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
NAVISTAR INTERNATIONAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 36-3359573
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(State of incorporation or organization) (I.R.S. Employer Identification No.)
455 North Cityfront Plaza Drive, Chicago, IL 60611
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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Preferred Stock Purchase Rights, with New York Stock Exchange
respect to Common Stock, par value $.10 per Chicago Stock Exchange
share Pacific Exchange
If this form relates to the registration of a class of securities pursuant to
Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), check the following box. : [ X ]
If this form relates to the registration of a class of securities pursuant to
Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), check the following box. [ ]
Securities Act registration statement file number to which this form relates:
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(if applicable).
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
The Exhibit Index is located on page 7.
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Item 1. Description of Registrant's Securities to be Registered:
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Preferred Stock Purchase Rights
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On April 20, 1999, the Board of Directors of Navistar International
Corporation (the "Company") authorized the issuance of one preferred share
purchase right (a "Right") for each outstanding share of common stock, par value
$.10 per share (the "Common Shares"), of the Company. The distribution is
payable to stockholders of record at the close of business on May 3, 1999 (the
"Record Date"), and with respect to all Common Shares that become outstanding
after the Record Date and prior to the earliest of the Distribution Date (as
defined below), the redemption of the Rights, the exchange of the Rights, and
the expiration of the Rights (and, in certain cases, following the Distribution
Date). Each Right entitles the registered holder to purchase from the Company
one one-thousandth of a share of Junior Participating Preferred Stock, Series A,
par value $1.00 per share, of the Company (the "Preferred Shares") at a price of
$175 per one one-thousandth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement") between the Company and Harris Trust
and Savings Bank, as Rights Agent (the "Rights Agent").
The Rights will be evidenced by Common Share certificates and not by
separate certificates until the earlier to occur of (i) the tenth day after the
date it is publicly announced that a person or group other than certain exempt
persons (an "Acquiring Person"), together with persons affiliated or associated
with such Acquiring Person, has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding Common Shares (a
"Triggering Event") and (ii) the tenth business day after the commencement or
public disclosure of an intention to commence a tender offer or exchange offer
by a person other than an exempt person if, upon consummation of the offer, such
person could acquire beneficial ownership of 15% or more of the outstanding
Common Shares (the earlier of such dates being called the "Distribution Date").
Until the Distribution Date (or earlier redemption, exchange or expiration
of the Rights), the Rights will be transferred with and only with the Common
Shares, and the surrender for transfer of any certificate for Common Shares will
also constitute the transfer of the Rights associated with such Common Shares.
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.
The Rights will first become exercisable after the Distribution Date
(unless sooner redeemed or exchanged). Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends. The
Rights will expire at the close of business on May 3, 2009 (the "Expiration
Date"), unless earlier redeemed or exchanged by the Company as described below.
In the event that a person becomes an Acquiring Person, each Right (other
than Rights that are or were beneficially owned by the Acquiring Person and
certain related persons and transferees, which will thereafter be void) shall
thereafter be exercisable not for Preferred Shares, but for a number of Common
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Shares (or, in certain cases, common equivalent shares) having a market value of
two times the exercise price of the Right. In the event that, at the time or
after a person becomes an Acquiring Person, the Company is involved in a merger
or other business combination in which (i) the Company is not the surviving
corporation, (ii) Common Stock is changed or exchanged, or (iii) 50% or more of
the Company's consolidated assets or earning power are sold, then each Right
(other than Rights that are or were owned by the Acquiring Person and certain
related persons and transferees, which will thereafter be void) shall thereafter
be exercisable for a number of shares of common stock of the acquiring company
having a market value of two times the exercise price of the Right.
In addition, at any time after a person has become an Acquiring Person, but
before a person has acquired beneficial ownership of 50% or more of the
outstanding Common Shares, the Company may elect to exchange all or part of the
Rights (excluding void Rights held by an Acquiring Person and certain related
persons and transferees) for Common Shares on a one-for-one basis.
The Purchase Price payable, and the number and kind of securities, cash or
other property issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend or
distribution on, or a subdivision or combination of, the Common Shares, (ii)
upon the grant to holders of the Common Shares of rights, options or warrants to
subscribe for Common Shares or securities convertible into Common Shares at less
than the current market price, (iii) upon the distribution to holders of the
Common Shares of securities, cash, evidences of indebtedness or assets
(excluding regular periodic cash dividends out of earnings or retained earnings)
and (iv) in connection with recapitalizations of the Company or
reclassifications of the Common Shares.
No fractional Preferred Shares will be issued (other than fractions which
are integral multiples of one one-thousandth of a Preferred Share, which may, at
the election of the Company, be evidenced by depositary receipts) and in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading date prior to the date of exercise.
