SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
Form 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Forstmann & Company, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 58-1651326
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(State of incorporation or organization) (IRS Employer
Identification No.)
1155 Avenue of the Americas
New York, New York 10020
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
None
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Securities to be registered pursuant to Section 12(g) of the Act:
Rights to Purchase Common Stock, par value $.01 per share
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(Title of Class)
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ITEM 1. Description of Registrant's Securities to
be Registered
-----------------------------------------
On October 9, 1997, the Board of Directors of Forstmann & Company,
Inc. (the "Registrant") declared a dividend of one Right for each outstanding
common share, $.01 par value per share (the "Common Shares") of the Registrant.
The Rights will be issued to the stockholders of record at the close of business
on October 29, 1997 and will expire in ten years, subject to earlier redemption.
Under certain circumstances, each Right entitles the registered holder to
purchase from the Registrant one Common Share of the Registrant or, in certain
circumstances, common stock of an acquiring company at one-half the market price
of such Common Shares or common stock, as the case may be. The Rights are
designed to make it more likely that all the Registrant's stockholders receive
fair and equal treatment in the event of any proposed takeover of the Registrant
and to guard against the use of partial tender offers or other coercive tactics
to gain control of the Registrant. The description and terms of the Rights are
set forth in a Rights Agreement (the "Rights Agreement") between the Registrant
and Norwest Bank Minnesota, N.A., as Rights Agent (the "Rights Agent").
Exercise Price
- --------------
When exercisable, except as set forth below, each Right entitles the
registered holder to purchase from the Registrant one Common Share, at a price
of $60 per share (the "Purchase Price"), subject to adjustment in certain
circumstances.
Transfer and Detachment
- -----------------------
Until the "Distribution Date," which is the earlier to occur of (i)
ten business days following the time (the "Stock Acquisition Time") of a public
announcement or notice to the Registrant that a person or group of affiliated or
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associated persons (an "Acquiring Person") has acquired, or obtained the right
to acquire, beneficial ownership (as defined in the Rights Agreement) of 25% or
more of the outstanding Common Shares of the Registrant, and (ii) ten business
days, or such later date as may be determined by the Board of Directors of the
Registrant, after the date of the commencement of or announcement by a person of
an intention to make a tender offer or exchange offer for an amount of Common
Shares which, together with the shares of such stock already owned by such
person, constitutes 25% or more of the outstanding Common Shares, the Rights
will be evidenced, with respect to any of the Registrant's Common Shares
certificates outstanding as of October 29, 1997 by such Common Share certificate
with a copy of a Summary of Rights attached thereto. The Rights Agreement
provides that, until the Distribution Date, the Rights will be transferred with
and only with the Registrant's Common Shares. Until the Distribution Date (or
earlier redemption or expiration of the Rights), new Common Share certificates
issued after October 29, 1997, upon the transfer or issuance of new Common
Shares, will contain a notation incorporating the Rights Agreement by reference.
Until the Distribution Date (or earlier redemption or expiration of the Rights),
the surrender for transfer of any of the Registrant's Common Share certificates
outstanding as of October 29, 1997, even without a copy of the Summary of Rights
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence the
Rights.
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Exercisability
- --------------
The Rights are not exercisable until the Distribution Date. The
Rights will expire on October 28, 2007 unless earlier redeemed by the
Registrant.
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Registrant, including, without limitation, the
right to vote or to receive dividends.
Right to Acquire Stock at Half Price
- ------------------------------------
In the event that after the Stock Acquisition Time, the Registrant
is acquired in a merger or other business combination transaction or 50% or more
of the Registrant's assets, cash flow or earning power are sold or otherwise
transferred, the Rights Agreement provides that proper provision shall be made
so that each holder of a Right, upon the exercise thereof at the then current
exercise price of the Right, shall thereafter be entitled to receive that number
of shares of common stock of the acquiring company which at the time of such
transaction would have a market value (as defined in the Rights Agreement) of
two times the exercise price of the Right. In the event that the Registrant is
the surviving corporation of a merger and its Common Shares are changed or ex-
changed, proper provision shall be made so that each holder of a Right will
thereafter have the right to receive upon exercise that number of shares of
common stock of the other party to the transaction having a market value of two
times the exercise price of the Right.
In the event that a person or group becomes an Acquiring Person,
proper provision shall be made so that each holder of a Right, other than Rights
that were beneficially owned by the Acquiring Person, which will thereafter be
void, will thereafter have the right to receive upon exercise that number of
Common Shares having a market value (as defined in the Rights Agreement) of two
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times the exercise price of the Right. A person or group will not be deemed to
be an Acquiring Person if the Board of Directors of the Registrant determines
that such person or group became an Acquiring Person inadvertently and such
person or group promptly divests itself of a sufficient number of Common Shares
so that such person or group is no longer an Acquiring Person. Nor shall a
Person be an Acquiring Person because such person owned 25% or more of the
Common Shares on October 9, 1997, so long as such Person while continuing to own
at least 25% of the Common Shares, does not acquire an additional one percent or
more of the Common Shares.
Adjustments
- -----------
The Purchase Price payable and the number of Common Shares or other
securities or property issuable upon the exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on or a subdivision, combination or reclassification of the Common
Shares, (ii) upon the fixing of a record date for the issuance to holders of
Common Shares of certain rights, options or warrants to subscribe for Common
Shares or convertible securities at less than the current market price of Common
Shares or (iii) upon the fixing of a record date for the making of a
distribution to holders of Common Shares of evidences of indebtedness or assets
(excluding regular periodic cash dividends out of earnings or retained earnings
of the Company and dividends payable in Common Shares) or of subscription rights
or warrants (other than those referred to above). The number of Rights and the
number of Common Shares issuable upon exercise of each Right are also subject to
adjustment in the case of a stock split, combination or stock dividend on the
Common Shares prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Common Shares will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market value of Common
Shares on the last trading date prior to the date of exercise.
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Redemption or Exchange
- ----------------------
At any time prior to the earlier of (i) the Stock Acquisition Time
and (ii) October 28, 2007, the Registrant, by resolution of its Board of
Directors, may redeem the Rights in whole, but not in part, at a price of $.01
per Right (the "Redemption Price"). Immediately upon the action of the Board of
Directors of the Registrant electing to redeem the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
At any time after a person becomes an Acquiring Person and prior to
the acquisition by such person of 50% or more of the outstanding Common Shares
of the Registrant, the Board of Directors of the Registrant may exchange the
Rights (other than Rights beneficially owned by such person which have become
void), in whole or in part, for Common Shares of the Registrant at an exchange
ratio of one Common Share per Right (subject to adjustment). The Registrant may
at its option substitute shares of any substantially similar equity security of
the Registrant for some or all of the Common Shares exchangeable for Rights, at
an exchange ratio of one share of such equity security for each Common Share to
be exchanged.
Amendment
- ---------
The Rights and the Rights Agreement can be amended by the Board of
Directors of the Registrant in any respect (including, without limitation, any
extension of the period in which the Right Certificates may be redeemed) at any
time prior to the Stock Acquisition Time. From and after such time, without the
approval of the stockholders of the Registrant or the holders of the Rights, the
Board of Directors may only supplement or amend the Rights Agreement in order
<page break>
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
in the Rights Agreement which may be defective or inconsistent with any other
provision in the Rights Agreement, (iii) to shorten or lengthen any time period
under the Rights Agreement or (iv) to make any changes or supplements which the
Registrant may deem necessary or desirable which shall not adversely affect the
interests of the holders of Right Certificates (other than an Acquiring Person
or an affiliate or associate of any such person), provided that the Rights
Agreement may not be supplemented or amended to lengthen (A) a time period
relating to when the Rights may be redeemed or to modify the ability (or
inability) of the Registrant's board of directors to redeem the Rights, in
either case at such time as the Rights are not then redeemable or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the Rights of or the benefits to the holders of Rights (other than
an Acquiring Person or an affiliate or associate of any such person).
Issuance of Rights
- ------------------
Each outstanding Common Share on October 29, 1997 will receive one
Right. As long as the Rights are attached to the Common Shares, the Registrant
will issue one Right with each Common Share it issues, so that all such shares
have attached Rights. Approximately 4.4 million Common Shares have been re-
served for issuance upon exercise of the Rights.
A copy of the Rights Agreement, which includes as Exhibit A the form
of Right Certificate, is attached hereto as Exhibit 1 and is incorporated herein
by reference. The foregoing description of the Rights is qualified in its
entirety by reference to such Exhibit.
