the earlier of the Distribution Date or the Expiration Date, the
transfer of any of the certificates for Common Stock outstanding
on the Record Date, with or without a copy of the Summary of
Rights, shall also constitute the transfer of the Rights
associated with the Common Stock represented by such
certificates.
(c) Rights shall be issued in respect of all shares of
Common Stock that are issued (whether originally issued or
delivered from the Company's treasury) after the Record Date but
prior to the earlier of the Distribution Date or the Expiration
Date or, in certain circumstances provided in Section 22 hereof,
after the Distribution Date. Certificates issued for shares of
Common Stock that shall so become outstanding or shall be
transferred or exchanged after the Record Date but prior to the
earlier of the Distribution Date or the Expiration Date shall
also be deemed to be certificates for Rights, and shall bear the
following legend:
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in the
Rights Agreement between Pennzoil Company (the
"Company") and Chemical Bank (the "Rights Agent") dated
as of October 28, 1994 as it may from time to time be
supplemented or amended (the "Rights Agreement"), the
terms of which are hereby incorporated herein by
reference and a copy of which is on file at the
principal offices of the Company. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights may be redeemed, may be exchanged, may
expire or may be evidenced by separate certificates and
will no longer be evidenced by this certificate. The
Company will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date
of mailing, without charge promptly after receipt of a
written request therefor. Under certain circumstances
set forth in the Rights Agreement, Rights beneficially
owned by or transferred to any Person who is, was or
becomes an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the
Rights Agreement), and certain transferees thereof,
will become null and void and will no longer be
transferable.
With respect to such certificates containing the foregoing
legend, until the earlier of the Distribution Date or the
Expiration Date, the Rights associated with the Common Stock
represented by such certificates shall be evidenced by such
certificates alone, and registered holders of Common Stock shall
also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock
represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election
to purchase and of assignment to be printed on the reverse
thereof), when, as and if issued, shall be substantially in the
form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable
law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange or quotation system
on which the Rights may from time to time be listed or quoted, or
to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights 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 one one-
hundredths of a share of Preferred Stock as shall be set forth
therein at the price set forth therein (such exercise price per
one one-hundredth of a share (or, as set forth in this Agreement,
for other securities), the "Purchase Price"), but the amount and
type of securities purchasable upon the exercise of each Right
and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section
3(a) or Section 22 hereof that represents Rights beneficially
owned by a Person described in the first sentence of
Section 7(e), and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any such Rights, shall contain (to
the extent feasible) the following legend, modified as applicable
to apply to such Person:
The Rights represented by this Rights Certificate are
or were beneficially owned by a Person who was or
became an Acquiring Person or an Affiliate or Associate
of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby [will]
[have] become null and void in the circumstances and
with the effect specified in Section 7(e) of such
Agreement.
The provisions of Section 7(e) of this Agreement shall be
operative whether or not the foregoing legend is contained on any
such Rights Certificate. The Company shall give notice to the
Rights Agent promptly after it becomes aware of the existence of
any Acquiring Person or any Associate or Affiliate thereof.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President
or any Vice President, either manually or by facsimile signature,
and shall have affixed thereto the Company's seal or a facsimile
thereof, which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature, and
shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company
before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the
person who signed such Rights Certificates had not ceased to be
such officer of the Company; and any Rights Certificate may be
signed on behalf of the Company by any person who, at the actual
date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate,
although at the date of the execution of this Rights Agreement
any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its principal office or offices
designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration
and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the
certificate number and the date of each of the Rights
Certificates.
Section 6. Transfer, Split-Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section
7(e), Section 13(d), Section 14 and Section 24 hereof, at any
time after the close of business on the Distribution Date, and at
or prior to the close of business on the Expiration Date, any
Rights Certificate or Rights Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase
a like number of one one-hundredths of a share of Preferred Stock
(or, following a Triggering Event, Common Stock, other
securities, cash or other assets, as the case may be) as the
Rights Certificate or Rights Certificates surrendered then
entitled such holder (or former holder in the case of a transfer)
to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Rights Certificate or Rights
Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or
Rights Certificates to be transferred, split up, combined or
exchanged at the principal office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with
respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and
signed the certificate contained in the form of assignment on the
reverse side of such Rights Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) thereof or of the Affiliates or
Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b),
Section 7(e), Section 13(d), Section 14 and Section 24 hereof,
countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment by the holder of a
sum sufficient to cover any tax or governmental charge that may
be imposed in connection with any transfer, split-up, combination
or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent
of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case
of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation
of the Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner
in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price.
(a) Subject to Section 7(e) hereof, the registered
holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein including,
without limitation, the restrictions on exercisability set forth
in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in
whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly
completed and executed, to the Rights Agent at the principal
office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price
with respect to the total number of one one-hundredths of a share
of Preferred Stock (or other securities, cash or other assets, as
the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the Expiration Date.
(b) The Purchase Price for each one one-hundredth of a
share of Preferred Stock pursuant to the exercise of a Right
shall initially be $140, and shall be subject to adjustment from
time to time as provided in Sections 11 and 13(a) hereof and
shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate on the reverse side thereof duly executed,
accompanied by payment, with respect to each Right so exercised,
of the Purchase Price per one one-hundredth of a share of
Preferred Stock (or other shares, securities, cash or other
assets, as the case may be) to be purchased as set forth below
and an amount equal to any applicable transfer tax, the Rights
Agent shall, subject to Section 20(k) hereof, thereupon promptly
(i)(A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the total number
of one one-hundredths of a share of Preferred Stock to be
purchased, and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the
Company, in its sole discretion, shall have elected to deposit
the shares of Preferred Stock issuable upon exercise of the
Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing interests in
such number of one one-hundredths of a share of Preferred Stock
as are to be purchased (in which case certificates for the shares
of Preferred Stock represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and
the Company will direct the depositary agent to comply with such
request, (ii) requisition from the Company the amount of cash, if
any, to be paid in lieu of fractional shares in accordance with
Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such
holder and (iv) after receipt thereof, deliver such cash, if any,
to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount
may be reduced pursuant to Section 11(a)(iii) hereof) may be made
in cash or by certified check, cashiers or official bank check or
bank draft payable to the order of the Company or the Rights
Agent. In the event that the Company is obligated to issue other
securities (including Common Stock) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) or
Section 13(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other
property are available for distribution by the Rights Agent, if
and when appropriate. The Company reserves the right to require
prior to the occurrence of a Triggering Event that, upon exercise
of Rights, a number of Rights be exercised so that only whole
shares of Preferred Stock would be issued.
(d) In case the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the
provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Flip-In Event,
any Rights beneficially owned by or transferred to (i) an
Acquiring Person (or an Associate or Affiliate of an Acquiring
Person) other than any such Person that became such pursuant to a
Permitted Offer and the Board of Directors in good faith
determines was not involved in and did not cause or facilitate,
directly or indirectly, such Flip-In Event, (ii) a direct or
indirect transferee of such Rights from such Acquiring Person (or
any such Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes such or (iii) a direct or indirect
transferee of such Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person's becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for
consideration) from such Acquiring Person (or such Affiliate or
Associate) to holders of equity interests in such Acquiring
Person (or such Affiliate or Associate) or to any Person with
whom such Acquiring Person (or such Affiliate or Associate) has
any continuing agreement, arrangement or understanding regarding
the transferred Rights or (B) a transfer that the Board of
Directors of the Company determines is part of a plan,
arrangement or understanding that has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and
void without any further action, no holder of such Rights shall
have any rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise, and such
Rights shall not be transferable. The Company shall use all
reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall
have no liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or
transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have
(i) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as
the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the
purpose of exercise, transfer, split-up, combination or exchange
shall, if surrendered to the Company or any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled
by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Rights Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the
Company, or shall, at the written request of the Company, destroy
such cancelled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Capital
Stock.
(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized and
unissued shares of Preferred Stock (and, following the occurrence
of a Triggering Event, out of its authorized and unissued shares
of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering
Event, Common Stock and/or other securities) that, as provided in
this Agreement, including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock
and/or other securities) issuable and deliverable upon the
exercise of the Rights may be listed on any national securities
exchange or quoted on any trading system, the Company shall use
its best efforts to cause, from and after such time as the Rights
become exercisable, all shares reserved for such issuance to be
listed on such exchange, or quoted on such system, upon official
notice of issuance upon such exercise.
(c) The Company shall use its best efforts to
(i) prepare and file, as soon as practicable following the first
occurrence of a Flip-In Event or, if applicable, as soon as
practicable following the earliest date after the first
occurrence of a Flip-In Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been
determined pursuant to this Agreement (including in accordance
with Section 11(a)(iii) hereof), a registration statement on an
appropriate form under the Securities Act with respect to the
securities purchasable upon exercise of the Rights, (ii) cause
such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times
meeting the requirements of the 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
will 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 not to exceed 90 days after the date set forth in clause (i)
of the first sentence of this Section 9(c), the exercisability of
the Rights in order to prepare and file such registration
statement and permit it to become effective. In addition, if the
Company shall determine that the Securities Act requires an
effective registration statement under the Securities Act
following the Distribution Date, the Company may temporarily
suspend the exercisability of the Rights until such time as such
a registration statement has been declared 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. Notwithstanding
any provision of this Agreement to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite
qualification in such jurisdiction shall not have been obtained,
the exercise thereof shall not be permitted under applicable law
or any required registration statement shall not have been
declared effective.