At any time prior to the earlier of (i) the occurrence of a Triggering
Event and (ii) the Expiration Date, the Board of Directors of the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The Redemption Price will be payable in cash, shares
(including fractional shares) of Common Stock or any other form of consideration
deemed appropriate by the Board of Directors. Immediately upon action of the
Board of Directors ordering redemption of the Rights, the ability of holders to
exercise the Rights will terminate and the only rights of such holders will be
to receive the Redemption Price.
At any time prior to the occurrence of a Triggering Event, the Board of
Directors of the Company may amend or supplement the Rights Agreement without
the approval of the Rights Agent or any holder of the Rights. Thereafter, the
Rights Agreement may not be amended or changed in any manner which would
adversely affect the interests of the holders of the Rights (other than an
Acquiring Person or an affiliate or associate thereof).
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The Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of $25 per share and 1,000 times
the dividend declared per Common Share. In the event of liquidation, the holders
of the Preferred Shares will be entitled to a minimum preferential liquidation
payment equal to the greater of $100 per share and 1,000 times the payment made
per Common Share. Each Preferred Share will have 1,000 votes per share, voting
together with the Common Shares. In the event of any merger, consolidation or
other transaction in which Common Shares are exchanged, each Preferred Share
will be entitled to receive 1,000 times the amount received per Common Share.
The Rights have certain anti-takeover effects. The Rights may cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors, except pursuant to an offer
conditioned on a substantial number of Rights being acquired. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors prior to the occurrence of a Triggering Event, because until
such time the Rights may generally be redeemed by the Company at $.01 per Right.
This summary description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement attached as
Exhibit 1.1, which is incorporated in this Registration Statement on Form 8-A by
reference.
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Item 2. Exhibits
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1.1 Rights Agreement dated as of April 20, 1999 between
Navistar International Corporation and Harris Trust
and Savings Bank, as Rights Agent, including the form
of Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series A
attached thereto as Exhibit A, and the form of Rights
Certificate attached thereto as Exhibit B.
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SIGNATURE
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Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereto duly authorized.
NAVISTAR INTERNATIONAL CORPORATION
By: /s/ Robert C. Lannert
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Robert C. Lannert
Executive Vice President
and Chief Financial Officer
Date: April 20, 1999
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EXHIBIT INDEX
Exhibit No. Description
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1.1 Rights Agreement dated as of April 20, 1999 between
Navistar International Corporation and Harris Trust and
Savings Bank, as Rights Agent, including the form of
Certificate of Designation, Preferences and Rights of
Junior Participating Preferred Stock, Series A attached
thereto as Exhibit A, and the form of Rights Certificate
attached thereto as Exhibit B.
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Exhibit 1.1
NAVISTAR INTERNATIONAL CORPORATION
and
HARRIS TRUST AND SAVINGS BANK
Rights Agent
Rights Agreement
Dated as of April 20, 1999
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Table of Contents
Page
Section 1. Certain Definitions - 1 -
Section 2. Appointment of Rights Agent - 8 -
Section 3. Issuance of Rights Certificates - 8 -
Section 4. Form of Rights Certificates - 10 -
Section 5. Execution, Countersignature and Registration - 10 -
Section 6. Transfer, Division, Combination and Exchange
of Rights Certificates; Mutilated, Destroyed,
Lost or Stolen Rights Certificates - 11 -
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights - 11 -
Section 8. Cancellation and Destruction
of Rights Certificates - 13 -
Section 9. Reservation and Availability of Preferred Stock - 14 -
Section 10. Preferred Stock Record Date - 15 -
Section 11. Adjustments to Purchase Price, Number of Shares
or Number of Rights - 15 -
Section 12. Certification of Adjustments - 25 -
Section 13. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power - 26 -
Section 14. Fractional Rights and Fractional Shares - 28 -
Section 15. Rights of Action - 29 -
Section 16. Agreement of Rights Holders Concerning
Transfer and Ownership of Rights - 29 -
Section 17. Rights Holder Not Deemed a Stockholder - 30 -
Section 18. Concerning the Rights Agent - 30 -
Section 19. Merger or Consolidation or Change of
Name of Rights Agent - 31 -
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Section 20. Duties of Rights Agent - 31 -
Section 21. Change of Rights Agent - 33 -
Section 22. Issuance of New Rights Certificates - 35 -
Section 23. Redemption and Termination - 35 -
Section 24. Notice of Certain Events - 36 -
Section 25. Notices - 36 -
Section 26. Supplements and Amendments - 37 -
Section 27. Successors - 38 -
Section 28. Benefits of this Agreement. - 38 -
Section 29. Severability - 39 -
Section 30. Governing Law - 39 -
Section 31. Counterparts - 39 -
Section 32. Descriptive Headings - 39 -
Section 33. Grammatical Construction - 39 -
Exhibit A -- Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series A
Exhibit B -- Form of Rights Certificate
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RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT, dated as of April 20, 1999 is made between
NAVISTAR INTERNATIONAL CORPORATION, a Delaware corporation (the "Company"), and
HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation (the "Rights
Agent").