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ITEM 2. Exhibits
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1. Rights Agreement between the Registrant and Norwest Bank
Minnesota, N.A., Rights Agent, dated as of October 9, 1997,
which includes as Exhibit A the form of Right Certificate.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereto duly authorized.
FORSTMANN & COMPANY, INC.
(Registrant)
By: /s/ Rod J. Peckham
-----------------------
Name: Rod J. Peckham
Title: Chief Financial Officer
DATE: October 22, 1997
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EXHIBIT INDEX
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Sequential
Exhibit No. Description Page No.
- ----------- ----------- ----------
1. Rights Agreement between
the Registrant and Norwest
Bank Minnesota, N.A., Rights
Agent, dated as of October 9,
1997, which includes as
Exhibit A the form of Right
Certificate. 10
<page break>
FORSTMANN & COMPANY, INC.
and
NORWEST BANK MINNESOTA, N.A.
Rights Agent
----------------
RIGHTS AGREEMENT
Dated as of October 9, 1997
<page break>
TABLE OF CONTENTS
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Section Page
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1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . 12
3. Issue of Right Certificates . . . . . . . . . . . . . . . . . . . . . 12
4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . 15
5. Countersignature and Registration . . . . . . . . . . . . . . . . . . 17
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates . . . . . . 18
7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . 20
8. Cancellation and Destruction of Right Certificates . . . . . . . . . 24
9. Reservation and Availability of Common Stock . . . . . . . . . . . . 25
10. Common Stock Record Date . . . . . . . . . . . . . . . . . . . . . . 27
11. Adjustment of Purchase Price; Number and Kind of Shares
or Number of Rights . . . . . . . . . . . . . . . . . . . . . . . 28
12. Certificate of Adjusted Purchase Price or Number of Shares . . . . . 47
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 47
14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . 53
15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . 55
16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . . . 56
17. Right Certificate Holder Not Deemed a Shareholder . . . . . . . . . 57
18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . 58
19. Merger or Consolidation or Change of Name of Rights Agent . . . . . 59
20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 60
21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 65
22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . 67
23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
25. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . 72
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
27. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . 75
28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
29. Determinations and Actions by the Board of Directors, etc . . . . . 77
30. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . 78
31. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
33. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
34. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . 80
Exhibit A - Form of Right Certificate
Exhibit B - Form of Summary of Rights
<page break>
RIGHTS AGREEMENT
----------------
THIS RIGHTS AGREEMENT, dated as of October 9, 1997 (the
"Agreement"), between Forstmann & Company, Inc., a Georgia corporation (the
"Company"), and Norwest Bank Minnesota, N.A. (the "Rights Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend of one Right (as hereinafter defined) for each share of
Common Stock, par value $.01 per share, of the Company outstanding at the
Close of Business (as hereinafter defined) on October 29, 1997 (the "Record
Date"), each Right representing the right to purchase one share of Common
Stock of the Company, and has further authorized the issuance of one Right
with respect to each share of Common Stock of the Company that shall become
outstanding between the Record Date and the earliest of the Distribution
Date, the Expiration Date and the Final Expiration Date (as such terms are
hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
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a. "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 25% or more of the shares of Common Stock of
the Company then outstanding, but shall not include any employee
benefit plan of the Company or any Subsidiary of the Company or any
Person organized, appointed or established by the Company or such
Subsidiary for or pursuant to the terms of any such employee
benefit plan. Notwithstanding the foregoing:
i. no Person who, together with all Affiliates and Associates
of such Person, is the Beneficial Owner of 25% or more of
the shares of Common Stock of the Company on the date of
this Agreement shall become an "Acquiring Person" by virtue
of such ownership, provided, however, that if such Person
shall, at a time when such Person continues to Beneficially
Own 25% or more of the shares of the Common Stock of the
Company, become the Beneficial Owner of an additional one
percent or more of the shares of Common Stock of the
Company, then such Person shall be deemed to be an
"Acquiring Person";
ii. no Person shall become an "Acquiring Person" as the result
of an acquisition of shares of Common Stock by the Company
which, by reducing the number of shares of Common Stock
outstanding, increases the proportionate number of shares
Beneficially Owned by such Person to 25% or more of the
<page break>
shares of Common Stock of the Company then outstanding,
provided, however, that if a Person shall become the
Beneficial Owner of 25% or more of the shares of Common
Stock of the Company by reason of share purchases by the
Company and shall, after such share purchases by the
Company, at a time when such Person Beneficially Owns 25%
or more of the Common Stock, become the Beneficial Owner of
any additional shares of Common Stock of the Company, other
than as a direct or indirectr result of any corporate
action by the Company, then such Person shall be deemed to
be an "Acquiring Person";
iii. if the Board of Directors of the Company determines in good
faith that a Person who would otherwise be an "Acquiring
Person" has become such inadvertently (including, without
limitation, because (A) such Person was unaware that he or
it Beneficially Owned a percentage of Common Stock that
would otherwise cause such Person to be an "Acquiring
Person" or (B) such Person was aware of the extent of his
or its Beneficial Ownership 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, as
promptly as practicable after being advised of such
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determination, divests himself or itself 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 been an "Acquiring Person" for any purposes of this
Agreement; and
iv. no Person shall become an "Acquiring Person" by virtue of
ownership of Common Stock of the Company by any Affiliate
and/or Associate of such Person, which Affiliate and/or
Associate is deemed to be an Affiliate and/or Associate of
such Person solely by reason of such Affiliate and/or
Associate being a director or officer of the Company.
b. "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) hereof.
c. "Affiliate" and "Associate", when used with reference to any
Person, shall have the respective meanings ascribed to such terms
in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the Record Date.
d. A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
i. which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote
or dispose of, including pursuant to any agreement,
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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
if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy given to
such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report);
ii. that such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of
conversion rights, exchange rights, rights (other than the
Rights subject to this Agreement), 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 or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or
(B) securities issuable upon exercise of Rights at any time
prior to the occurrence of either a Section 11(a)(ii) Event
or a Section 13 Event, or (C) securities issuable upon
exercise of Rights from and after the occurrence of either
a Section 11(a)(ii) Event or a Section 13 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) hereof in
connection with an adjustment made with respect to any
Original Rights; or
iii. which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof)
with which such Person or any of such Person's Affiliates
or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose
of acquiring, holding, voting (except pursuant to a
revocable proxy as described in subparagraph (i) of this
paragraph (d)) or disposing of any securities of the
Company in a manner that relates or is reasonably likely
potentially to relate to influencing the control or
management of the Company;
provided, however, that nothing in this paragraph (d) shall cause a
person engaged in business as an underwriter of securities to be the
Beneficial Owner of, or to beneficially own, any securities acquired
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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.
e. "Business Day" shall mean any day other than a Saturday, Sunday
or a day on which banking institutions in the State of New York or
Georgia are authorized or obligated by law or executive order to
close.
f. "Close of Business" on any given date shall mean 5:00 P.M., New
York, New York time, on such date; provided, however, that if such
date is not a Business Day, it shall mean 5:00 P.M., New York, New
York time, on the next succeeding Business Day.
g. "Common Stock" when used with reference to the Company shall mean
the Common Stock, par value $.01 per share, of the Company.
"Common Stock" when used with reference to any Person other than
the Company which is organized in corporate form shall mean the
capital stock with the greatest voting power, or the equity
securities or other equity interest having power to control or
direct the management, of such Person, or, if such Person is a Sub-
sidiary of another Person, the capital stock with the greatest
voting power of the Person which ultimately controls such
first-mentioned Person. "Common Stock" when used with reference to
any Person which is not organized in corporate form shall mean
units of beneficial interest which (i) shall represent the right to
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participate generally in the profits and losses of such Person
(including, without limitation, any flow-through tax benefits
resulting from an ownership interest in such Person) and which
(ii) shall be entitled to exercise the greatest voting power of
such Person or, in the case of a limited partnership, shall have
the power to remove the general partner or partners.
h. "Common Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
i. "Company" shall have the meaning set forth in the first paragraph
of this Agreement.
j. "Current Market Price" shall have the meaning set forth in
Section 11(d) hereof.
k. "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
l. "Distribution Date" shall have the meaning specified in Section
3(a) hereof.
m. "Equivalent Common Stock" shall have the meaning set forth in
Section 11(b) hereof.
n. "Expiration Date" shall have the meaning specified in Section
7(a) hereof.