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all one one-
hundredths of a share of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other
securities) delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such shares (subject to
payment of the Purchase Price), be duly and validly authorized
and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Rights Certificates and of any
certificates for a number of one one-hundredths of a share of
Preferred Stock (or Common Stock and/or other securities, as the
case may be) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax that may be payable
in respect of any transfer or delivery of Rights Certificates to
a Person other than, or the issuance or delivery of a number of
one one-hundredths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to
issue or deliver any certificates for a number of one one-
hundredths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in a name other than that
of the registered holder upon the exercise of any Rights until
such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. Preferred Stock Record Date. Each
Person in whose name any certificate for a number of one one-
hundredths of a share of Preferred Stock (or Common Stock and/or
other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the
holder of record of such shares (fractional or otherwise) of
Preferred Stock (or Common Stock and/or other securities, as the
case may be) represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing
such Rights was duly surrendered and payment of the Purchase
Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date
upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are
closed, such Person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on
which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate, as such, shall not be entitled to
any rights of a stockholder of the Company 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
Kind of Shares or Number of Rights. The Purchase Price, the
number and kind of shares or other securities subject to purchase
upon exercise of each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this
Section 11.
(a)(i) In the event the Company shall at any
time after the Rights Dividend Declaration Date (A) declare
a dividend on the Preferred Stock payable in shares of
Preferred Stock, (B) subdivide the outstanding Preferred
Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares or (D) issue any shares of its
capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
shares of Preferred Stock or capital stock, as the case may
be, issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time
shall be entitled to receive, upon payment of the Purchase
Price then in effect, the aggregate number and kind of
shares of Preferred Stock or capital stock, as the case may
be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock
transfer books of the Company were open, 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, the
adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to Sections 23 and 24 of this
Agreement, in the event any Person shall, at any time after
the Rights Dividend Declaration Date, become an Acquiring
Person, unless the event causing such Person to become an
Acquiring Person is (1) a transaction set forth in Section
13(a) hereof or (2) an acquisition of shares of Common Stock
pursuant to a Permitted Offer (provided that this clause (2)
shall cease to apply if such Acquiring Person thereafter
becomes the Beneficial Owner of any additional shares of
Common Stock other than pursuant to such Permitted Offer or
a transaction set forth in Section 13(a) hereof), then
(x) the Purchase Price shall be adjusted to be the Purchase
Price immediately prior to the first occurrence of a Flip-
In Event multiplied by the number of one one-hundredths of a
share of Preferred Stock for which a Right was exercisable
immediately prior to such first occurrence and (y) each
holder of a Right (except as provided below in Section
11(a)(iii) and in Section 7(e) hereof) shall thereafter have
the right to receive, upon exercise thereof at a price equal
to the Purchase Price in accordance with the terms of this
Agreement, in lieu of shares of Preferred Stock, such number
of shares of Common Stock of the Company as shall equal the
result obtained by dividing the Purchase Price by 50% of the
Current Market Price per share of Common Stock on the date
of such first occurrence (such number of shares, the
"Adjustment Shares"); provided that the Purchase Price and
the number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any events occurring
after the date of such first occurrence.
(iii) In the event that the number of shares
of Common Stock that are authorized by the Company's
restated certificate of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise
of the Rights is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall,
to the extent permitted by applicable law and regulation,
(A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (computed using
the Current Market Price used to determine the number of
Adjustment Shares) (the "Current Value") over (2) the
Purchase Price (such excess is herein referred to as the
"Spread"), and (B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon the
exercise of the Rights and payment of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Common Stock or other equity securities of the
Company (including, without limitation, shares, or units of
shares, of preferred stock (including, without limitation,
the Preferred Stock) that the Board of Directors of the
Company has determined to have the same value as shares of
Common Stock (such shares of preferred stock are herein
referred to as "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets or (6) any
combination of the foregoing, having an aggregate value
equal to the Current Value, where such aggregate value has
been determined by the Board of Directors of the Company
based upon the advice of a nationally recognized investment
banking firm selected by the Board of Directors of the
Company; provided, however, if the Company shall not have
made adequate provision to deliver value pursuant to clause
(B) above within 30 days following the later of (x) the
first occurrence of a Flip-In Event and (y) the date on
which the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being
referred to herein as the "Flip-In Trigger Date"), then the
Company shall be obligated to deliver, upon the surrender
for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the
Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise
in full of the Rights, the 30-day period set forth above may
be extended to the extent necessary, but not more than 90
days after the Flip-In Trigger Date, in order that the
Company may seek stockholder approval for the authorization
of such additional shares (such period, as it may be
extended, the "Substitution Period"). To the extent that
the Company determines that some action need be taken
pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject
to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and
to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. For
purposes of this Section 11(a)(iii), the value of the Common
Stock shall be the Current Market Price per share of the
Common Stock on the Flip-In Trigger Date and the value of
any Common Stock Equivalent shall be deemed to have the same
value as the Common Stock on such date.
(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Preferred Stock entitling them to subscribe for or purchase (for
a period expiring within 45 calendar days after such record date)
Preferred Stock (or shares having the same rights, privileges and
preferences as the shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock
or Equivalent Preferred Stock at a price per share of Preferred
Stock or per share of Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into
Preferred Stock or Equivalent Preferred Stock) less than the
Current Market Price per share of Preferred Stock on such record
date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred
Stock outstanding on such record date, plus the number of shares
of Preferred Stock that the aggregate offering price of the total
number of shares of Preferred Stock and/or Equivalent Preferred
Stock 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 shares of Preferred Stock
outstanding on such record date, plus the number of additional
shares of Preferred Stock and/or Equivalent Preferred Stock 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 by
delivery of consideration, part or all of which may be in a form
other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock
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 or warrants are not
so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date
had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (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 quarterly cash dividend out of the earnings or retained
earnings of the Company), assets (other than a dividend payable
in Preferred Stock, but including any dividend payable in stock
other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per share of
Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights
or warrants applicable to a share of Preferred Stock and the
denominator of which shall be such Current Market Price per share
of Preferred Stock. 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 be adjusted
to be the Purchase Price which would have been in effect if such
record date had not been fixed.
(d)(i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii)
hereof, the "Current Market Price" per share of Common Stock
of a Person on any date shall be deemed to be the average of
the daily Closing Prices per share of such Common Stock for
the 30 consecutive Trading Days immediately prior to such
date, and for purposes of computations made pursuant to
Section 11(a)(iii) hereof, the "Current Market Price" per
share of Common Stock on any date shall be deemed to be the
average of the daily Closing Prices per share of such Common
Stock for the 10 consecutive Trading Days immediately
following such date; provided, however, that in the event
that the Current Market Price per share of Common Stock is
determined during a period following the announcement of (A)
a dividend or distribution on such Common Stock other than a
regular quarterly cash dividend or the dividend of the
Rights, or (B) any subdivision, combination or
reclassification of such Common Stock, and the ex-dividend
date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, shall
not have occurred prior to the commencement of the requisite
30 Trading Day or 10 Trading Day period, as set forth above,
then, and in each such case, the Current Market Price shall
be properly adjusted to take into account ex-dividend
trading. If the Common Stock is not publicly held or not so
listed or traded, "Current Market Price" per share shall
mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the "Current Market Price" per share (or one one-hundredth
of a share) of Preferred Stock shall be determined in the
same manner as set forth above for the Common Stock in
clause (i) of this Section 11(d) (other than the last
sentence thereof). If the Current Market Price per share
(or one one-hundredth of a share) of Preferred Stock cannot
be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in
a manner described in clause (i) of this Section 11(d), the
"Current Market Price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 (as such
number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with
respect to the Common Stock occurring after the date of this
Agreement) multiplied by the Current Market Price per share
of the Common Stock. If neither the Common Stock nor the
Preferred Stock is publicly held or so listed or traded,
Current Market Price per share of the Preferred Stock shall
mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the Current Market Price of one
one-hundredth of a share of Preferred Stock shall be equal
to the Current Market Price of one share of Preferred Stock
divided by 100.