RECITALS
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The Board of Directors of the Company has authorized and declared the
payment of a dividend of one preferred share purchase right (a "Right") for each
share of Common Stock (as defined in Section 1) outstanding on the Record Date
(as defined in Section 1) and has authorized the issuance of one Right for each
share of Common Stock issued after the Record Date and before the earliest of
the Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date (as such terms are defined in Section 1) and in certain cases following the
Distribution Date. Each Right will represent, as of the Record Date, the right
to purchase one one-thousandth of one share of Preferred Stock (as defined in
Section 1) upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions.
--------------------
For purposes of this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who or which, together with all
Affiliates and Associates of such Person, is (or has previously been, at any
time after the date of this Agreement, whether or not such Person(s) continues
to be) the Beneficial Owner of 15% or more of the Common Stock then outstanding
(determined without taking into account any securities exercisable or
exchangeable for, or convertible into, Common Stock, other than any such
securities beneficially owned by the Acquiring Person and Affiliates and
Associates of such Person). However, "Acquiring Person" shall not include any
Exempt Person.
Notwithstanding the foregoing, a Person shall not become an "Acquiring
Person" solely as the result of an acquisition of Common Stock by the Company or
any Subsidiary which, by reducing the number of shares outstanding, increases
the proportionate number of shares beneficially owned by such Person to 15% or
more of the Common Stock then outstanding as determined above; provided,
however, that if a Person becomes the Beneficial Owner of 15% or more of the
Common Stock then outstanding as determined above solely by reason of such a
share acquisition by the Company and such Person shall, after becoming the
Beneficial Owner of such Common Stock, become the Beneficial Owner of any
additional shares of Common Stock by any means whatsoever (other than as a
result of the subsequent occurrence of a stock dividend or a subdivision of the
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Common Stock into a larger number of shares or a similar transaction), then such
Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this Section 1(a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing provisions
of this Section 1(a), then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement. The determination of whether such
Person's becoming an Acquiring Person shall have been inadvertent and the
determination of whether the divestment of sufficient shares shall have been
made as promptly as practicable shall be made by a majority of the Board of
Directors of the Company.
(b) "Adjustment Number" has the meaning set forth in, and shall be
calculated in accordance with, the Certificate of Designation, Preferences and
Rights of Junior Participating Preferred Stock, Series A, attached as Exhibit A
hereto.
(c) "Affiliate" has the meaning given to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Agreement; provided that, for purposes of this Agreement, the term
"Affiliate" shall not include any Person that is an Exempt Person.
(d) "Associate" has the meaning given to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Agreement; provided that, for purposes of this Agreement, the term
"Associate" shall not include any Person that is an Exempt Person.
(e) Except as provided below, a Person shall be deemed to be the
"Beneficial Owner" of, and shall be deemed to "beneficially own," any
securities:
(i) which such Person or any Affiliate or Associate of such Person
beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such Person
has, directly or indirectly, the right or obligation (whether or not then
exercisable or effective) to acquire pursuant to any agreement, arrangement
or understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise; provided, however, that a Person will
not be deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of
such Person or any Affiliate or Associate of such Person until such
tendered securities are accepted for purchase or exchange;
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(iii) which such Person or any Affiliate or Associate of such Person
has, directly or indirectly, the right (whether or not then exercisable) to
vote, or to direct the voting of, pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security pursuant to this clause (iii) if the agreement, arrangement or
understanding to vote, or to direct the voting of, such security (A) arises
solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
Exchange Act and applicable rules and regulations thereunder and (B) is not
also then reportable under Item 6 (or any comparable or successor item) of
Schedule 13D under the Exchange Act (or any comparable or successor
schedule or report);
(iv) which such Person or any Affiliate or Associate of such Person
has "beneficial ownership" of as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act or any successor
provision; or
(v) which are beneficially owned, directly or indirectly, by any other
Person or any Affiliate or Associate of such other Person with whom such
Person or any Affiliate or Associate of such Person has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in clause (iii) of this Section 1(d)) or disposing of any
securities of the Company; provided, however, that for purposes of
determining "beneficial ownership" of securities under this Agreement,
officers and directors of the Company solely by reason of their status as
such shall not constitute a group (notwithstanding that they may be
Associates of one another or may be deemed to constitute a group for
purposes of Section 13(d) the Exchange Act or any successor provision) and
shall not be deemed to own shares owned by another officer or director of
the Company.
Nothing in the preceding sentence shall cause a Person engaged in business
as an underwriter of securities to be the "Beneficial Owner" of, or to
"beneficially own," any securities acquired through such Person's participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for purposes of
this Agreement, no Person shall be treated as the "Beneficial Owner" of, or be
deemed to "beneficially own," any securities solely by reason of the ownership
of those securities by any other Person that is an Exempt Person.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially under the preceding provisions in this definition.