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o. "Final Expiration Date" shall have the meaning specified in
Section 7(a) hereof.
p. "NASDAQ" shall have the meaning set forth in Section 11(d)
hereof.
q. "Outside Directors" shall have the meaning set forth in
Section 11(a)(ii) hereof.
r. "Person" shall mean any individual, firm, corporation,
partnership, trust or other entity, and shall include any successor
(by merger or otherwise) of such entity.
s. "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
t. "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
u. "Record Date" shall have the meaning set forth in the recitals of
this Agreement.
v. "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
w. "Right" shall have the meaning set forth in the recitals of this
Agreement.
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x. "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
y. "Rights Agent" shall have the meaning set forth in the first
paragraph of this Agreement.
z. "Section 11(a)(ii) Event" shall have the meaning set forth in
Section 11(a)(ii) hereof.
aa. "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) hereof.
bb. "Section 13 Event" shall have the meaning set forth in Section
13(a) hereof.
cc. "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
dd. "Stock Acquisition Time" shall mean the time of occurrence of
the earlier of: (i) the first public announcement by the Company
or an Acquiring Person that the Acquiring Person has become such,
or (ii) the communication to the Company (including, without
limitation, to the directors of the Company) of any notice
(including, without limitation, any written consent or notice
related thereto) from an Acquiring Person indicating or reflecting
that the Acquiring Person has become such.
<page break>
ee. "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient, in the absence
of contingencies, to elect a majority of the board of directors or
other persons performing similar functions are at the time
beneficially owned, directly or indirectly, by such Person or
otherwise controlled by such Person.
ff. "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
gg. "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
hh. "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
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. Any actions which may be taken by the Rights
Agent pursuant to the terms of this Agreement may be taken by any such
Co-Rights Agent.
<page break>
Section 3. Issue of Right Certificates. (a) Until the earlier of the
Close of Business on (i) the tenth Business Day after the Stock Acquisition
Time, or (ii) the tenth Business Day, or such specified or unspecified later
date as may be determined by action of the Board of Directors of the Company,
after the date of the commencement of (as determined by reference to
Rule 14d-2(a), as in effect under the Exchange Act on the Record Date), or
first public announcement of the intent of any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person organized,
appointed or established by the Company or such Subsidiary as a fiduciary
pursuant to the terms of any such employee benefit plan) to commence (which
intention to commence remains in effect for five Business Days after such an-
nouncement), a tender or exchange offer for an amount of Common Stock of the
Company which, together with the shares of such stock already owned by such
Person, constitutes 25% or more of the outstanding Common Stock of the
Company (including any such date which is after the date of this Agreement
and prior to the issuance of the Rights) (the earlier of such dates described
in clauses (i) and (ii) above being herein referred to as the "Distribution
Date"), (x) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for shares of Common
Stock registered in the names of the holders of Common Stock (which
certificates for Common Stock shall be deemed also to be certificates for
Rights) and not by separate Right Certificates, and (y) the right to receive
Right Certificates will be transferable only in connection with the transfer
of the underlying Common Stock. As soon as practicable after the
Distribution Date, the Rights Agent will send, by first class, insured,
postage-prepaid mail, to each record holder of Common Stock as of the Close
of Business on the Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate, in substantially the form of
Exhibit A hereto (a "Right Certificate"), evidencing one Right for each share
of Common Stock so held, subject to adjustment as provided herein and to the
provisions of Section 14(a) hereof. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
<page break>
(b) On the Record Date or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Common Stock, in
substantially the form attached hereto as Exhibit B (the "Summary of
Rights"), by first-class, postage-prepaid mail, to each record holder of
Common 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
earlier of the Distribution Date or the Expiration Date, the Rights will be
evidenced by such certificates for Common Stock registered in the names of
the holders of Common Stock with a copy of the Summary of Rights attached
thereto. Until the earliest of the Distribution Date, the Expiration Date
and the Final Expiration Date, the surrender for transfer of any of the
certificates for Common Stock outstanding on the Record Date, with or without
a copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate.
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(c) Certificates for Common Stock issued (or delivered from the
Company's treasury) after the Record Date but prior to the earliest of the
Distribution Date, the Expiration Date and the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between
Forstmann & Company, Inc. (the "Corporation") and Norwest Bank
Minnesota, N.A., dated as of October 9, 1997 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal execu-
tive offices of the Corporation. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be evidenced
by separate certificates and will no longer be evidenced by this
certificate. The Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge
promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights
issued to an Acquiring Person or any Associate or Affiliate
thereof (as such terms are defined in the Rights Agreement) may
be null and void. The Rights shall not be exercisable, and shall
be void so long as held, by a holder in any jurisdiction where
the requisite qualification for the issuance to such holder, or
the exercise by such holder of the Rights in such jurisdiction,
shall not have been obtained or be obtainable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for 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 Right Certificates. (a) The Right Certificates
(and the forms of election to purchase shares, certification and assignment
to be printed on the reverse thereof) shall be substantially in the form set
forth in Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as
the Company may deem appropriate and as are not inconsistent with the provi-
sions of this Agreement, or as may be required to comply with any applicable
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Sections 11 and
22 hereof, the Right Certificates, whenever distributed, which are
distributed in respect of shares of Common Stock which were issued and
outstanding as of the Record Date, shall be dated as of the Record Date, and
all Right Certificates which are distributed in respect of other shares of
Common Stock shall be dated as of the respective dates of issuance of such
Common Stock, and in each such case on their face shall entitle the holders
thereof to purchase such number of shares of Common Stock as shall be set
forth therein at the price per share of Common Stock set forth therein (the
"Purchase Price"), but the number and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided in this Agreement.
(b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person
<page break>
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Direc-
tors of the Company has determined is part of a plan, arrangement or
understanding (whether or not in writing) which has as a primary purpose or
effect the avoidance of the provisions of Section 7(e), Section 11(a)(ii) or
of Section 13 hereof with respect to the limitation of the Rights
beneficially owned by an Acquiring Person (or any Associate or Affiliate
thereof), and any Right Certificate issued pursuant to Section 6 or Section
11 hereof upon transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend modified as necessary to apply to such Person:
The Rights represented by this Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement). Accordingly, this Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration. (a) The Right
Certificates shall be executed on behalf of the Company manually or by
facsimile signature by the Chairman of the Board, the President or any Vice
President of the Company and have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or any Assistant
Secretary, either manually or by facsimile signature. The Right Certificates
shall be countersigned by the Rights Agent manually and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company
who shall have signed any of the Right Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent, and issued and delivered by the
Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any person who,
at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate, although at the
date of the execution of this Rights Agreement any such person was not such
an officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its principal office in St. Paul, Minnesota, books
for registration and transfer of the Right Certificates issued hereunder.
Such books shall show the names and addresses of the respective holders of
the Right Certificates, the number of Rights evidenced on its face by each of
the Right Certificates and the date and certificate number of each of the
Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of Sections 4(b) and 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close
of Business on the earlier of the Expiration Date and the Final Expiration
Date, any Right Certificate or Right Certificates may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certifi-
cates, entitling the registered holder to purchase a like number of shares of
Common Stock (or other securities, cash, and/or assets, as the case may be)
as the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged, with
the form of assignment and certificate appropriately executed, at the
principal office of the Rights Agent in St. Paul, Minnesota. Neither the
<page break>
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Right Certificate or
Right Certificates until the registered holder shall have completed and
signed the certificate contained in the form of assignment on the reverse
side of such Right Certificate or Right Certificates and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request. Thereupon the Rights Agent shall countersign and deliver
to the Person entitled thereto a Right Certificate or Right Certificates, as
the case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of any Right
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 Right Certificate, and, in case of loss, theft or destruction, of indem-
nity or security reasonably satisfactory to them, and, if requested by the
Company, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will execute
and deliver a new Right Certificate of like tenor to the Rights Agent for
counter-signature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly
executed, to the Rights Agent at the principal office of the Rights Agent in
St. Paul, Minnesota together with payment of the Purchase Price for each
share of Common Stock as to which the Rights are exercised, at or prior to
the earliest of (i) the Close of Business on October 28, 2007 (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 are exchanged as
provided in Section 23A hereof, or (iv) the time at which the Rights expire
pursuant to Section 13(d) hereof (the earliest of such times being herein
referred to as the "Expiration Date").