(e) Anything herein to the contrary notwithstanding,
no adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1%
in the Purchase Price; provided, however, that any adjustments
that by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share
of Common Stock or other share or one-millionth of a share of
Preferred Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such
adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a) hereof, the holder of any Right
thereafter exercised shall become entitled to receive in respect
of such Right any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof 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 Preferred Stock contained in Sections 11(a), (b),
(c), (e), (f), (g), (h), (i), (j), (k) and (m) hereof, and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to
the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of one one-hundredths of a share of Preferred
Stock purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior
to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to
the nearest one-millionth) obtained by (i) multiplying (x) the
number of one one-hundredths of a share of Preferred Stock
covered by a Right immediately prior to this adjustment by (y)
the Purchase Price in effect immediately prior to such adjustment
of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment
of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights,
in lieu of any adjustment in the number of one one-hundredths of
a share of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in
the number of Rights shall be exercisable for the number of one
one-hundredths of a share of Preferred Stock 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 ten-
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
Purchase Price. The Company shall make a public announcement of
its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the
date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued,
shall be at least 10 days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section
11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such
record date Rights Certificates evidencing, subject to Section 14
hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record
in substitution and replacement for the Rights Certificates held
by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights
Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates 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 Rights Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-hundredths of a share of
Preferred Stock issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per one one-hundredth of a
share and the number of one-hundredths of a share that were
expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value
or stated value, if any, of the number of one one-hundredths of a
share of Preferred Stock or of the number of shares of Common
Stock or other securities issuable upon exercise of a Right, the
Company shall take any corporate action that may, in the opinion
of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable such
number of one one-hundredths of a share of Preferred Stock or
such number of shares of Common Stock or other securities at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of
a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the
holder of any Right exercised after such record date the number
of one one-hundredths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon
such exercise over and above the number of one one-hundredths of
a share of Preferred Stock 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 (fractional or
otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 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 in their good faith judgment the Board of Directors
of the Company shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of
shares of Preferred Stock or securities that by their terms are
convertible into or exchangeable for shares of Preferred Stock,
(iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11 hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to
such stockholders.
(n) The Company covenants and agrees that it shall
not, at any time that there is an Acquiring Person,
(i) consolidate with any other Person, (ii) merge with or into
any other Person, or (iii) sell, lease or transfer (or permit one
or more Subsidiaries to sell, lease or transfer), in one
transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company and/or any of
its wholly owned Subsidiaries in one or more transactions each of
which complies (and all of which together comply) with Section
11(o) hereof), if (x) at the time of or immediately after such
consolidation, merger, sale, lease or transfer there are any
rights, warrants or other instruments or securities of the
Company or any other Person outstanding or agreements,
arrangements or understandings in effect that would substantially
diminish or otherwise eliminate the benefits intended to be
afforded by the Rights, (y) prior to, simultaneously with or
immediately after such consolidation, merger, sale, lease or
transfer, the stockholders or other equity owners of the Person
who constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of
its Affiliates or Associates, or (z) the identity, form or nature
of organization of the Principal Party (including without
limitation the selection of the Person that will be the Principal
Party as a result of the Company's entering into one or more
consolidations, mergers, sales, leases, transfers or transactions
with more than one party) would preclude or limit the exercise of
Rights or otherwise diminish substantially or eliminate the
benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23
or Section 27 hereof, take (or permit any Subsidiary to take) any
action if the purpose of such action is to, or if at the time
such action is taken it is reasonably foreseeable that such
action will, diminish substantially or eliminate the benefits
intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time
after the Rights Dividend Declaration Date and prior to the
Distribution Date (i) declare a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, (iii) combine
the outstanding shares of Common Stock into a smaller number of
shares or (iv) otherwise reclassify the outstanding shares of
Common Stock, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter
but prior to the Distribution Date, shall be proportionately
adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal
the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to
such event by a fraction (the "Adjustment Fraction") the
numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the
event and the denominator of which shall be the total number of
shares of Common Stock outstanding immediately following the
occurrence of such event. In lieu of such adjustment in the
number of Rights associated with one share of Common Stock, the
Company may elect to adjust the number of one one-hundredths of a
share of Preferred Stock purchasable upon the exercise of one
Right and the Purchase Price. If the Company makes such
election, the number of Rights associated with one share of
Common Stock shall remain unchanged, and the number of one one-
hundredths of a share of Preferred Stock purchasable upon
exercise of one Right and the Purchase Price shall be
proportionately adjusted so that (i) the number of one one-
hundredths of a share of Preferred Stock purchasable upon
exercise of a Right following such adjustment shall equal the
product of the number of one one-hundredths of a share of
Preferred Stock purchasable upon exercise of a Right immediately
prior to such adjustment multiplied by the Adjustment Fraction
and (ii) the Purchase Price following such adjustment shall equal
the product of the Purchase Price immediately prior to such
adjustment multiplied by the Adjustment Fraction.
Section 12. Certificate of Adjusted Purchase Price
or Number of Shares. Whenever an adjustment is made as provided
in Section 11 or Section 13 hereof, the Company shall (a)
promptly prepare a certificate setting forth such adjustment and
a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer
agent for the Preferred Stock and the Common Stock, a copy of
such certificate and (c) mail a brief summary thereof to each
holder of a Rights Certificate (or, if prior to the Distribution
Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such certificate
and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.
(a) In the event that, from and after the time an
Acquiring Person has become such, directly or indirectly, (x) the
Company shall consolidate with, or merge with and into, any other
Person, and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person shall
consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such
consolidation or merger, and, in connection with such
consolidation or merger, all or part of the outstanding shares of
Common Stock shall be changed into or exchanged for stock or
other securities of the Company or any other Person or cash or
any other property, or (z) the Company shall sell, lease or
otherwise transfer (or one or more of its Subsidiaries shall
sell, lease or otherwise transfer), in one transaction or a
series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or
Persons (other than the Company or any wholly owned Subsidiary of
the Company or any combination thereof in one or more
transactions each of which complies (and all of which together
comply) with Section 11(o) hereof), then, and in each such case
(except as may be contemplated by Section 13(d) hereof), proper
provision shall be made so that: (i) the Purchase Price shall be
adjusted to be the Purchase Price immediately prior to the first
occurrence of a Triggering Event multiplied by the number of one
one-hundredths of a share of Preferred Stock for which a Right
was exercisable immediately prior to such first occurrence; (ii)
on and after the Distribution Date, each holder of a Right,
except as provided in Section 7(e) hereof, shall thereafter have
the right to receive, upon the exercise thereof at the Purchase
Price in accordance with the terms of this Agreement, in lieu of
shares of Preferred Stock or Common Stock of the Company, such
number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the
Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or
other adverse claims, as shall be equal to the result obtained by
dividing the Purchase Price by 50% of the Current Market Price
per share of the Common Stock of such Principal Party on the date
of consummation of such Flip-Over Event; provided that the
Purchase Price and the number of shares of Common Stock of such
Principal Party issuable upon exercise of each Right shall be
further adjusted as provided in this Agreement to reflect any
events occurring after the date of such occurrence of a
Triggering Event or after the date of such Flip-Over Event, as
applicable; (iii) such Principal Party shall thereafter be liable
for, and shall assume, by virtue of such Flip-Over Event, all the
obligations and duties of the Company pursuant to this Agreement;
(iv) the term "Company" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the
provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Flip-Over
Event; (v) such Principal Party shall take such steps (including,
but not limited to, the reservation of a sufficient number of
shares of its Common Stock) in connection with the consummation
of any such transaction as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (vi)
the provisions of Section 11(a)(ii) hereof shall be of no effect
following the first occurrence of any Flip-Over Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), (A) the
Person that is the issuer of any securities into which
shares of Common Stock of the Company are converted in such
merger or consolidation, or, if there is more than one such
issuer, the issuer the Common Stock of which has the
greatest aggregate market value, or (B) if no securities are
so issued, (x) the Person that survives such consolidation
or is the other party to the merger and survives such
merger, or, if there is more than one such Person, the
Person the Common Stock of which has the greatest aggregate
market value or (y) if the Person that is the other party to
the merger does not survive the merger, the Person that does
survive the merger (including the Company if it survives);
and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that
is the party receiving the greatest portion of the assets or
earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the
assets or earning power so transferred, or if the Person
receiving the greatest portion of the assets or earning
power cannot be determined, the Person the Common Stock of
which has the greatest aggregate market value;
provided, however, that in any such case, if the Common Stock of
such Person is not at such time and has not been continuously
over the preceding twelve-month period registered under Section
12 of the Exchange Act, and if (1) such Person is a direct or
indirect Subsidiary of another Person the Common Stock of which
is and has been so registered, "Principal Party" shall refer to
such other Person; (2) such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of all of
which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value; and (3) such
Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth in (1) and
(2) above shall apply to each of the chains of ownership having
an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the
Principal Parties in each such chain shall bear the obligations
set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such
interests.