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(e) "Business Combination" has the meaning set forth in Section 13 of this
Agreement.
(f) "Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in the State of New York or Illinois are authorized
or obligated by law or executive order to close.
(g) "Close of Business" on any given date means 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.
(h) "Common Equivalent Share" has the meaning set forth in Section
11(c)(2)(C) of this Agreement.
(i) "Common Share" has the meaning set forth in Section 11(c)(2) of this
Agreement.
(j) "Common Stock" when used with reference to the Company means the Common
Stock, par value $.10 per share, of the Company (as the same may be changed by
reason of any combination, subdivision or reclassification of the Common Stock).
"Common Stock" when used with reference to any Person (other than the Company
prior to a Business Combination) means shares of capital stock of such Person
(if such Person is a corporation) of any class or series, or units of equity
interests in such Person (if such Person is not a corporation) of any class or
series, the terms of which shares or units do not limit (as a fixed amount and
not merely in proportional terms) the amount of dividends or income payable or
distributable on such shares or units or the amount of assets distributable on
such shares or units upon any voluntary or involuntary liquidation, dissolution
or winding up of such Person and do not provide that such shares or units are
subject to redemption at the option of such Person, or any shares of capital
stock or units of equity interests into which the foregoing shall be
reclassified or changed; provided, however, that if at any time there are more
than one such class or series of capital stock of or equity interests in such
Person, "Common Stock" of such Person will include all such classes and series
substantially in the proportion of the total number of shares or other units of
each such class or series outstanding at such time.
(k) "Current Market Price" per share of Common Stock, Common Equivalent
Share or any other security on any date is the average of the daily closing
prices per share of such Common Stock, Common Equivalent Share or any other
security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date for the purpose of any computation under
this Agreement; provided, however, that in the event that the Current Market
Price per share of Common Stock, Common Equivalent Share or any other security
is determined during a period following the announcement by the issuer of such
Common Stock, Common Equivalent Share or any other security of (i) a dividend or
distribution on such Common Stock, Common Equivalent Share or any other security
other than a regular quarterly cash dividend, or (ii) any subdivision,
combination or reclassification of such Common Stock, Common Equivalent Share or
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any other security, and prior to the expiration of 30 Trading Days after the
"ex-dividend" date for such dividend or distribution or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
"Current Market Price" must be appropriately adjusted to take into account such
dividend, distribution, subdivision, combination or reclassification. The
closing price for each Trading Day shall be the last sale price, regular way, on
such day, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, on such day, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange
("NYSE") or, if the Common Stock, Common Equivalent Share or any other security
is not listed or admitted to trading on the NYSE, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal United States national securities exchange on which the Common
Stock, Common Equivalent Share or any other security is listed or admitted to
trading or, if the Common Stock, Common Equivalent Share or any other security
is not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System ("NASDAQ")
or such other system then in use, or, if on any such date the Common Stock,
Common Equivalent Share or any other security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the security selected by a majority
of the Board of Directors of the Company. If no such market maker is making a
market, the fair market value of such shares on such day shall be determined in
good faith by a majority of the Board of Directors of the Company, which
determination shall be described in a statement filed with the Rights Agent and
shall be binding and conclusive for all purposes. The term "Trading Day" means a
day on which the principal United States national securities exchange on which
the Common Stock, Common Equivalent Share or any other security is listed or
admitted to trading is open for the transaction of business or, if the Common
Stock, Common Equivalent Share or any other security is not listed or admitted
to trading on any United States national securities exchange, but is traded in
the over-the-counter market, then any day for which the high bid and low asked
prices in the over-the-counter market are reported, or if the Common Stock,
Common Equivalent Share or any other security is not traded in the
over-the-counter market, then a Business Day. If the Preferred Stock is not
publicly traded, the "Current Market Price" of the Preferred Stock shall be
conclusively deemed to be the Current Market Price of the Common Shares as
determined pursuant to this paragraph of Section 1 (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof), multiplied by the Adjustment Number.
(l) "Distribution Date" means the earlier of (i) the tenth day after the
Stock Acquisition Date and (ii) the tenth Business Day after commencement of or
public disclosure of an intention to commence (including, without limitation,
any such commencement or public disclosure which occurs before or after the date
of this Agreement and prior to the issuance of the Rights) a tender offer or
exchange offer by a Person if, after acquiring the maximum number of securities
sought pursuant to such offer, such Person, or any Affiliate or Associate of
such Person, would be an Acquiring Person. A majority of the Board of Directors
of the Company may defer the date set forth in clause (ii) of the preceding
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sentence to a specified later date or to an unspecified later date to be
determined by a subsequent action or event.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and any successor statute.
(n) "Exchange Date" means the time at which Rights are exchanged pursuant
to Section 11(c)(3).