(b) The Purchase Price for each share of Common Stock issued
pursuant to the exercise of a Right shall initially be $60, shall be subject
to adjustment from time to time as provided in Sections 11 and 13 hereof and
shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase and certificate duly executed,
accompanied by payment (by certified check or bank draft payable to the order
of the Company) of the Purchase Price for the Common Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder
of the Rights pursuant hereto in cash, or by certified check or bank draft
payable to the order of the Company, the Rights Agent shall, subject to Sec-
tion 20(k) hereof, (i)(A) promptly requisition from any transfer agent of the
Common Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Common Stock to be purchased (and
the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests), or (B) if the Company shall have elected to deposit the
total number of shares of Common Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of shares of Common Stock as are
to be purchased (in which case certificates for the shares of Common Stock
represented by such receipts shall be deposited by the transfer agent with
the depositary agent) and the Company hereby directs the depositary agent to
comply with such request, (ii) when appropriate, requisition from the Company
<page break>
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder, and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order
of the registered holder of such Right Certificate. In the event that the
Company is obligated to issue other securities of the Company, pay cash
and/or distribute other property pursuant to Section 11(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.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent and delivered to the registered holder of such
Right Certificate or to his duly authorized assigns, 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 Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (ii) a transferee of any such Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee after such
Acquiring Person becomes such, or (iii) a transferee of any such Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior
to or concurrently with such Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration)
from such Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights or
(B) a transfer which the Board of Directors of the Company has determined is
part of a plan, arrangement or understanding which has as a primary purpose
or effect the avoidance of this Section 7(e), shall become null and void
without any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right
Certificates or any other Person as a result of its failure to make any
determination with respect to an Acquiring Person or any of its respective
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Right Certificate upon the
occurrence of any purported transfer or exercise as set forth in this Section
7 unless such registered holder shall have (i) completed and signed the
certificate following the form of assignment or election to purchase set
forth on the reverse side of the Right Certificate surrendered for such
assignment or exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and
no Right Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the Company.
<page break>
Section 9. (a) Reservation and Availability of Common 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 Common Stock or any
authorized and issued shares of Common Stock held in its treasury (and will
use its best efforts, following the occurrence of a Section 11(a)(ii) Event,
to cause to be reserved and kept available out of its authorized and unissued
shares of other securities or out of its authorized and issued shares of
other securities held in its treasury), the number of shares of Common Stock
(and, following the occurrence of a Section 11(a)(ii) Event, other securi-
ties) that will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) The Company shall use its best efforts to (i) file, as soon
as practicable following the earliest date after the first occurrence of a
Section 11(a)(ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a)(iii) hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to the
securities purchasable upon exercise of the Rights on an appropriate form,
(ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of
the Act) 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, acting by
resolution of its Board of Directors, temporarily suspend, for a period of
time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(b), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been tem-
porarily 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 juris-
diction unless the requisite qualification in such jurisdiction shall have
been obtained.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock (and,
following the occurrence of a Section 11(a)(ii) Event, other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable
shares.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the issuance or delivery of the Right Cer-
tificates or of any shares of Common Stock (or other securities, as the case
may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a person other than, or the
issuance or delivery of certificates or depositary receipts for a number of
shares of Common Stock (or other securities, as the case may be), in a name
other than that of, the registered holder of the Right Certificate evidencing
Rights surrendered for exercise or to issue or deliver any certificates for
shares of Common Stock (or other securities, as the case may be) or
depositary receipts for Common Stock upon the exercise of any Rights until
any such tax shall have been paid (any such tax being payable by the holder
of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
<page break>
Section 10. Common Stock Record Date. Each person in whose name any
certificate for a number of shares of Common Stock (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 shares of Common Stock (or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Common Stock (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 and otherwise) on, and such certificate shall be dated,
the next succeeding Business Day on which the Common Stock (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 Right
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 meetings or other 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
fractions thereof, covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.
(a)(i) Dividends. In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the Common Stock
payable in shares of Common Stock, (B) subdivide the outstanding Common Stock
into a greater number of shares, (C) combine or consolidate the outstanding
Common Stock into a smaller number of shares, or (D) issue any shares of its
Common Stock in a reclassification of the Common 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 Section 7(e) hereof and this Section 11(a), 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 Common Stock or other securities, 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 Common Stock or Common Stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time when
the Common 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
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that any Person,
alone or together with its Affiliates and Associates, shall become an
Acquiring Person, unless the event causing such Person to become an Acquiring
Person is a Section 13 Event or is an acquisition of Common Stock of the
Company pursuant to a tender or exchange offer for all outstanding Common
Stock of the Company at a price and on terms determined by at least a
majority of the members of the Board of Directors of the Company who are not
Acquiring Persons or representatives, nominees, Affiliates or Associates of
an Acquiring Person (the "Outside Directors"), after receiving advice from
one or more investment banking firms, to be (A) at a price which is fair to
stockholders (taking into account all factors which such Outside Directors
deem relevant, including, without limitation, prices which could reasonably
be achieved if the Company or its assets were to be sold on an orderly basis
designed to realize maximum value) and (B) otherwise in the best interests of
the Company and its stockholders, then proper provision shall be made so that
<page break>
each holder of a Right (except as provided below and in Section 7(e) hereof),
shall thereafter have the right to receive, upon exercise thereof following
the Distribution Date at the then current Purchase Price in accordance with
the terms of this Agreement, such number of shares of Common Stock of the
Company as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of shares of Common Stock for which
a Right was exercisable immediately prior to the first occurrence of such
Section 11(a)(ii) Event, whether or not such Right was then exercisable, and
(y) dividing that product (which, following such first occurrence, shall
thereafter be referred to as the "Purchase Price" for each Right and for all
purposes of this Agreement) by 50% of the Current Market Price per share of
the Common Stock of the Company (determined pursuant to Section 11(d) hereof)
on the date of the occurrence of such Section 11(a)(ii) Event (such number of
shares being hereinafter referred to as the "Adjustment Shares"). The
Company shall notify the Rights Agent as to any Persons who are deemed by the
Company to be Acquiring Persons or Associates, Affiliates or transferees (as
described in subparagraphs (ii) and (iii) of Section 7(e) hereof) of such
Persons and shall identify any Rights pertaining thereto.
(iii) In lieu of issuing shares of Common Stock of the Company in
accordance with Section 11(a)(ii) hereof, the Company, acting by resolution
of its Board of Directors, may (and, in the event that the number of shares
of Common Stock which are authorized by the Company's Certificate of Incor-
poration but not outstanding or reserved for issuance for purposes other than
upon exercise of the Rights are not sufficient to permit the exercise in full
of the Rights in accordance with Section 11(a)(ii) hereof, the Company, act-
ing by resolution of its Board of Directors, shall): (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the exercise
of a Right (the "Current Value"), over (2) the Purchase Price attributable to
each Right (such excess, the "Spread") and (B) with respect to each Right
(subject to Section 7(e) hereof), make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Purchase Price, (1)
cash, (2) a reduction in the Purchase Price, (3) other equity securities of
the Company that the Company has been authorized to issue (including, without
limitation, shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as shares of
Common Stock of the Company (such shares or units of preferred stock herein-
after called "Common Stock Equivalents")), (4) debt securities of the Com-
pany, (5) other assets, or (6) any combination of the foregoing having an ag-
gregate value equal to the Current Value, where such aggregate value has been
determined by action of 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 which has theretofore performed no services
for the Company or any Subsidiary of the Company in the past three years;
provided, however, if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days following
the later of (x) the first occurrence of a Section 11(a)(ii) Event and (y)
the first date that the right to redeem the Rights pursuant to Section 23
hereof, as such date may be amended pursuant to Section 26 hereof, shall
expire (the later of (x) and (y) being referred to herein as the "Sec-
tion 11(a)(ii) Trigger Date"), then the Company shall be obligated to de-
liver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, shares of Common Stock of the Company (to the
extent available) and then, if necessary, cash, securities and/or assets,
that in the aggregate have a value equal to the Spread. If, after the occur-
rence of a Section 11(a)(ii) Event, the number of shares of Common Stock that
are authorized by the Company's Certificate of Incorporation but not out-
standing or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof and the Company, acting by resolu-
tion of its Board of Directors, 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 thirty (30) day period
set forth above may be extended to the extent necessary, but not more than
ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek stockholder approval for the authorization of such
<page break>
additional shares (such period as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action is to
be taken pursuant to the terms 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 such stockholder approval for the authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
the first sentence of this Section 11(a)(iii) 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
Common Stock (as determined pursuant to Section 11(d) hereof) on the date of
the first occurrence of the Section 11(a)(ii) Event, and the per share or per
unit value of any Common Stock Equivalents shall be deemed to equal the
Current Market Price per share of the Common Stock of the Company on such
date.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of shares of Common
Stock entitling them (for a period expiring within 45 calendar days after
such record date) to subscribe for or purchase Common Stock (or shares having
the same rights, privileges and preferences as the shares of Common Stock
("Equivalent Common Stock")) or securities convertible into shares of Common
Stock or Equivalent Common Stock at a price per share of Common Stock or
Equivalent Common Stock (or having a conversion price per share, if a
security convertible into shares of Common Stock or Equivalent Common Stock)
less than the Current Market Price per share of the Common Stock (as defined
in Section 11(d) hereof) on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock
and/or Equivalent Common Stock which the aggregate offering price of the
total number of such shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be
the number of shares of Common Stock outstanding on such record date plus the
number of additional shares of Common Stock and/or Equivalent Common Stock to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such sub-
scription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as de-
termined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent.