(c) The Company shall not consummate any Flip-Over
Event unless each Principal Party (or Person that may become a
Principal Party as a result of such Flip-Over Event) shall have a
sufficient number of authorized shares of its Common Stock that
have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Company and each such Principal
Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable after the date of such Flip-Over
Event, the Principal Party at its own expense will
(i) prepare and file a registration statement under
the Securities Act with respect to the Rights and the
securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause
such registration statement to (A) become effective as soon
as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the
Rights under the "blue sky" laws of such jurisdictions as
may be necessary or appropriate;
(iii) use its best efforts, if the Common Stock of
the Principal Party is or shall become listed on a national
securities exchange, to list (or continue the listing of)
the Rights and the securities purchasable upon exercise of
the Rights on such securities exchange and, if the Common
Stock of the Principal Party shall not be listed on a
national securities exchange, to cause the Rights and the
securities purchasable upon exercise of the Rights to be
reported by NASDAQ or such other transaction reporting
system then in use; and
(iv) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates that comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
In the event that a Flip-Over Event shall occur at any time after
the occurrence of a Flip-In Event, the Rights that have not
theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
(d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction
described in subparagraphs (x) and (y) of Section 13(a) if (i)
such transaction is consummated with a Person or Persons who
acquired shares of Common Stock pursuant to a Permitted Offer (or
a wholly owned subsidiary of any such Person or Persons), (ii)
the price per share of Common Stock offered in such transaction
is not less than the price per share of Common Stock paid to all
holders of Common Stock whose shares were purchased pursuant to
such Permitted Offer, and (iii) the form of consideration being
offered to the remaining holders of shares of Common Stock
pursuant to such transaction is the same as the form of
consideration paid pursuant to such Permitted Offer. Upon
consummation of any such transaction contemplated by this Section
13(d), all Rights hereunder shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue
fractions of Rights, except prior to the Distribution Date as
provided in Section 11(p) hereof, or to distribute Rights
Certificates or scrip evidencing fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered
holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the Closing Price of one Right for
the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue
fractions of shares of Preferred Stock (other than, except as
provided in Section 7(c) hereof, fractions that are integral
multiples of one one-hundredth of a share of Preferred Stock)
upon exercise of the Rights or to distribute certificates or
scrip evidencing fractional shares of Preferred Stock (other
than, except as provided in Section 7(c) hereof, fractions that
are integral multiples of one one-hundredth of a share of
Preferred Stock). Interests in fractions of shares of Preferred
Stock in integral multiples of one one-hundredth of a share of
Preferred Stock may, at the election of the Company in its sole
discretion, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary
selected by it, provided that such agreement shall provide that
the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as
beneficial owners of the shares of Preferred Stock represented by
such depositary receipts. In lieu of fractional shares of
Preferred Stock that are not integral multiples of one
one-hundredth of a share of Preferred Stock, the Company may pay
to the registered holders of Rights Certificates at the time such
Rights are exercised as herein provided an amount in cash equal
to the same fraction of one one-hundredth of the Closing Price of
a share of Preferred Stock for the Trading Day immediately prior
to the date of such exercise.
(c) Following the occurrence of a Triggering Event,
the Company shall not be required to issue fractions of shares of
Common Stock upon exercise of the Rights or to distribute
certificates or scrip evidencing fractional shares of Common
Stock. In lieu of fractional shares of Common Stock, the Company
may pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in
cash equal to the same fraction of the Closing Price of one share
of Common Stock for the Trading Day immediately prior to the date
of such exercise.
(d) The holder of a Right by the acceptance of the
Right expressly waives his right to receive any fractional Rights
or any fractional shares upon exercise of a Right, except as
permitted by this Section 14.
Section 15. Rights of Action. All rights of action
in respect of this Agreement, other than rights of action vested
in the Rights Agent pursuant to Section 18 hereof, are vested in
the respective registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered holders of
the Common Stock) and, where applicable, the Company; and any
registered holder of any Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, of the Common Stock), may,
in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the
Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief
against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement. After a
Triggering Event, holders of Rights shall be entitled to recover
the reasonable costs and expenses, including attorneys' fees,
incurred by them in any action to enforce the provisions of this
Agreement.
Section 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
not be evidenced by Rights Certificates and will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights
Certificates will be transferable only on the registry books of
the Rights Agent if surrendered at the principal office or
offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and
with the form of assignment set forth on the reverse side thereof
and the certificate contained therein duly completed and fully
executed;
(c) subject to Section 6(a) and Section 7(f) hereof,
the Company and the Rights Agent may deem and treat the Person in
whose name a Rights Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as
the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for
all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of
its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative
agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of
such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends or be deemed for any
purpose the holder of the number of one one-hundredths of a share
of Preferred Stock or any other securities of the Company that
may at any time be issuable upon the exercise of the Rights
represented thereby, nor shall anything contained herein or in
any Rights Certificate be construed to confer upon the holder of
any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions
hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and disbursements and other
reasonable disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of
its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the
costs and expenses of defending against any claim of liability in
the premises.
(b) The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration
of this Agreement in reliance upon any Rights Certificate or
certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it,
after proper inquiry or examination, to be genuine and to be
signed, executed and, where necessary, guaranteed, verified or
acknowledged, by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of
Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation 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 or stock transfer 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, however, 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 Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at
that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent
shall be changed and at such time any of the Rights Certificates
shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver
Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned,
the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases
such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 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 Rights Certificates, by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted
by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation,
the identity of any Acquiring Person and the determination of
"Current Market Price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved
and established by a certificate signed by the Chairman of the
Board, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of
the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for
any action taken or 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. In no
event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including
but not limited to lost profits), even if the Rights Agent has
been advised of the likelihood of such loss or damage and
regardless of the form of action.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained in
this Agreement or in the Rights Certificates or be required to
verify the same (except as to its countersignature on such Rights
Certificates), but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any
adjustment required under the provisions of Section 11 or
Section 13 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after
receipt of actual knowledge of any such adjustment); nor shall it
by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of
Preferred Stock or Common Stock or other securities to be issued
pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Preferred Stock or Common Stock or other
securities will, when so issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or 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 the Chairman of the Board, the President,
any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or any Assistant Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or
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, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from
any such act, omission, default, neglect or misconduct; provided,
however, that reasonable care was exercised in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been
completed or indicates an affirmative response to clause 1 and/or
2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first
consulting with the Company.
Section 21. Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon 30 days' notice in
writing mailed to the Company, and to each transfer agent of the
Common Stock and the Preferred Stock, by registered or certified
mail, and to the holders, if any, of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent (with or without cause) upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the
Common Stock and the Preferred Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-
class mail. If the Rights Agent shall resign or be removed or
shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. Notwithstanding the
foregoing provisions of this Section 21, in no event shall the
resignation or removal of a Rights Agent be effective until a
successor Rights Agent shall have been appointed and have
accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after giving notice
of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by
the Company), then the Rights Agent or the registered holder of
any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by
such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or of the State of
New York (or of any other state of the United States so long as
such corporation is authorized to conduct a stock transfer or
corporate trust business in the State of New York), in good
standing, which is authorized under such laws to exercise
corporate trust 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 $100,000,000 or (b) an
affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property
at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the
Common Stock and the Preferred Stock, and mail a notice thereof
in writing to the registered holders of the Rights Certificates.
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Rights Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of
this Agreement. In addition, in connection with the issuance or
sale of shares of Common Stock following the Distribution Date
and prior to the Expiration Date, the Company (a) shall, with
respect to shares of Common Stock so issued or sold pursuant to
the exercise of stock options or under any employee plan or
arrangement granted or awarded on or prior to the Distribution
Date, or upon the exercise, conversion or exchange of securities
issued by the Company on or prior to the Distribution Date, and
(b) may, in any other case, if deemed necessary or appropriate by
the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to
the Company or the Person to whom such Rights Certificate would
be issued, and (ii) no such Rights Certificate shall be issued
if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its
option, at any time prior to the earlier of (i) the close of
business on the tenth day following the first date of public
announcement of the occurrence of a Flip-In Event (or, if such
date shall have occurred prior to the Record Date, the close of
business on the tenth day following the Record Date) and (ii) the
Expiration Date, cause the Company to redeem all but not less
than all the then outstanding Rights at a redemption price of
$.01 per Right, as such amount may be appropriately adjusted, if
necessary, to reflect any stock split, stock dividend or similar
transaction occurring after the Rights Dividend Declaration Date
(such redemption price being hereinafter referred to as the
"Redemption Price"); provided, however, that the Rights may not
be redeemed following any merger to which the Company is a party
that (i) occurs after a Flip-In Event has occurred and (ii) was
not approved by the Board of Directors of the Company and by the
stockholders of the Company at a stockholders' meeting.
Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first
occurrence of a Flip-In Event until such time as the Company's
right of redemption hereunder has expired. The Company may, at
its option, pay the Redemption Price in cash, shares of Common
Stock (based on the Current Market Price of the Common Stock at
the time of redemption) or any other form of consideration deemed
appropriate by the Board of Directors.
(b) Immediately upon the effectiveness of the action
of the Board of Directors of the Company ordering the redemption
of the Rights (which action may be conditioned on the occurrence
of one or more events or on the existence of one or more facts or
may be effective at some future time), evidence of which shall be
filed with the Rights Agent and without any further action and
without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held.
Promptly after the effectiveness of the action of the Board of
Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to
all such holders at each holder's last address as it appears upon
the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Company for the
Common Stock. Any notice that is mailed in the manner herein
provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption shall state
the method by which the payment of the Redemption Price will be
made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its
option, at any time and from time to time after the first
occurrence of a Flip-In 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 7(e) hereof) for shares of Common Stock or Common Stock
Equivalents or any combination thereof, at an exchange ratio of
one share of Common Stock, or such number of Common Stock
Equivalents or units representing fractions thereof as would be
deemed to have the same value as one share of Common Stock, per
Right, appropriately adjusted, if necessary, to reflect any stock
split, stock dividend or similar transaction occurring after the
Rights Dividend Declaration Date (such exchange ratio being
hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors may not
effect such exchange at any time after any Person (other than an
Exempt Person), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of 50% or more of the
shares of Common Stock then outstanding.