(o) "Exempt Event" means with respect to any Person, the acquisition by
such Person of Beneficial Ownership of Common Stock solely as a result of the
occurrence of a Triggering Event and the effect of such Triggering Event on the
last proviso of clause (ii) of the definition of Beneficial Owner, other than a
Triggering Event in which such Person becomes an Acquiring Person.
(p) "Exempt Person" means (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company, and (iv) any Person holding Common Stock for any such employee
benefit plan or for employees of the Company or of any Subsidiary of the Company
pursuant to the terms of any such employee benefit plan.
(q) "Exercise Amount" means the amount payable by the holder as a condition
to the exercise of one Right. Until and unless it shall be adjusted in
accordance with this Agreement, the Exercise Amount shall be $175.
(r) "Expiration Date" means the Close of Business on May 3, 2009.
(s) "Person" means any individual, firm, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity, and shall include any "group" as that term is used
in Rule 13d-5(b) under the Exchange Act (or any successor provision).
(t) "Preferred Stock" means the Company's Junior Participating Preferred
Stock, Series A, par value $1.00 per share, having the rights and preferences
set forth in the Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A, attached hereto as Exhibit A.
(u) "Principal Party" means (i) in the case of any Business Combination
described in clause (i), (ii) or (iii) of the first sentence of Section 13(a),
(A) the Person that is the issuer of any securities into which shares of Common
Stock of the Company are converted or for which they are exchanged in such
Business Combination or, if there is more than one such issuer, the issuer of
the Common Stock which has the greatest aggregate market value or (B) if no
securities are so issued, the Person that survives or results from the Business
Combination or, if there is more than one such Person, the Person the Common
Stock of which has the greatest aggregate market value, and (ii) in the case of
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any Business Combination described in clause (iv) of the first sentence in
Section 13(a), the Person that receives the greatest portion of the assets or
earning power transferred pursuant to such Business Combination or, if each
Person that is a party to such Business Combination receives the same portion of
the assets or earning power so transferred or if the Person receiving the
greatest portion of the assets or earning power cannot reasonably be determined,
whichever of such Persons is the issuer of the Common Stock which has the
greatest aggregate market value; provided, however, that in any such case, if
the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act and such Person is a direct or indirect Subsidiary of one or
more other Persons, then (x) "Principal Party" refers to whichever of such other
Persons has Common Stock that is and has been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act; (y) if the
Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party" refers to whichever of such other Persons is the
issuer of the Common Stock which has the greatest aggregate market value; or (z)
if the Common Stock of none of such other Persons has been so registered,
"Principal Party" refers to whichever of such other Persons (other than an
individual) is the Person which has the equity securities with the greatest
aggregate market value. In case such Person is owned, directly or indirectly, by
a joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth above apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a Subsidiary of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in Section 13 in
the same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(v) "Purchase Price:" Until the Trigger Date, the term Purchase Price means
the price at which one one-thousandth of a share of Preferred Stock shall be
purchasable with the Rights. The Purchase Price shall be $175 per one
one-thousandth of a share of Preferred Stock until and unless it shall be
adjusted pursuant to this Agreement. Immediately after the Trigger Date, the
term "Purchase Price" shall mean the price per Common Share for which Common
Shares shall be purchasable with the Rights. Thereafter the term "Purchase
Price" as applied with respect to each kind of stock or other property
purchasable with the Rights as a result of adjustments prescribed by this
Agreement shall mean the price at which each share of such stock or the smallest
available unit of such other property is purchasable with the Rights.
(w) "Record Date" means the Close of Business on May 3, 1999.
(x) "Redemption Date" means the time at which the Rights are scheduled to
be redeemed as provided in Section 23.
(y) "Redemption Price" has the meaning given to such term in Section 23.
(z) "Securities Act" means the Securities Act of 1933, as amended, and any
successor statute.
- 7 -
<PAGE>
(aa) "Stock Acquisition Date" means the first date of public disclosure by
the Company, an Acquiring Person or otherwise that an Acquiring Person has
become such.
(bb) "Subsidiary" has the meaning given to such term in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Agreement.
(cc) "Trigger Date" means the first date upon which a Person becomes an
Acquiring Person.
(dd) "Triggering Event" shall mean a Person becoming an Acquiring Person.
Section 2. Appointment of Rights Agent.
---------------------------
The Company hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates.