Common 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, options or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of
a distribution to all holders of Common 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 indebt-
edness or assets (other than a regular periodic cash dividend out of the
earnings or retained earnings of the Company or a dividend payable in Common
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 Common Stock (as defined in
<page break>
Section 11(d) hereof) 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)
of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
share of Common Stock, and the denominator of which shall be such Current
Market Price per share of Common 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 again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) For the purpose of any computation hereunder, the "Current
Market Price" per share of Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to 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 by the issuer of such Common Stock of (i) a
dividend or distribution on such Common Stock payable in shares of such
Common Stock or securities convertible into such Common Stock or (ii) any
subdivision, combination or reclassification of such Common Stock, and prior
to the expiration of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such subdivision,
combination or reclassification, as the case may be, then, and in each such
case, the "Current Market Price" shall be appropriately adjusted to take into
account the ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not listed or admitted
to trading on the New York Stock Exchange, as reported in the principal con-
solidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading or, if the shares of Common Stock are
not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
or such other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker
making a market in shares of Common Stock selected by the Company, acting by
resolution of the Board of Directors of the Company. If on any such date no
market maker is making a market in shares of Common Stock, the fair value of
such shares on such date as determined in good faith by the Company, acting
by resolution of the Board of Directors of the Company, shall be used. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares
of Common Stock are not listed or admitted to trading on any national
securities exchange but are quoted on NASDAQ, a day on which NASDAQ is in
operation or if the shares of Common Stock are neither listed or admitted to
trading on any national securities exchange nor quoted on NASDAQ, a Business
Day. If the current per share market price of the Common Stock cannot be
determined in the manner provided above, or if the Common Stock is not
publicly held or not so listed or traded, "Current Market Price" per share of
Common Stock shall mean the fair value per share as determined in good faith
by the Company, acting by resolution of 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.
<page break>
(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 such price; provided,
however, that any adjustments which by reason of this Section 11(e) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a share of Common
Stock. 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 requires
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 any shares of capital stock of the Company other
than Common Stock, thereafter the Purchase Price and the number of such other
shares so receivable upon exercise of any Right and the number of Rights
outstanding shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect
to the Common Stock contained in Sections 11(a), (b), (c), (e), (g), (h),
(i), (j), (k) and (m) and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Common Stock shall apply on like terms to any such other
shares, provided, however, that the Company shall not be liable for its
inability or failure to reserve and keep available for issuance upon exercise
of the Rights pursuant to Section 11(a)(ii) a number of shares of Common
Stock greater than the number then authorized by the Certificate of
Incorporation of the Company but not outstanding or reserved for any other
purpose.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common
Stock 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) hereof, upon each adjustment of the Purchase Price
as a result of the calculations made in Section 11(b) and (c) hereof, each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price,
that number of shares of Common Stock (calculated to the nearest ten-
thousandth of a share of Common Stock) obtained by (i) multiplying (A) the
number of shares covered by a Right immediately prior to such adjustment of
the Purchase Price by (B) 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 substitution for any
adjustment in the number of shares of Common Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of shares of Common
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 Right Certifi-
cates have been issued, shall be at least 10 days later than the date of the
public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to holders
of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option
<page break>
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record
of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the number of shares of Common Stock, or fraction thereof, issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number of
shares which were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the shares
of Common Stock issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock 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 issuing to the holder of any Right exercised after such record date
the Common Stock and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Common Stock and other
capital stock or securities of the Company, if any, issuable upon such exer-
cise 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, acting by resolution of its Board of Directors, shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that
it in its sole discretion shall determine to be advisable in order that any
consolidation or subdivision of the Common Stock, any issuance wholly for
cash of any Common Stock at less than the current market price, any issuance
wholly for cash of Common Stock or securities which by their terms are
convertible into or exchangeable for Common Stock, any stock dividends or any
issuance of rights, options or warrants referred to herein above in this
Section 11, hereafter made by the Company to holders of its Common Stock
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Company in a transaction that complies with
Section 11(o) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction or in a series of related transactions, assets,
cash flow or earning power aggregating more than 50% of the assets, cash flow
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
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), if (x) at the time of or immediately after such consolidation,
merger or sale there are any rights, warrants or other instruments or
securities outstanding or agreements in effect that would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of the Person who
<page break>
constitutes, or would constitute, the "Principal Party" for purposes of Sec-
tion 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 26 hereof,
take (or permit any Subsidiary to take) any action if at the time such action
is taken it is reasonably foreseeable that such action will diminish
substantially or eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare or pay any dividend on the Common
Stock of the Company payable in such Common Stock or (ii) subdivide the
outstanding Common Stock of the Company into a greater number of shares (by
reclassification or otherwise than by payment of dividends in such Common
Stock) or (iii) combine or consolidate the outstanding Common Stock of the
Company into a smaller number of shares, then in any such case, (x) the
number of shares of Common Stock purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of -
shares of Common Stock so purchasable immediately prior to such event by a
fraction, the numerator of which is the number of shares of Common Stock of
the Company outstanding immediately before such event and the denominator of
which is the number of shares of such Common Stock outstanding immediately
after such event and (y) action shall be taken such that each share of Common
Stock of the Company outstanding immediately after such event shall have
issued with respect to it that number of Rights which each share of such
Common Stock outstanding immediately prior to such event had issued with
respect to it. The adjustments provided for in this Section 11(p) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected. If an event occurs
which would require an adjustment under Section 11(a)(ii) hereof and this
Section 11(p), the adjustments provided for in this Section 11(p) shall be in
addition and prior to any adjustment required pursuant to Section 11(a)(ii)
hereof.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13
hereof, the Company shall (a) promptly prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with the transfer
agent for the Common Stock a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Right Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing shares of
Common Stock) in accordance with Section 25 of this Agreement. Notwith-
standing the foregoing sentence, the failure of the Company to make such
certificates or give such notice shall not affect the validity or the force
or effect of the requirement for such adjustment. The Rights Agent shall be
fully protected in relying on any such certificate and on any adjustment
therein contained. Any adjustment to be made pursuant to Sections 11 and 13
hereof shall be effective as of the date of the event giving rise to such
adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event (a "Section 13 Event") that, following the
Stock Acquisition Time, directly or indirectly, (x) the Company shall con-
solidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof) and the Company shall not be the surviving or continuing corporation
of such merger, consolidation or combination, (y) any Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof) shall consolidate with the Company, or merge with and into the
Company, and the Company shall be the surviving or continuing corporation of
such merger or consolidation and, in connection therewith, all or part of the
Common Stock shall be changed into or exchanged for stock or other securities
of the Company or of any Person or cash or any other property, or (z) the
<page break>
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one or more transactions, assets, cash
flow or earning power aggregating more than 50% of the assets, cash flow or
earning power of the Company and its Subsidiaries (taken as a whole and cal-
culated on the basis of the Company's most recent regularly prepared
financial statement) to any other Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o) hereof), then, and in each such case (except as
provided in Section 13(d) hereof), proper provision shall be made so that
(i) each holder of a Right (except as otherwise provided in Section 7(e)
hereof) shall thereafter have the right to receive, upon the exercise thereof
at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradable shares of Common Stock of the Principal
Party (as hereinafter defined), not subject to any liens, encumbrances,
rights of call, rights of first refusal or other adverse claims, as shall be
equal to the result obtained by (A) multiplying the then current Purchase
Price by the number of shares of Common Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section 13 Event
(or, if a Section 11(a)(ii) Event has occurred prior to the first occurrence
of a Section 13 Event, multiplying the number of shares of Common Stock for
which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to
such first occurrence), and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by (B) 50% of
the Current Market Price per share of Common Stock of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such merger, consolidation, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this Agree-
ment; (iii) 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 Section 13 Event; (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the pro-
visions hereof shall thereafter be applicable, as nearly as reasonably may be
possible, in relation to its Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any Section 13 Event.
The Company shall not consummate any such merger, consolidation, sale or
transfer unless prior thereto the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement containing the
provisions required by this Section 13.