(b) Immediately upon the effectiveness of the action
of the Board of Directors of the Company ordering the exchange of
any Rights pursuant to and in accordance with subsection (a) of
this Section 24 (which action may be conditioned on the
occurrence of one or more events or on the existence of one or
more facts or may be effective at some future time) and without
any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of shares
of Common Stock and/or Common Stock Equivalents equal to the
number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of
any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any
such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights
Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by
which the exchange of the shares of Common Stock and/or Common
Stock Equivalents for Rights will be effected and, in the event
of any partial exchange, the number of Rights that will be
exchanged. Any partial exchange shall be effected as nearly pro
rata as possible based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e)
hereof) held by each holder of Rights.
(c) In the event that the number of shares of Common
Stock that are authorized by the Company's restated certificate
of incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient
to permit an exchange of Rights as contemplated in accordance
with this Section 24, the Company may, at its option, take all
such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue
fractions of shares of Common Stock or to distribute certificates
or scrip evidencing fractional shares of Common Stock. In lieu
of such fractional shares of Common Stock, the Company shall pay
to the registered holders of Rights with regard to which such
fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the value of a whole
share of Common Stock. For purposes of this Section 24, the
value of a whole share of Common Stock shall be the Closing Price
per share of Common Stock for the Trading Day immediately prior
to the date of exchange pursuant to this Section 24, and the
value of any Common Stock Equivalent shall be deemed to have the
same value as the Common Stock on such date.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time
after the Distribution Date, (i) to pay any dividend payable in
stock of any class to the holders of Preferred Stock or to make
any other distribution to the holders of Preferred Stock (other
than a regular quarterly cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the
holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of
stock of any class or any other securities, rights or options, or
(iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any
consolidation or merger into or with any other Person (other than
a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), or to effect any sale, lease or other
transfer of all or substantially all the Company's assets to any
other Person or Persons (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) hereof), or
(v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each
holder of record of a Rights Certificate, to the extent feasible
and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification,
consolidation, merger, sale, lease, transfer, liquidation,
dissolution or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii)
above at least 20 days prior to the record date for determining
holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of the shares of
Preferred Stock, whichever shall be the earlier. The failure to
give notice required by this Section 25 or any defect therein
shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.
(b) In case any Flip-In Event or Flip-Over Event shall
occur, then the Company shall as soon as practicable thereafter
give to each holder of a Rights Certificate (or if occurring
prior to the Distribution Date, the holders of Common Stock), in
accordance with Section 26 hereof, a notice of the occurrence of
such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) or
Section 13(a) hereof, and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter to refer
to Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized
by this Agreement to be given or made by the Rights Agent or by
the holder of any Rights Certificate to or on the Company shall
be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Pennzoil Company
P. O. Box 2967
Houston, Texas 77252-8200
Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company
or by the holder of any Rights Certificate to or on the Rights
Agent shall be 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:
Chemical Bank
_ Chemical Shareholder Services Group, Inc.
2323 Bryan Street, Suite 2300
Dallas, Texas 75201-2656
Attention: Barbara Cotte
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any
Rights Certificate (or, if prior to the Distribution Date, to the
holder of certificates representing shares of Common Stock) shall
be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Except as
provided in the last sentence of this Section 27, at any time
when the Rights are then redeemable, the Company may in its sole
and absolute discretion and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of
Rights. At any time when the Rights are not redeemable, except
as provided in the last sentence of this Section 27, the Company
may and the Rights Agent shall, if the Company so directs,
supplement or amend this Agreement without the approval of any
holders of Rights in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein that may be
defective or inconsistent with any other provisions herein, (iii)
to shorten or lengthen any time period hereunder or (iv) to
change or supplement the provisions hereunder in any manner that
the Company may deem necessary or desirable and that shall not
materially adversely affect the interests of the holders of
Rights (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, that this Agreement
may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed at such time as the Rights are not
then redeemable or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of
Rights (other than any Acquiring Person and its Affiliates and
Associates). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or
amendment; provided, however, that the Rights Agent may, but
shall not be obligated to, enter into any such supplement or
amendment that affects the Rights Agent's own rights, duties or
immunities under this Agreement. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or
amendment shall be made that decreases the Redemption Price.
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. Determinations and Actions by the Board
of Directors, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding
at any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act as in effect
on the date hereof. The Board of Directors of the Company (or,
as set forth herein, certain specified members thereof) shall
have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation,
the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or
advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the
Rights or to amend this Agreement). All such actions,
calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the
foregoing) that are done or made by the Board of Directors of the
Company in good faith, shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights, as
such, and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock) 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 Rights
Certificates (and, prior to the Distribution Date, registered
holders of the Common Stock).
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
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this
Agreement to the contrary, if any such term, provision, covenant
or restriction is held by such court or authority to be invalid,
void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose
or effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until
the close of business on the tenth day following the date of such
determination by the Board of Directors of the Company. Without
limiting the foregoing, if any provision requiring that a
determination be made by less than the entire Board of Directors
of the Company is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, such
determination shall then be made by the entire Board of Directors
of the Company.
Section 32. Governing Law. This Agreement, each
Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such State applicable to contracts
made and to be 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.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
Attest: PENNZOIL COMPANY
______________________________ By ___________________________
Name: Name:
Title: Title:
Attest: CHEMICAL BANK
_____________________________ By ____________________________
Name: Name:
Title: Title:
<PAGE>
PENNZOIL COMPANY
and
CHEMICAL BANK,
Rights Agent
________________
Rights Agreement
Dated as of October 28, 1994
<PAGE>
TABLE OF CONTENTS
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 7
Section 3. Issue of Rights Certificates 7
Section 4. Form of Rights Certificates 8
Section 5. Countersignature and Registration 9
Section 6. Transfer, Split-Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates 9
Section 7. Exercise of Rights; Purchase Price 10
Section 8. Cancellation and Destruction of Rights Certificates 12
Section 9. Reservation and Availability of Capital Stock 12
Section 10. Preferred Stock Record Date 14
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights 14
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares 22
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 22
Section 14. Fractional Rights and Fractional Shares 25
Section 15. Rights of Action 25
Section 16. Agreement of Rights Holders 26
Section 17. Rights Certificate Holder Not Deemed a Stockholder 27
Section 18. Concerning the Rights Agent 27
Section 19. Merger or Consolidation or Change of Name of Rights
Agent 27
Section 20. Duties of Rights Agent 28
Section 21. Change of Rights Agent 30
Section 22. Issuance of New Rights Certificates 30
Section 23. Redemption and Termination 31
Section 24. Exchange 32
Section 25. Notice of Certain Events 33
Section 26. Notices 34
Section 27. Supplements and Amendments 34
Section 28. Successors 35
Section 29. Determinations and Actions by the Board of
Directors, etc 35
Section 30. Benefits of this Agreement 35
Section 31. Severability 35
Section 32. Governing Law 36
Section 33. Counterparts 36
Section 34. Descriptive Headings 36
Exhibit A - Form of Certificate of Designations of Series A
Junior Participating Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights to Purchase Preferred Stock
<PAGE>
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
PENNZOIL COMPANY
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
PENNZOIL COMPANY, a corporation organized and existing
under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DOES
HEREBY CERTIFY:
That pursuant to the authority vested in the Board of
Directors in accordance with the provisions of the Restated
Certificate of Incorporation of the said Corporation, the said
Board of Directors on October 28, 1994 adopted the following
resolution creating a series of 750,000 shares of Preferred Stock
designated as "Series A Junior Participating Preferred Stock":
RESOLVED, that pursuant to the authority vested in
the Board of Directors of this Corporation in
accordance with the provisions of the Restated
Certificate of Incorporation, a series of Preferred
Stock, par value $1.00 per share, of the Corporation be
and hereby is created, and that the designation and
number of shares thereof and the voting and other
powers, preferences and relative, participating,
optional or other rights of the shares of such series
and the qualifications, limitations and restrictions
thereof are as follows:
Series A Junior Participating Preferred Stock
1. Designation and Amount. There shall be a series of
Preferred Stock that shall be designated as "Series A Junior
Participating Preferred Stock," and the number of shares
constituting such series shall be 750,000. Such number of shares
may be increased or decreased by resolution of the Board of
Directors; provided, however, that no decrease shall reduce the
number of shares of Series A Junior Participating Preferred Stock
to less than the number of shares then issued and outstanding
plus the number of shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series A Junior Participating Preferred
Stock with respect to dividends, the holders of shares of Series
A Junior Participating Preferred Stock, in preference to the
holders of shares of any class or series of stock of the
Corporation ranking junior to the Series A Junior Participating
Preferred Stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available
for the purpose, quarterly dividends payable in cash on the 15th
day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a
share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the
greater of (a) $2.00 or (b) the Adjustment Number (as defined
below) times the aggregate per share amount of all cash
dividends, and the Adjustment Number times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock,
par value $0.83 1/3 per share, of the Corporation (the "Common
Stock") since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction
of a share of Series A Junior Participating Preferred Stock. The
"Adjustment Number" shall initially be 100. In the event the
Corporation shall at any time after October 28, 1994 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series A Junior Participating Preferred Stock
as provided in paragraph (A) above immediately after it declares
a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on
the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment
Date, a dividend of $2.00 per share on the Series A Junior
Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred
Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares of Series A Junior Participating
Preferred Stock, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is
a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of shares of Series A
Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series
A Junior Participating Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which
record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
3. Voting Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following
voting rights:
(A) Each share of Series A Junior Participating Preferred
Stock shall entitle the holder thereof to a number of votes equal
to the Adjustment Number on all matters submitted to a vote of
the stockholders of the Corporation. At all elections of
directors at which the Series A Junior Participating Preferred
Stock shall vote together with the Common Stock (and any other
capital stock of the Corporation at the time entitled thereto),
each share of Series A Participating Preferred Stock shall
entitle the holder thereof to as many votes as shall equal the
Adjustment Number multiplied by the number of directors to be
elected, and such holder may cast all of such votes for a single
director, or may distribute them among the number to be voted
for, or for any two or more of them, as such holder may see fit.