-------------------------------
(a) Until the Distribution Date: (i) the Rights shall be issued in respect
of and shall be evidenced by the certificates representing the shares of Common
Stock issued and outstanding on the Record Date and shares of Common Stock
issued or which become outstanding after the Record Date and prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date (which certificates for Common Stock shall be deemed to also
be certificates evidencing the Rights), and not by separate certificates; (ii)
the registered holders of such shares of Common Stock shall also be the
registered holders of the Rights associated with such shares; and (iii) the
Rights shall be transferable only in connection with the transfer of shares of
Common Stock, and the surrender for transfer of any certificate for such shares
of Common Stock shall also constitute the surrender for transfer of the Rights
associated with such shares. As soon as practicable after the Company has
notified the Rights Agent of the occurrence of the Distribution Date, the Rights
Agent shall (except as otherwise provided in Section 7(e)) mail, at the expense
of the Company, by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Distribution Date,
as shown by the records of the Company, at the address of such holder shown on
such records, one or more certificates evidencing the Rights ("Rights
Certificates"), in substantially the form of Exhibit B hereto, evidencing one
Right (as adjusted from time to time pursuant to this Agreement) for each share
of Common Stock so held. From and after the Distribution Date, the Rights will
be evidenced solely by such Rights Certificates.
(b) Rights shall be issued in respect of all shares of Common Stock which
are issued or sold by the Company after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date, the Exchange Date and
the Expiration Date. In addition, in connection with the issuance or sale of
Common Stock by the Company following the Distribution Date and prior to the
earliest of the Redemption Date, the Exchange Date and the Expiration Date, the
Company shall, with respect to Common Stock so issued or sold (i) pursuant to
the exercise of stock options issued prior to the Distribution Date or under any
employee plan or arrangement created prior to the Distribution Date, or (ii)
- 8 -
<PAGE>
upon the exercise, conversion or exchange of securities issued by the Company
prior to the Distribution Date, issue Rights and Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (x) no such Rights and Rights Certificate shall
be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued and (y) no such Rights and Rights Certificates shall be issued if, and
to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof. Certificates issued after the Record Date
representing shares of Common Stock outstanding on the Record Date and shares of
Common Stock issued after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date shall have impressed, printed, or written on, or otherwise affixed to them
a legend substantially in the following form:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights Agreement
between Navistar International Corporation and Harris
Trust and Savings Bank as Rights Agent, dated as of
April 20, 1999 (the "Rights Agreement"), the terms of
which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive
offices of Navistar International 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. Navistar
International Corporation will mail to the holder of this
certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor. Under certain
circumstances, Rights that were, are or become beneficially
owned by Acquiring Persons or their Associates or Affiliates
(as such terms are defined in the Rights Agreement) may
become null and void and the holder of any of such Rights
(including any subsequent holder) shall not have any right
to exercise such Rights.
(c) Notwithstanding any other provision of this Agreement, neither the
Company, the Rights Agent nor anyone else shall have any obligation to issue any
Rights Certificate to an Acquiring Person or to anyone else in whose hands the
- 9 -
<PAGE>
Rights nominally represented by such Certificate shall be null and void either
initially or in connection with a request to register a transfer of Rights
represented by a certificate previously issued. Furthermore, neither the
Company, the Rights Agent nor anyone else shall be obligated to issue Rights
Certificates to any person making a tender offer which if consummated could
render such person an Acquiring Person or to any Affiliate or Associate of such
person until and unless the tender offer is withdrawn and the person shall have
established to the Company's reasonable satisfaction that such person does not
intend to become an Acquiring Person. The Company shall be entitled to require
any person claiming the right to receive a Rights Certificate to present such
evidence as the Company shall require in good faith to establish to the
Company's satisfaction that the Rights represented by that Certificate have not
become null and void under the provisions in Section 7(e) or that the Company is
not entitled to withhold such Certificate under the provisions of the preceding
sentence.
Section 4. Form of Rights Certificates.
---------------------------
The Rights Certificates (and the form of election to purchase shares and form of
assignment to be printed on the reverse thereof) shall be in substantially the
form of Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any 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 this Agreement, the Rights Certificates,
whenever issued, shall be dated as of the Distribution Date, and on their face
shall entitle the holders thereof to purchase such number of shares of Preferred
Stock as shall be set forth therein at the Purchase Price set forth therein, but
the number and kind of such securities and the Purchase Price shall be subject
to adjustment as provided in this Agreement.
Section 5. Execution, Countersignature and Registration.
--------------------------------------------
(a) Each Rights Certificate shall be executed on behalf of the Company by
the Company's Chief Executive Officer, President, Chief Financial Officer,
Treasurer or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Company's Secretary or an Assistant Secretary, either
manually or by facsimile signature. Each Rights Certificate shall be
countersigned by the Rights Agent either manually or, if permitted by the
Company, by facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed a Rights
Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificate nevertheless may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person who
signed such Rights Certificate had not ceased to be such officer of the Company;
and any Rights Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep or cause
to be kept, at its principal stock transfer office, books for registration and
transfer of the Rights Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced by each Rights Certificate, and the certificate
number and the date of issuance of each Rights Certificate.