(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) hereof, the Person that is the
issuer of any securities into which shares of Common Stock of the Com-
pany are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such
merger or consolidation; and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets, cash flow or earning
power transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such
Person is not at any time and has not been continuously over the preceding
twelve month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the Common Stock
of which is and has been so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a Subsidiary, directly or indi
<page break>
rectly, of more than one Person, the Common Stock of two or more of which are
and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest aggregate
market value.
(c) The Company shall not consummate any Section 13 Event unless
the Principal Party shall have a sufficient number of shares of authorized
Common Stock which have not been issued or reserved for issuance to permit
the exercise in full of the Rights in accordance with this Section 13 and
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement containing the provi-
sions set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any such Section 13
Event, the Principal Party will:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the 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
Section 13 Event shall occur at any time after the occurrence of a Sec-
tion 11(a)(ii) Event, the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a)
hereof.
(d) Notwithstanding anything in this Agreement to the contrary,
this Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) hereof if (i) such transaction is
consummated with a Person or Persons who acquired Common Stock of the Company
pursuant to a tender offer or exchange offer for all outstanding Common Stock
of the Company which complies with the provisions of Section 11(a)(ii) hereof
(or a wholly owned Subsidiary of any such Person or Persons), (ii) the price
per share of Common Stock of the Company offered in such transaction is not
less than the price per share of Common Stock of the Company paid to all
holders of Common Stock of the Company whose shares were purchased pursuant
to such tender offer or exchange offer and (iii) the form of consideration
being offered to the remaining holders of Common Stock of the Company
pursuant to such transaction is the same as the form of consideration paid
pursuant to such tender offer or exchange offer. Upon consummation of any
such transaction contemplated by this Section 13(d), all Rights hereunder
shall expire.
(e) The Company covenants and agrees that it will not, after the
Stock Acquisition Time, engage in any Section 13 Event if at the time of or
after such event there are any charter or by-law provisions or any rights,
warrants or other instruments outstanding or any other action taken which
would diminish or otherwise eliminate the benefits intended to be afforded by
the Rights.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractions of Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for
the Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable. The closing price of the Rights for any
day shall be the last sale price, regular way, or, in case no such sale takes
<page break>
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal national securities exchange on which the Rights are listed
or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the Rights (selected by the
Company, acting by resolution of its Board of Directors). If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Company, acting by
resolution of its Board of Directors, shall be used.
(b) The Company shall not be required to issue fractions of
shares of Common Stock or Common Stock Equivalents upon exercise of the
Rights or to distribute certificates which evidence fractional shares. In
lieu of fractional shares, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of
one share of Common Stock or Common Stock Equivalent. For purposes of this
Section 14(b), the current market value of a share of Common Stock or Common
Stock Equivalent shall be the closing price of a share of Common Stock (as
determined pursuant to the second sentence of Section 11(d)(ii) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right except as permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of Common Stock); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of Common Stock), without the consent of
the Rights Agent or of any holder of any other Right Certificate (or, prior
to the Distribution Date, of 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 Right Certificate in the
manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Agreement and will be entitled
to specific performance of the obligations hereunder, and injunctive relief
against actual or threatened violations of the obligations of any Person
subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by
accepting such Right consents and agrees with the Company and with every
other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced
by the certificates for shares of Common Stock registered in the name
of the holders of such shares (which certificates for shares of Common
Stock shall also constitute certificates for Rights) and each Right
will be transferable only in connection with the transfer of Common
Stock;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates duly completed and fully executed;
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right 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 af-
fected 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, regu-
latory 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. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right or Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of a share of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be construed to confer
upon the holder of any Right or Right 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 24 hereof), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by such Right
Certificate shall have been exercised in accordance with the provisions
hereof.
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 other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability,
or expense, incurred without negligence, bad faith 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
Right 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 to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. (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 cor-
poration 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
<page break>
the part of any of the parties hereto; provided, however, that such corpora-
tion would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. The purchase of all or substantially all of
the Rights Agent's assets employed in the performance of transfer agent ac-
tivities shall be deemed a merger or consolidation for purposes of this
Section 19. In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of the predecessor Rights Agent and deliver
such Right Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, any successor Rights
Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certifi-
cates, 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 an
Acquiring Person and the determination of the Current Market Price per
share of Common Stock) 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 or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in
the Right Certificates (except as to its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section 11 or 13 hereof
or responsible for the manner, method or amount of any such adjustment
<page break>
or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such
adjustment), nor shall it be responsible for any determination by the
Board of Directors of the Company of the Current Market Price of the
Rights or Common Stock, nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or
reservation of any shares of Common Stock or other securities to be
issued pursuant to this Agreement or any Right Certificate or as to
whether any shares of Common Stock or other securities will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances
as may reasonably be required by the Rights Agent for the carrying out
or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from 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 capa-
city for the Company or for any other legal entity, except it may not
act for an Acquiring Person in an investment banking capacity, or
otherwise assist an Acquiring Person in ways hostile to the Company,
without the consent of the Company.
(i) The Rights Agent may execute and exercise any of the rights
and 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 or to holders of the Rights resulting from any such act,
omission, default, neglect or misconduct, provided 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 Right 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 the
transfer agent of the Common Stock by registered, certified or express mail,
and to the holders of the Right Certificates by first-class mail. The Com-
pany may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as
<page break>
the case may be, and to the transfer agent of the Common Stock by registered,
certified or express mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor
to the Rights Agent. If the Company shall fail to make such appointment
within a period of 30 days after giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by the re-
signing or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by
the Company), then the registered holder of any Right Certificate may apply
to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business under the
laws of the United States or of any state of the United States, in good
standing, which is authorized 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 million. 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 the transfer agent of the
Common Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by resolution of its Board of Directors, to re-
flect any adjustment or change in the Purchase Price and the number or kind
or class of shares of stock or other securities or property purchasable under
the Right Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of Common
Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate
by the Board of Directors of the Company, issue Right Certificates repre-
senting the appropriate number of Rights in connection with such issuance or
sale; provided, however, that (i) no such Right Certificates 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 Right Certificates would be issued,
and (ii) no such Right Certificates 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. (a) The Company may, by resolution of its
Board of Directors, at its option, at any time prior to the earlier of
(x) the Stock Acquisition Time or (y) the Close of Business on the Final
Expiration Date, redeem all but not less than all of the then outstanding
Rights at a redemption price of $0.01 per Right (payable 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 of the Company, including, but not limited to, rights
having substantially similar rights, privileges and preferences as the
<page break>
Rights), appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price").
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights (or at such time subsequent to
such action as the Board of Directors may determine), and without any further
action and without any notice, the right to exercise the Rights will ter-
minate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within 10 days after the action of the Board
of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they
appear upon the registry books of the Rights Agent or, prior to the Dis-
tribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates
or Associates may redeem, acquire or purchase any Rights at any time in any
manner other than that specifically set forth in this Section 23, and other
than in connection with the repurchase of Common Stock of the Company prior
to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may,
at its option, at any time after any Person becomes an Acquiring Person,
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)) for Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the "Exchange Ratio"). Not-
withstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than the Company,
any wholly owned Subsidiary of the Company, any employee benefit plan of the
Company or any such Subsidiary, or any entity holding Common Stock as a
fiduciary for or pursuant to the terms of any such employee benefit plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24, evidence of which shall have been filed with the Rights Agent,
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 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 shall promptly mail a
notice of any such exchange to all of the holders of such Rights at their
last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Stock for
Rights will be effected and, in the event of any partial exchange, the number
of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become
void pursuant to the provisions of Section 7(e) hereof) held by each holder
of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute shares of Common Stock Equivalents for some or all
of the shares of Common Stock exchangeable for Rights.
<page break>
(d) In the event that there shall not be sufficient shares of
Common Stock (or Common Stock Equivalents) issued but not outstanding or
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24 , the Company shall take all such action as
may be necessary to authorize additional shares of Common Stock (or Common
Stock Equivalents) for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
Common Stock or to distribute certificates which evidence fractional Common
Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares would otherwise be issuable an amount in cash equal to the
same fraction of the current market value of a whole share of Common Stock.