(B) Except as otherwise provided herein, in the Restated
Certificate of Incorporation or by law, the holders of shares of
Series A Junior Participating Preferred Stock, the holders of
shares of Preference Common Stock, par value $0.83 1/3 per share, of
the Corporation ("Preference Common Stock") and the holders of
shares of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount
equal to six quarterly dividends thereon, the occurrence of such
contingency shall mark the beginning of a period (herein called a
"default period") that shall extend until such time when all
accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all
shares of Series A Junior Participating Preferred Stock then
outstanding shall have been declared and paid or set apart for
payment. During each default period, (1) the number of Directors
shall be increased by two, effective as of the time of election
of such Directors as herein provided, and (2) the holders of
Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) upon which these or like voting
rights have been conferred and are exercisable (the "Voting
Preferred Stock") with dividends in arrears in an amount equal to
six quarterly dividends thereon, voting as a class, irrespective
of series, shall have the right to elect such two Directors.
(i) During any default period, such voting right of the
holders of Series A Junior Participating Preferred Stock may be
exercised initially at a special meeting called pursuant to
subparagraph (iii) of this Section 3(C) or at any annual meeting
of stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not be
exercised unless the holders of at least one-third in number of
the shares of Voting Preferred Stock outstanding shall be present
in person or by proxy. The absence of a quorum of the holders of
Common Stock shall not affect the exercise by the holders of
Voting Preferred Stock of such voting right.
(ii) Unless the holders of Voting Preferred Stock shall,
during an existing default period, have previously exercised
their right to elect Directors, the Board of Directors may order,
or any stockholder or stockholders owning in the aggregate not
less than ten percent of the total number of shares of Voting
Preferred Stock outstanding, irrespective of series, may request,
the calling of a special meeting of the holders of Voting
Preferred Stock, which meeting shall thereupon be called by the
Chairman of the Board, the President, a Vice President or the
Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Voting Preferred Stock are
entitled to vote pursuant to this paragraph (C)(iii) shall be
given to each holder of record of Voting Preferred Stock by
mailing a copy of such notice to him at his last address as the
same appears on the books of the Corporation. Such meeting shall
be called for a time not earlier than 20 days and not later than
60 days after such order or request or, in default of the calling
of such meeting within 60 days after such order or request, such
meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent of
the total number of shares of Voting Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no
such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual
meeting of the stockholders.
(iii) In any default period and after the holders of
Voting Preferred Stock shall have exercised their right to elect
Directors voting as a class, (x) the Directors so elected by the
holders of Voting Preferred Stock shall continue in office until
their successors shall have been elected by such holders or until
the expiration of the default period, and (y) any vacancy in the
Board of Directors may be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the
class or classes of stock which elected the Director whose office
shall have become vacant. References in this paragraph (C) to
Directors elected by the holders of a particular class or classes
of stock shall include Directors elected by such Directors to
fill vacancies as provided in clause (y) of the foregoing
sentence.
(iv) Immediately upon the expiration of a default period,
(x) the right of the holders of Voting Preferred Stock as a class
to elect Directors shall cease, (y) the term of any Directors
elected by the holders of Voting Preferred Stock as a class shall
terminate and (z) the number of Directors shall be such number as
may be provided for in the Restated Certificate of Incorporation
or By-Laws irrespective of any increase made pursuant to the
provisions of paragraph (C) of this Section 3 (such number being
subject, however, to change thereafter in any manner provided by
law or in the Restated Certificate of Incorporation or By-Laws).
Any vacancies in the Board of Directors effected by the
provisions of clauses (y) and (z) in the preceding sentence may
be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating
Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have been
paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Participating Preferred Stock, except
dividends paid ratably on the Series A Junior Participating
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled; or
(iii) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Participating
Preferred Stock, or any shares of stock ranking on a parity with
the Series A Junior Participating Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of Series A Junior Participating Preferred Stock, or to
such holders and holders of any such shares ranking on a parity
therewith, upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or
otherwise acquire such shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Junior
Participating Preferred Stock purchased or otherwise acquired by
the Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to any conditions
and restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up. (A) Upon any
liquidation (voluntary or otherwise), dissolution or winding up
of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders
of shares of Series A Junior Participating Preferred Stock shall
have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the
Series A Liquidation Preference, no additional distributions
shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders
of shares of Common Stock and Preference Common Stock shall have
received an amount per share (the "Common Adjustment") equal to
the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) the Adjustment Number. Following the payment
of the full amount of the Series A Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of
(1) Series A Junior Participating Preferred Stock and (2) Common
Stock and Preference Common Stock, respectively, (a) holders of
Series A Junior Participating Preferred Stock and (b) holders of
shares of Common Stock and Preference Common Stock shall, subject
to the prior rights of all other series of Preferred Stock, if
any, ranking prior thereto, receive their ratable and
proportionate share of the remaining assets to be distributed in
the ratio of the Adjustment Number to 1 with respect to (x) the
Series A Junior Participating Preferred Stock and (y) the Common
Stock and Preference Common Stock, on a per share basis,
respectively.
(A) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A
Liquidation Preference and the liquidation preferences of all
other series of Preferred Stock, if any, that rank on a parity
with the Series A Junior Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not
sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock and Preference
Common Stock.
(B) Neither the merger or consolidation of the Corporation
into or with another corporation nor the merger or consolidation
of any other corporation into or with the Corporation shall be
deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 6, but the sale,
lease or conveyance of all or substantially all the Corporation's
assets shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this
Section 6.
7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for
or changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Junior
Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share equal to the
Adjustment Number times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common
Stock is changed or exchanged.
8. Redemption. (A) The Corporation, at its option, may
redeem shares of the Series A Junior Participating Preferred
Stock in whole at any time and in part from time to time, at a
redemption price equal to the Adjustment Number times the current
per share market price (as such term is hereinafter defined) of
the Common Stock on the date of the mailing of the notice of
redemption, together with unpaid accumulated dividends to the
date of such redemption. The "current per share market price" on
any date shall be deemed to be the average of the closing price
per share of such Common Stock for the ten 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 Stock is determined during a
period following the announcement of (A) a dividend or
distribution on the Common Stock other than a regular quarterly
cash dividend or (B) any subdivision, combination or
reclassification of such Common Stock and the ex-dividend date
for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, shall not have
occurred prior to the commencement of such ten Trading Day
period, then, and in each such case, the current per share market
price shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sales
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 transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange, or, if the Common Stock
is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which
the Common Stock is listed or admitted to trading, or, if the
Common Stock is not listed or admitted to trading on any national
securities exchange but sales price information is reported for
such security, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other self-regulatory organization or registered
securities information processor (as such terms are used under
the Securities Exchange Act of 1934, as amended) that then
reports information concerning the Common Stock, or, if sales
price information is not so reported, the average of the high bid
and low asked prices in the over-the-counter market on such day,
as reported by NASDAQ or such other entity, or, if on any such
date the Common Stock is not quoted by any such entity, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock
selected by the Board of Directors of the Corporation. If on any
such date no such market maker is making a market in the Common
Stock, the fair value of the Common Stock on such date as
determined in good faith by the Board of Directors of the
Corporation shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which
the Common Stock is listed or admitted to trading is open for the
transaction of business, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange but is
quoted by NASDAQ, a day on which NASDAQ reports trades, or, if
the Common Stock is not so quoted, 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.
(A) In the event that fewer than all the outstanding shares
of the Series A Junior Participating Preferred Stock are to be
redeemed, the number of shares to be redeemed shall be determined
by the Board of Directors and the shares to be redeemed shall be
determined by lot or pro rata as may be determined by the Board
of Directors or by any other method that may be determined by the
Board of Directors in its sole discretion to be equitable.