- 10 -
<PAGE>
Section 6. Transfer, Division, Combination and Exchange of Rights
------------------------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
- ----------------------------------------------------------------------------
(a) Subject to the provisions of Section 3(d) and Section 14, at any time
after the Close of Business on the Distribution Date and at or prior to the
Close of Business on the earliest of the Redemption Date, the Exchange Date and
the Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or following a Triggering Event or a Business
Combination, other securities, cash or other property, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide, combine
or exchange any Rights Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, divided, combined or exchanged at the principal
corporate office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. As a condition to such
transfer, division, combination or exchange, the Company may require payment by
the surrendering holder of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection therewith. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have duly completed and executed the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or such former or proposed Beneficial
Owner) thereof or such Beneficial Owner's Affiliates or Associates as the
Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date and the Redemption Date, one one-thousandth (1/1000) of a share of
Preferred Stock, subject to adjustment from time to time as provided in Sections
11 and 13.
(b) The registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided in this Agreement) in whole or
in part (except that no fraction of a Right may be exercised) at any time after
- 11 -
<PAGE>
the Distribution Date and prior to the earliest of the Expiration Date, the
Exchange Date and the Redemption Date, by surrendering the Rights Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal stock transfer office of the Rights Agent,
together with payment of the Exercise Amount for each Right exercised.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Exercise Amount for each Right exercised and an amount equal to any
applicable transfer tax required to be paid by the surrendering holder pursuant
to Section 9(d), the Rights Agent shall, subject to the provisions of this
Agreement, thereupon promptly (i)(A) requisition from any transfer agent for the
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the Preferred Stock (or other securities, as
the case may be) to be purchased (and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests), or (B) if the Company
shall have elected to deposit the total number of shares of Preferred Stock (or
other securities, as the case may be) issuable upon exercise of the Rights with
a depositary agent, requisition from the depositary agent depositary receipts
representing such Preferred Stock (or other securities, as the case may be) as
are to be purchased (in which case certificates for the Preferred Stock (or
other securities, as the case may be) represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company shall
direct the depositary agent to comply with such request; (ii) after receipt of
such certificates or depositary receipts, cause the same to be delivered to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder; and (iii) if
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 of this Agreement
and, promptly after receipt thereof, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate. In the event that
the Company is obligated to issue other securities (including shares of Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
this Agreement, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Rights Certificate
or to his duly authorized assigns, subject to the provisions of Section 3(c) and
Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, any Rights
that are or were formerly beneficially owned on or after the earlier of the
Distribution Date and the Trigger Date by (i) an Acquiring Person or any
Associate or Affiliate of an Acquiring Person, (ii) a direct or indirect
transferee of an Acquiring Person (or of an Associate or Affiliate of such
Acquiring Person) who becomes a transferee after the Acquiring Person becomes
such, or (iii) a direct or indirect transferee of an Acquiring Person (or of an
Associate or Affiliate of such Acquiring Person) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and receives such
- 12 -
<PAGE>
Rights pursuant to either (A) a direct or indirect transfer (whether or not for
consideration) from the Acquiring Person (or from an Associate or Affiliate of
such Acquiring Person) to holders of equity interests in such Acquiring Person
(or to holders of equity interests in any Associate or Affiliate of such
Acquiring Person) or to any Person with whom the Acquiring Person (or an
Associate or Affiliate of such Acquiring Person) has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a direct or
indirect transfer which a majority of the Board of Directors of the Company
determines is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7(e), shall, immediately
upon the occurrence of a Triggering Event and without any further action, be
null and void and no holder of such Rights shall have any rights whatsoever with
respect to such Rights whether under this Agreement or otherwise, provided,
however, that, in the case of transferees under clause (ii) or clause (iii)
above, any Rights beneficially owned by such transferee shall be null and void
only if and to the extent such Rights were formerly beneficially owned by a
Person who was, at the time such Person beneficially owned such Rights, or who
later became, an Acquiring Person or an Affiliate or Associate of such Acquiring
Person. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) are complied with, but shall have no liability
to any holder of a Rights Certificate or to any other Person as a result of the
Company's failure to make, or any delay in making (including any such failure or
delay by the Board of Directors of the Company) any determinations with respect
to an Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to the registered holder of a Rights Certificate upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former or proposed Beneficial Owner)
thereof or the Affiliates or Associates of such Beneficial Owner (or former or
proposed Beneficial Owner) as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
------------------------------------------------------
All Rights Certificates surrendered for the purpose of exercise, transfer,
division, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all canceled Rights Certificates to the Company, or shall, at the written
request of the Company, destroy such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.
- 13 -
<PAGE>
Section 9. Reservation and Availability of Preferred Stock.
-----------------------------------------------
(a) The Company covenants and agrees that it will cause to be reserved and
kept available at all times out of its authorized and unissued shares of
Preferred Stock or its authorized and issued shares of Preferred Stock held in
its treasury (and, following the occurrence of a Triggering Event or a Business
Combination, out of its authorized and unissued shares of Common Stock and/or
other securities or out of its authorized and issued shares of Common Stock
and/or other securities held in its treasury) free from preemptive rights or any
right of first refusal, a sufficient number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, shares of Common Stock and/or
other securities) to permit the exercise in full of all Rights from time to time
outstanding.