For the purposes of this paragraph (e), the current market value of a whole
share of Common Stock shall be the closing price of a share of Common Stock
(as determined pursuant to the second sentence of Section 11(d) hereof) for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24
Section 25. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders
of its Common Stock or to make any other distribution to the holders of its
Common Stock (other than a regular quarterly dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Common
Stock options, rights or warrants to subscribe for or to purchase any
additional Common Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of the
Common Stock (other than a reclassification involving only the subdivision of
outstanding shares of Common Stock), or (iv) to effect any merger,
consolidation or other combination into or with, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets, cash flow or earning power of the Company and its Subsidiaries (taken
as a whole) to, any other Person, or (v) to effect the liquidation, dissolu-
tion or winding up of the Company, then, in each such case, the Company shall
give to each holder of a Right, 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, merger, consolidation, combination,
sale, transfer, liquidation, dissolution or winding up is to take place and
the date of participation therein by the holders of Common 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 twenty days prior to the
record date for determining holders of Common Stock for purposes of such
action, and in the case of any such other action, at least twenty days prior
to the date of the taking of such proposed action or the date of
participation therein by the holders of Common 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 of the events set forth in Section 11(a)(ii) or
Section 13(a) of this Agreement shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each holder of a
Right Certificate, to the extent feasible and in accordance with Section 26
thereof, 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 Section 25(a)
hereof to Common Stock shall be deemed thereafter to refer to Common Stock or
other securities issuable in respect of the Rights, as the case may be.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the 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:
<page break>
Forstmann & Company, Inc.
1155 Avenue of the Americas
New York, New York 10019
Attention: Chief Financial Officer
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
Norwest Bank Minnesota, N.A.
P. O. Box 64954
St. Paul, Minnesota 44164
Attention: Shareowner Relations Dept.
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such Right holder (or, if
prior to the Distribution Date, to such holder of Common Stock) at the
address of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the Stock
Acquisition Time and subject to the penultimate sentence of this Section 27,
the Company may, by resolution of its Board of Directors, and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of
this Agreement in any respect whatsoever (including, without limitation, any
extension of the period in which the Rights may be redeemed) without the
approval of any holders of certificates representing shares of Common Stock
of the Company. From and after the Stock Acquisition Time and subject to the
penultimate sentence of this Section 27, without the approval of any holders
of certificates representing shares of Common Stock of the Company or of
Right Certificates, the Company may, by resolution of its Board of Directors,
and the Rights Agent shall, if the Company so directs, supplement or amend
this Agreement in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen
any time period hereunder or (iv) to change or supplement or make any other
provisions in any manner which the Company may deem necessary or desirable,
which shall not adversely affect the interests of, or diminish substantially
or eliminate the benefits intended to be afforded by the Rights to, the hold-
ers of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of any such Person); provided, however, that this Agreement may not
be supplemented or amended to lengthen, pursuant to clause (iii) of this sen-
tence, (A) a time period relating to when the Rights may be redeemed or to
modify the ability (or inability) of the Board of Directors of the Company to
redeem the Rights, in either case at such time as the Rights are not then re-
deemable or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of or the benefits
to the holders of Rights (other than an Acquiring Person or an Affiliate or
Associate of any such Person). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement
or amendment is in compliance with the terms of this Section 27, the Rights
Agent shall execute such supplement or amendment. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall
be made which changes the Redemption Price, the Final Expiration Date, the
Purchase Price or the number of shares of Common Stock for which a Right is
exercisable. Prior to the Stock Acquisition Time, the interests of the
holders of Rights shall be deemed coincident with the interests of the
holders of Common Stock.
<page break>
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 here-
under.
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. The Board of Directors of the
Company (with, where specifically provided for herein, the concurrence of the
Outside Directors) shall have the exclusive power, authority and discretion
to administer this Agreement and to exercise all rights and powers
specifically granted to such Board of Directors (with, where specifically
provided for herein, the concurrence of the Outside Directors), 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, but not
limited to, a determination to redeem or not redeem the Rights, to amend the
Agreement or to find or to announce publicly that any Person has become an
Acquiring Person). All such actions, calculations, interpretations and
determinations (including, for purposes of clauses (i) and (iii) below, all
omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Company (with, where specifically provided for herein,
the concurrence of the Outside Directors), the Outside Directors or the
Company (i) shall be within the discretion of the Board of Directors or the
Outside Directors, (ii) shall be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Right Certificates and all
other parties, and (iii) shall not subject the Board of Directors of the
Company or the Outside Directors to any liability to the holders of the
Rights and Right Certificates.
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 Right 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 Right 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 Business Day following the
date of such determination by the Board of Directors. Without limiting the
foregoing, if any provision of this Agreement requiring that a determination
be made by the Board of Directors with the concurrence of a majority of the
Outside Directors or by the Outside Directors 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 Board of Directors in accordance with
applicable law and the Company's certificate of incorporation and by-laws.
<page break>
Section 32. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Georgia and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together consti-
tute 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.
<page break>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
FORSTMANN & COMPANY, INC.
By: /s/ Rod J. Peckham
----------------------------
Name: Rod J. Peckham
Title: Chief Financial Officer
NORWEST BANK MINNESOTA, N.A.
By: /s/ Kenneth P. Swanson
----------------------------
Name: Kenneth P. Swanson
Title: Assitant Vice President
<page break>
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- Rights
--------
NOT EXERCISABLE AFTER OCTOBER 28, 2007 OR EARLIER IF THE BOARD OF DIRECTORS
ORDERS THE REDEMPTION OR EXCHANGE OF THE RIGHTS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID
SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE
QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER,
OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE
OBTAINABLE. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE BENEFI-
CIALLY 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 CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
1SECTION 7(e) OF SUCH AGREEMENT.]
<page break>
Rights Certificate
FORSTMANN & COMPANY, INC.
This certifies that , or registered assigns, is the
------
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions
of the Rights Agreement, dated as of October 9, 1997 (the "Rights Agree-
ment"), between Forstmann & Company, Inc., a Georgia corporation (the
"Company"), and Norwest Bank Minnesota, N.A. (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such
term is defined in the Rights Agreement) and prior to 5:00 P.M. (New York,
New York time) on October 28, 2007, at the principal office of the Rights
Agent, or its successors as Rights Agent, one fully paid nonassessable share
of Common Stock, par value $1.00 per share of the Company (the "Common
Stock"), at a purchase price of $60 per share of Common Stock (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the
Form of Election to Purchase and the Certificate contained therein duly
executed. The number of Rights evidenced by this Right Certificate (and the
number of shares of Common Stock which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per share of Common Stock
set forth above, are the number and Purchase Price as of October 29, 1997,
based on the shares of Common Stock as constituted at such date.
From and after the first occurrence of a Section 11(a)(ii) Event
(as defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate
or Associate thereof (as such terms are defined in the Rights Agreement),
(ii) a transferee of any such Acquiring Person (or of any Associate or
Affiliate thereof) who becomes a transferee after such Acquiring Person (or
any Associate or Affiliate thereof) becomes such or (iii) under certain cir-
cumstances specified in the Rights Agreement, a transferee of such Acquiring
Person (or of any Associate or Affiliate thereof) who becomes a transferee
prior to or concurrently with such Acquiring Person becoming such, such
Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Sec-
tion 11(a)(ii) Event.
The Rights evidenced by this Right Certificate shall not be
exercisable, and shall be void so long as held, by a holder in any
jurisdiction where the requisite qualification to the issuance to such
holder, or the exercise by such holder, of the Rights in such jurisdiction
shall not have been obtained or be obtainable.
As provided in the Rights Agreement, the Purchase Price and the
number of shares of Common Stock or the number and kind of other securities
which may be purchased upon the exercise of the Rights evidenced by this
Right Certificate are subject to modification and adjustment upon the
happening of certain events, including Section 11(a)(ii) Events and Sec-
tion 13 Events (as defined in the Rights Agreement).
This Right Certificate is subject to all of the terms, provisions
and conditions of the Rights Agreement, as it may be amended from time to
time, which terms, provisions and conditions are hereby incorporated herein
by reference and made a part hereof and to which Rights Agreement reference
is hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates, which limitations of rights in-
clude 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 principal executive offices of the
1. The portion of the legend in brackets shall be
inserted only if applicable and shall replace the
preceding sentence.
<page break>
Company and the above-mentioned office of the Rights Agent and are also
available upon written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged
for another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Common Stock as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to purchase.
If this Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at a
redemption price of $.01 per Right at any time prior to the earlier of
(i) the Stock Acquisition Time (as defined in the Rights Agreement) and
(ii) the close of business on the Expiration Date (as defined in the Rights
Agreement). Subject to the provisions of the Rights Agreement, the rights
evidenced by this Right Certificate may be exchanged in whole or part for
shares of Common Stock (or any other substantially similar equity security of
the Company).
No fractional shares of Common Stock will be issued upon the
exercise of any Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
Other than those provisions relating to the principal economic
terms of the Rights, any of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company in any respect whatsoever up
until the Stock Acquisition Time and thereafter in certain respects which do
not adversely affect the interests of holders of Right Certificates (other
than an Acquiring Person or the Affiliates or Associates thereof).