(B) Notice of any such redemption shall be given by mailing
to the holders of the shares of Series A Junior Participating
Preferred Stock to be redeemed a notice of such redemption, first
class postage prepaid, not later than the fifteenth day and not
earlier than the sixtieth day before the date fixed for
redemption, at their last address as the same shall appear upon
the books of the Corporation. Each such notice shall state:
(i) the redemption date; (ii) the number of shares to be redeemed
and, if fewer than all the shares held by such holder are to be
redeemed, the number of such shares to be redeemed from such
holder; (iii) the redemption price; (iv) the place or places
where certificates for such shares are to be surrendered for
payment of the redemption price; and (v) that dividends on the
shares to be redeemed will cease to accrue on the close of
business on such redemption date. Any notice that is mailed in
the manner herein provided shall be conclusively presumed to have
been duly given, whether or not the stockholder received such
notice, and failure duly to give such notice by mail, or any
defect in such notice, to any holder of Series A Junior
Participating Preferred Stock shall not affect the validity of
the proceedings for the redemption of any other shares of
Series A Junior Participating Preferred Stock that are to be
redeemed. On or after the date fixed for redemption as stated in
such notice, each holder of the shares called for redemption
shall surrender the certificate evidencing such shares to the
Corporation at the place designated in such notice and shall
thereupon be entitled to receive payment of the redemption price.
If fewer than all the shares represented by any such surrendered
certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(C) The shares of Series A Junior Participating Preferred
Stock shall not be subject to the operation of any purchase,
retirement or sinking fund.
9. Ranking. The Series A Junior Participating Preferred
Stock shall rank junior to all other series of the Corporation's
Preferred Stock as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall
provide otherwise, and shall rank senior to the Common Stock and
Preference Common Stock as to such matters.
10. Amendment. At any time that any shares of Series A
Junior Participating Preferred Stock are outstanding, the
Restated Certificate of Incorporation of the Corporation shall
not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A
Junior Participating Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of a
majority or more of the outstanding shares of Series A Junior
Participating Preferred Stock, voting separately as a class.
11. Fractional Shares. Series A Junior Participating
Preferred Stock may be issued in fractions of a share that shall
entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate
in distributions and to have the benefit of all other rights of
holders of Series A Junior Participating Preferred Stock.
IN WITNESS WHEREOF, the undersigned have executed and
subscribed this Certificate and do affirm the foregoing as true
under the penalties of perjury this ___ day of _______, 1994.
_______________________________________
[Vice] President
Attest:
__________________________________
[Assistant] Secretary
<PAGE>
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER OCTOBER 28, 1999 OR EARLIER IF REDEEMED OR
EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION,
AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET
FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF
WILL BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.
Rights Certificate
PENNZOIL COMPANY
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 October 28, 1994 as it may from time to
time be supplemented or amended (the "Rights Agreement"), between
Pennzoil Company, a Delaware corporation (the "Company"), and
Chemical Bank, a national banking association (the "Rights
Agent"), to purchase from the Company at any time prior to 5:00
p.m. (New York City time) on October 28, 1999 at the principal
office or offices of the Rights Agent designated for such
purpose, or its successors as Rights Agent, one one-hundredth of
a fully paid, nonassessable share of Series A Junior
Participating Preferred Stock (the "Preferred Stock") of the
Company, at a purchase price of $140 per one one-hundredth of a
share (the "Purchase Price"), upon presentation and surrender of
this Rights Certificate with the Form of Election to Purchase and
related Certificate set forth on the reverse hereof duly
executed. The Purchase Price may be paid in cash or by certified
check, cashiers or official bank check or bank draft payable to
the order of the Company or the Rights Agent. The number of
Rights evidenced by this Rights Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth
above, and the Purchase Price per share set forth above, are the
number and Purchase Price as of October 28, 1994, based on the
Preferred Stock as constituted at such date. The Company
reserves the right to require prior to the occurrence of a
Triggering Event (as such term is defined in the Rights
Agreement) that a number of Rights be exercised so that only
whole shares of Preferred Stock will be issued.
From and after the occurrence of a Flip-In Event (as
such term is defined in the Rights Agreement), if the Rights
evidenced by this Rights Certificate are beneficially owned by or
transferred to (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement), (ii) a transferee of any such Acquiring
Person, Associate or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of
a person who, concurrently with or after such transfer, became an
Acquiring Person or an Affiliate or Associate of an Acquiring
Person, such Rights shall become null and void in the
circumstances set forth in the Rights Agreement, and no holder
hereof shall have any rights whatsoever with respect to such
Rights from and after the occurrence of such Flip-In Event.
As provided in the Rights Agreement, the Purchase Price
and the number and kind of shares of Preferred Stock or other
securities or assets that may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to
modification and adjustment upon the happening of certain events,
including Triggering Events.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the
Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Rights under
the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned
office of the Rights Agent and are also available upon written
request to the Company.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the principal office or offices
of the Rights Agent designated for such purpose, may be exchanged
for another Rights Certificate or Rights Certificates of like
tenor and date evidencing Rights entitling the holder to purchase
a like aggregate number of one one-hundredths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate
or Rights Certificates surrendered shall have entitled such
holder to purchase. If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may be redeemed by the
Company at its option at a redemption price of $.01 per Right,
payable, at the election of the Company, in cash or shares of
Common Stock or such other consideration as the Board of
Directors may determine, at any time prior to the earlier of the
close of business on (a) the tenth day following the first public
announcement of the occurrence of a Flip-In Event (as such time
period may be extended or shortened pursuant to the Rights
Agreement) and (b) the Expiration Date (as such term is defined
in the Rights Agreement) or (ii) may be exchanged in whole or in
part for shares of the Company's Common Stock, par value $0.83 1/3
per share, and/or other equity securities of the Company deemed
to have the same value as shares of Common Stock, at any time
prior to a person's becoming the beneficial owner of 50% or more
of the shares of Common Stock outstanding.
No fractional shares of Preferred Stock are required to
be issued upon the exercise of any Right or Rights evidenced
hereby (other than, except as set forth above, fractions that are
integral multiples of one one-hundredth of a share of Preferred
Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment may be
made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any
purpose the holder of shares of Preferred Stock or of any other
securities of the Company that may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Rights Certificate shall have
been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or
obligatory for any purpose until it shall have been countersigned
by the Rights Agent.
WITNESS the facsimile signature of the proper officers
of the Company and its corporate seal.
Dated as of November 11, 1994
ATTEST: PENNZOIL COMPANY
________________________ By ________________________________
Secretary Title:
Countersigned:
CHEMICAL BANK
By ________________________________
Authorized Signature
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer any Rights evidenced by the Rights Certificate.)
FOR VALUE RECEIVED ________________________________________
hereby sells, assigns and transfers unto
_________________________________________________________________
_________________________________________________________________
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together
with all right, title and interest therein, and does hereby
irrevocably constitute and appoint __________________ Attorney,
to transfer the said Rights on the books of the within-named
Company, with full power of substitution.
Dated: _________________, 199__
______________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national
securities exchange, a member of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or another
entity acceptable to the Rights Agent and the Company.
<PAGE>
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
[ ] are [ ] are not being sold, assigned and transferred by or on
behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are
defined 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 Rights Certificate from any Person who is, was or
subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person or who is a direct or indirect
transferee of an Acquiring Person or of an Affiliate or Associate
of an Acquiring Person.
Dated: _____________, 199__ _______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national
securities exchange, a member of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or another
entity acceptable to the Rights Agent and the Company.
NOTICE
The signatures to the foregoing Assignment and
Certificate must correspond to the name as written upon the face
of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: PENNZOIL COMPANY
The undersigned hereby irrevocably elects to exercise
_________ Rights represented by this Rights Certificate to
purchase the shares of Preferred Stock issuable upon the exercise
of the Rights (or such other securities of the Company or of any
other person that may be issuable upon the exercise of the
Rights) and requests that certificates for such shares (or other
securities) be issued in the name of and delivered to:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
If such number of Rights shall not be all the Rights
evidenced by this Rights Certificate, a new Rights Certificate
for the balance of such Rights shall be registered in the name of
and delivered to:
Please insert social security
or other identifying number
_________________________________________________________________
(Please print name and address)
_________________________________________________________________
Dated: ____________, 199__
______________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national
securities exchange, a member of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or another
entity acceptable to the Rights Agent and the Company.
<PAGE>
Certificate
The undersigned hereby certifies by checking the
appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ]
are [ ] are not being exercised by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring 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 Rights Certificate from any Person who is, was or became
an Acquiring Person or an Affiliate or Associate of an Acquiring
Person or who is a direct or indirect transferee of an Acquiring
Person or of an Affiliate or Associate of an Acquiring Person.
Dated: _____________, 199__ ________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a national
securities exchange, a member of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or another
entity acceptable to the Rights Agent and the Company.
NOTICE
The signatures to the foregoing Election to Purchase
and Certificate must correspond to the name as written upon the
face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
Exhibit C
Under certain circumstances set forth in the Rights Agreement,
Rights beneficially owned by or transferred to any Person who is,
was or becomes an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), and
certain transferees thereof, will become null and void and will
no longer be transferable.