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Common
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other 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 Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated:
ATTEST: FORSTMANN & COMPANY, INC.
- ------------------------ By
Assistant Secretary ------------------------
Title:
Countersigned:
NORWEST BANK MINNESOTA,
N.A.
By
---------------------
Authorized Signatory
<page break>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED hereby sells, assigns
-----------------------
and transfers unto
-------------------
- -----------------------------------------------------------------------------
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
-------------------------
Attorney, to transfer the within Right Certificate on the books of the within
named Company, with full power of substitution.
Dated:
--------------,------
----------------------
Signature
<page break>
Signatures Guaranteed:
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
---------------------
Signature
<page break>
NOTICE
------
The signature to the foregoing Assignment must correspond to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
<page break>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate.)
To Forstmann & Company, Inc.:
The undersigned hereby irrevocably elects to exercise
-------------
Rights represented by this Right Certificate to purchase the shares of Common
Stock issuable upon the exercise of such Rights and requests that certifi-
cates for such shares be issued in the name of:
Please insert social security
or other identifying number
- ----------------------------------------------------------
(Please print name and address)
- ----------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
- ----------------------------------------------------------
(Please print name and address)
- ----------------------------------------------------------
Dated:
---------------,-------
<page break>
[Form of Election to Purchase -- continued]
------------------------
Signature
(Signature must conform in all respects to name of holder as
specified on the face of this Right Certificate.)
Signature Guaranteed:
- --------------------------------------------------------
(To be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
----------------------------
Signature
- ---------------------------------------------------------------
NOTICE
------
In the event the certification set forth above in the Forms of
Assignment and Election is not completed, the Company will deem the
beneficial owner of the Rights evidenced by this Right Certificate to be an
Acquiring Person or an Affiliate or Associate thereof (as defined in the
Rights Agreement) and, in the case of an Assignment, will affix a legend to
that effect on any Right Certificates issued in exchange for this Rights
Certificate.
<page break>
EXHIBIT B
FORSTMANN & COMPANY, INC.
SUMMARY OF RIGHTS TO PURCHASE
Common Stock
On October 9, 1997, the Board of Directors of Forstmann & Company,
Inc. (the "Company") declared a dividend distribution of one Common Stock
Purchase Right (a "Right") for each outstanding share of Common Stock, par
value $.01 per share, of the Company (the "Common Stock"). The following is
a summary of the terms of the Rights.
Each Right entitles the registered holder to purchase from the
Company one share of Common Stock at a price of $60 per share of Common
Stock, subject to adjustment (the "Purchase Price"). The description and
terms of the Rights are set forth in a Rights Agreement, dated as of October
9, 1997 (the "Rights Agreement"), between the Company and Norwest Bank
Minnesota, N.A., as Rights Agent (the "Rights Agent").
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate
certificates representing the Rights ("Right Certificates") will be
distributed. The Rights will separate from the Common Stock and a "Dis-
tribution Date" will occur upon the earlier to occur of (i) ten business days
following the time (the "Stock Acquisition Time") of a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") acquired, or obtained the right to acquire, beneficial ownership of
25% or more of the outstanding Common Stock of the Company and (ii) ten
business days (or, if determined by the Board of Directors, a specified or
unspecified later date) following the commencement or announcement of an
intention to make a tender offer or exchange offer which, if successful,
would cause the bidder to own 25% of more of the outstanding Common Stock.
The Rights Agreement provides that, until the Distribution Date,
(i) the Rights will be transferred with and only with the Common Stock,
(ii) new Common Stock certificates issued after October 29, 1997, upon
transfer or new issuance of the Common Stock, will contain a notation incor-
porating the Rights Agreement by reference and (iii) the surrender for
transfer of any of the Common Stock certificates outstanding will also
constitute the transfer of the Rights associated with the shares of
<page break>
Common Stock represented by such certificate. As soon as practicable follow-
ing the Distribution Date, separate Right Certificates will be mailed to
holders of record of the Common Stock as of the close of business on the Dis-
tribution Date and such separate Right Certificates alone will evidence the
Rights. Except as otherwise determined by the Board of Directors, only
shares of Common Stock issued prior to the Distribution Date will be issued
with Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on October 28, 2007, unless earlier redeemed or exchanged
by the Company as described below.
In the event that, after the Stock Acquisition Time, the Company is
acquired in a merger or other business combination transaction (except
certain transactions with a person who became an Acquiring Person as a result
of a tender offer described in the next succeeding paragraph) or 50% or more
of its assets, cash flow or earning power is sold, proper provision shall be
made so that each holder of a Right shall thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which
at the time of such transaction would have a market value (as defined in the
Rights Agreement) of two times the Purchase Price of the Right. In the event
that, after the Stock Acquisition Time, the Company were the surviving
corporation of a merger and its Common Stock were changed or exchanged,
proper provision shall be made so that each holder of a Right will thereafter
have the right to receive upon exercise that number of shares of Common Stock
of the Company having a market value of two times the exercise price of the
Right.
In the event that a person or group becomes an Acquiring Person
(except pursuant to a tender offer for all outstanding shares of Common Stock
determined to be at a fair price and otherwise in the best interests of the
Company and its stockholders by a majority of the Outside Directors), proper
provision shall be made so that each holder of a Right (other than the Ac-
quiring Person) will thereafter have the right to receive upon exercise that
number of shares of Common Stock (or, in certain circumstances, cash, a
reduction in the Purchase Price, other equity securities of the Company, debt
securities of the Company, other property or a combination thereof) having a
market value (as defined in the Rights Agreement) of two times the Purchase
Price of the Right. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person (or an affiliate, associate or
transferee thereof) will be null and void. A person will not be an Acquiring
Person if the Board of Directors of the Company determines that such person
or group became an Acquiring Person inadvertently and such person or group
<page break>
promptly divests itself of a sufficient number of shares of Common Stock so
that such person or group is no longer an Acquiring Person. Nor shall a
Person be an Acquiring Person because such Person's beneficial ownership of
Common Stock was at or above 25% on the date of the Agreement, so long as
such Person, while continuing to beneficially own at least 25% of Common
Stock, does not acquire an additional one percent or more of the shares of
Common Stock of the Company.
The Purchase Price payable, and the number of shares of Common
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 Common Stock, (ii) upon the grant to holders of
Common Stock of certain rights or warrants to subscribe for Common Stock or
convertible securities at less than the current market price of Common Stock
or (iii) upon the distribution to holders of Common Stock of evidences of
indebtedness or assets (excluding regular periodic cash dividends or
dividends payable in Common Stock) or of subscription rights or warrants
(other than those referred to above). The number of Rights and number of
shares of Common Stock issuable upon the exercise of each Right are also
subject to adjustment in the event of a stock split, combination or stock
dividend on the Common Stock.
With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1%
in such Purchase Price. No fractional shares of Common Stock will be issued
and, in lieu thereof, an adjustment in cash will be made based on the market
price of the Common Stock on the last trading date prior to the date of
exercise.
At any time prior to the earlier of the Stock Acquisition Time and
the Expiration Date (as defined in the Rights Agreement), the Board of
Directors may redeem the Rights in whole, but not in part, at a price of $.01
per Right (the "Redemption Price"). Immediately upon the action of the Board
of Directors ordering redemption of the Rights (or at such time subsequent to
such action as the Board of Directors may determine), 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 a person becomes an Acquiring Person and prior to
the acquisition by such Person of 50% or more of the outstanding shares of
Common Stock, the Board of Directors of the Company may exchange the Rights
(other than Rights beneficially owned by such Person which have become void),
in whole or part, at an exchange ratio of one share of Common Stock per Right
(subject to adjustment). The Company, at its option, may substitute one
share of a substantially similar equity security of the Company for each
share of Common Stock to be exchanged.
<page break>
Until a Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of the Company, other than rights resulting from
such holder's ownership of shares of Common Stock, including, without
limitation, the right to vote or to receive dividends. While the distribu-
tion of the Rights will 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 common stock of the acquiring company as
set forth above.
Other than those provisions relating to the principal economic
terms of the Rights, any of the provisions of the Rights Agreement may be
amended by the Board of Directors prior to the Stock Acquisition Time. After
such time, the provisions of the Rights Agreement may be amended by the Board
of Directors in order to cure any ambiguity, to correct or supplement
defective or inconsistent provisions, to shorten or lengthen any time period
under the Rights Agreement, to make changes which do not adversely affect the
interests of the 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 adjust 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
dated October 22, 1997. Copies of the Rights Agreement are 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, as it may be amended from time to time, which is hereby
incorporated herein by reference.