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
On October 28, 1994, the Board of Directors of Pennzoil
Company (the "Company") declared a dividend of one right to
purchase preferred stock ("Right") for each outstanding share of
the Company's Common Stock, par value $0.83 1/3 per share ("Common
Stock"), to stockholders of record at the close of business on
November 11, 1994. Each Right entitles the registered holder to
purchase from the Company a unit consisting of one one-hundredth
of a share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $1.00 per share (the "Preferred Stock"), at a
purchase price of $140 per Unit, subject to adjustment (the
"Purchase Price"). The description and terms of the Rights are
set forth in a Rights Agreement dated as of October 28, 1994 as
it may from time to time be supplemented or amended (the "Rights
Agreement") between the Company and Chemical Bank, as Rights
Agent.
Initially, the Rights will be attached to all
certificates representing outstanding shares of Common Stock, and
no separate certificates for the Rights ("Rights Certificates")
will be distributed. The Rights will separate from the Common
Stock and a "Distribution Date" will occur upon the earlier of
(i) ten days following a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person")
has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common
Stock (the date of the announcement being the "Stock Acquisition
Date"), or (ii) ten business days (or such later date as may be
determined by the Company's Board of Directors before the
Distribution Date occurs) following the commencement of a tender
offer or exchange offer that would result in a person's becoming
an Acquiring Person. Certain inadvertent acquisitions will not
result in a person's becoming an Acquiring Person if the person
promptly divests itself of sufficient Common Stock. Until the
Distribution Date, (a) the Rights will be evidenced by the Common
Stock certificates (together with a copy of this Summary of
Rights or bearing the notation referred to below) and will be
transferred with and only with such Common Stock certificates,
(b) new Common Stock certificates issued after November 11, 1994
will contain a notation incorporating the Rights Agreement by
reference and (c) the surrender for transfer of any certificate
for Common Stock (with or without a copy of this Summary of
Rights) will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution
Date and will expire at the close of business on October 28,
1999, unless earlier redeemed or exchanged by the Company as
described below.
As soon as practicable after the Distribution Date,
Rights Certificates will be mailed to holders of record of Common
Stock as of the close of business on the Distribution Date and,
from and after the Distribution Date, the separate Rights
Certificates alone will represent the Rights. All shares of
Common Stock issued prior to the Distribution Date will be issued
with Rights. Shares of Common Stock issued after the
Distribution Date in connection with certain employee benefit
plans or upon conversion of certain securities will be issued
with Rights. Except as otherwise determined by the Board of
Directors, no other shares of Common Stock issued after the
Distribution Date will be issued with Rights.
In the event (a "Flip-In Event") that a person becomes
an Acquiring Person (except pursuant to a tender or exchange
offer for all outstanding shares of Common Stock at a price and
on terms that a majority of the independent directors of the
Company determines to be fair to and otherwise in the best
interests of the Company and its stockholders (a "Permitted
Offer")), each holder of a Right will thereafter have the right
to receive, upon exercise of such Right, a number of shares of
Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a Current Market Price
(as defined in the Rights Agreement) equal to two times the
exercise price of the Right. Notwithstanding the foregoing,
following the occurrence of any Flip-In Event, all Rights that
are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by or transferred to any
Acquiring Person (or by certain related parties) will be null and
void in the circumstances set forth in the Rights Agreement.
However, Rights are not exercisable following the occurrence of
any Flip-In Event until such time as the Rights are no longer
redeemable by the Company as set forth below.
For example, at an exercise price of $140 per Right,
each Right not owned by an Acquiring Person (or by certain
related parties) following an event set forth in the preceding
paragraph would entitle its holder to purchase $280 worth of
Common Stock (or other consideration, as noted above), based upon
its then Current Market Price, for $140. Assuming that the
Common Stock had a Current Market Price of $50 per share at such
time, the holder of each valid Right would be entitled to
purchase 5.6 shares of Common Stock for $140.
In the event (a "Flip-Over Event") that, at any time
from and after the time an Acquiring Person becomes such, (i) the
Company is acquired in a merger or other business combination
transaction (other than certain mergers that follow a Permitted
Offer), or (ii) 50% or more of the Company's assets or earning
power is sold or transferred, each holder of a Right (except
Rights that previously have been voided as set forth above) shall
thereafter have the right to receive, upon exercise, a number of
shares of common stock of the acquiring company having a Current
Market Price equal to two times the exercise price of the Right.
Flip-In Events and Flip-Over Events are collectively referred to
as "Triggering Events."
The Purchase Price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are
granted certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than the current market
price of the Preferred Stock, or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at
least 1% of the Purchase Price. No fractional Units are required
to be issued and, in lieu thereof, an adjustment in cash may be
made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise. Pursuant to the
Rights Agreement, the Company reserves the right to require prior
to the occurrence of a Triggering Event that, upon any exercise
of Rights, a number of Rights be exercised so that only whole
shares of Preferred Stock will be issued.
At any time until ten days following the first date of
public announcement of the occurrence of a Flip-In Event, the
Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right, payable, at the option of the Company,
in cash, shares of Common Stock or such other consideration as
the Board of Directors may determine. Immediately upon the
effectiveness of the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the $.01
redemption price.
At any time after the occurrence of a Flip-In Event and
prior to a person's becoming the beneficial owner of 50% or more
of the shares of Common Stock then outstanding, the Company may
exchange the Rights (other than Rights owned by an Acquiring
Person or an affiliate or an associate of an Acquiring Person,
which will have become void), in whole or in part, at an exchange
ratio of one share of Common Stock, and/or other equity
securities deemed to have the same value as one share of Common
Stock, per Right, subject to adjustment.
Until a Right is exercised, the holder thereof, as
such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends. While the distribution of the Rights should not be
taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the
event that the Rights become exercisable for Common Stock (or
other consideration) of the Company or for the common stock of
the acquiring company as set forth above or are exchanged as
provided in the preceding paragraph.
Other than the redemption price, any of the provisions
of the Rights Agreement may be amended by the Board of Directors
of the Company as long as the Rights are redeemable.
Thereafter, the provisions of the Rights Agreement may be amended
by the Board of Directors in order to cure any ambiguity, defect
or inconsistency, to make changes that do not materially
adversely affect the interests of holders of Rights (excluding
the interests of any Acquiring Person), or to shorten or lengthen
any time period under the Rights Agreement; provided, however,
that no amendment to lengthen the time period governing
redemption shall be made at such time as the Rights are not
redeemable.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an exhibit to a
Registration Statement on Form 8-A. A copy of the Rights
Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
PENNZOIL COMPANY NEWS
PUBLIC RELATIONS DEPARTMENT - PENNZOIL PLACE - P.O. BOX 2967 -
HOUSTON, TEXAS 77252-8200
FOR IMMEDIATE RELEASE
CONTACT: Robert Harper
713/546-8536
Pennzoil Board Adopts Shareholder Rights Plan
HOUSTON, Oct. 28, 1994 -- Pennzoil Co. (NYSE: PZL)
announced that its board of directors has adopted a five-year
shareholder rights plan to protect the company's shareholders
from unfair actions by third parties while the company pursues
its strategic initiatives and projects to increase shareholder
value. The plan (with a 15% "trigger") is similar to ones
adopted by numerous other companies and replaces Pennzoil's five-
year plan which expired in 1993.
The plan entails a distribution of one right for each
outstanding share of Pennzoil common stock. Each right will
entitle the holder to buy one one-hundredth (1/100th) of a share
of a new series of junior participating preferred stock at an
exercise price of $140 per share. Each one-hundredth of a share
of participating preferred stock would be essentially the
economic equivalent of a share of Pennzoil common stock. The
rights will attach to and trade with Pennzoil common stock (and
will not be exercisable) until after a person or group acquires
15% of Pennzoil's common stock or commences a tender offer that
would result in ownership of 15% of Pennzoil's common stock. The
record date for distribution of the rights is the close of
business on Nov. 11, 1994.
If any person becomes a 15% stockholder (except pursuant to
a tender offer for all outstanding shares of Pennzoil common
stock at a price and on terms determined to be fair by a majority
of Pennzoil's independent directors), the rights not held by the
15% stockholder "flip in" and become rights to buy shares of
Pennzoil common stock at a 50% discount. After a "flip in" event
and prior to a person's becoming the beneficial owner of 50% or
more of the company's common stock, the board of directors may,
in lieu of allowing the rights to be exercised, issue one share
of common stock in exchange for (and in mandatory redemption of)
all or any pro rata portion of the rights. In the event Pennzoil is
merged and its common stock is exchanged or converted, the new
rights "flip over" and require that provision be made so as to
entitle the holders to buy shares of the acquiring person's
common stock at a 50% discount.
The rights may be redeemed for $0.01 per right by action of
the board of directors at any time prior to the tenth day
following the first public announcement of a 15% acquisition of
beneficial ownership of Pennzoil's common stock.
The rights are not being distributed in response to any
specific effort to acquire control of Pennzoil, and the board of
directors is not aware of any such effort. The rights are not
intended to prevent a takeover but are designed to assure that
all Pennzoil stockholders receive fair treatment in the event of
any takeover and to guard against coercive or abusive tactics to
gain control of Pennzoil.
###