(b) The Company further covenants and agrees, so long as the Preferred
Stock (and, following the occurrence of a Triggering Event or a Business
Combination, shares of Common Stock and/or other securities) issuable upon the
exercise of Rights may be listed on any United States national securities
exchange or quoted on any automated quotation system, to use its best efforts to
cause, from and after the time that the Rights become exercisable, all such
shares and/or other securities reserved for such issuance to be listed on such
exchange or quoted on such automated quotation system upon official notice of
issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock (and,
following the occurrence of a Triggering Event or a Business Combination, shares
of Common Stock and/or other securities) delivered upon the exercise of Rights
shall, at the time of delivery of the certificates for such shares and/or such
other securities (subject to payment of the Purchase Price), be duly and validly
authorized and issued, fully paid, nonassessable, freely tradeable, not subject
to liens or encumbrances, and free of preemptive rights, rights of first refusal
or any other restrictions or limitations on the transfer or ownership thereof,
of any kind or nature whatsoever.
(d) The Company further covenants and agrees that 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 original issuance or delivery of the Rights
Certificates or of any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to (i) pay any transfer tax which
may be payable in respect of any transfer involved in the issuance or delivery
of any Rights Certificates or the issuance or delivery of any certificates for
shares of Preferred Stock (or Common Stock and/or other securities as the case
may be) to a Person other than, or in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
(ii) transfer or deliver any Rights Certificate or issue or deliver any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
- 14 -
<PAGE>
(e) The Company shall (i) as soon as practicable following a Triggering
Event (or such earlier time following the Distribution Date as may be required
by law), prepare and file a registration statement on an appropriate form under
the Securities Act with respect to the securities purchasable upon exercise of
the Rights, (ii) cause such registration statement to become effective as soon
as practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of (A) the date as of which Rights are no
longer exercisable for such securities and (B) the Expiration Date. The Company
shall also take such action as may be necessary or appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercise of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date of a
Triggering Event, the exercisability of the Rights in order to prepare and file
such registration statement and permit it to become effective. Upon any such
suspension, the Company shall make a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Section 10. Preferred Stock Record Date.
-----------------------------
Each Person in whose name any certificate for shares of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Stock (or Common Stock and/or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are closed, such
Person shall be deemed to have become the record holder of such shares (and/or
such other securities, as the case may be) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open.
Section 11. Adjustments to Purchase Price, Number of Shares or Number of
-----------------------------------------------------------------
Rights.
- ------
The Purchase Price, the number and kind of securities, cash and other property
obtainable upon exercise of each Right and the number of Rights outstanding
shall be subject to adjustment from time to time as provided in this Section 11.
(a) Adjustments Prior to Trigger Date:
(1) In the event the Company shall at any time after the date of this
Agreement and prior to the Trigger Date (i) pay a dividend or
make a distribution on the Common Stock payable in shares of
Common Stock, (ii) subdivide (by a stock split or otherwise) the
outstanding Common Stock into a larger number of shares, (iii)
combine (by a reverse stock split or otherwise) the outstanding
Common Stock into a smaller number of shares (and any of the
actions described in clauses (i), (ii) or (iii) are herein called
a "stock split") then:
- 15 -
<PAGE>
(A) The number of Rights outstanding shall be adjusted so that
after giving effect to such stock split the number of Rights
outstanding shall be exactly equal to the number of shares
of Common Stock outstanding (and so that prior to the
Distribution Date one Right shall be associated with every
share of Common Stock outstanding after such stock split);
(B) The Exercise Amount shall be adjusted by multiplying the
Exercise Amount in effect immediately prior to such stock
split by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately
prior to such stock split and the denominator of which shall
be the number of shares of Common Stock outstanding
immediately after such stock split;
(C) The Purchase Price for each one one-thousandth of a share of
Preferred Stock shall not change; and
(D) The fraction of a share of Preferred Stock purchasable with
each Right immediately after such stock split shall be equal
to the product derived by multiplying the fraction of a
share of Preferred Stock purchasable with each Right
immediately prior to such stock split times the fraction
cited in clause (B) above.
The following example illustrates the intended operation of the
preceding provisions. Assume that initially, each Right would (when
and if it became exercisable) entitle its holder to purchase one
one-thousandth of a share of Preferred Stock for $180 (and accordingly
the initial Exercise Amount and the initial Purchase Price per one
one-thousandth of a share of Preferred Stock are each $180. Assume
further that prior to the Distribution Date, the Company splits its
Common Stock two for one (thereby doubling the number of shares of
Common Stock outstanding). The intended operation of the preceding
adjustment provisions is that: (i) the number of Rights outstanding
would also double; (ii) one Right would be associated with each share
of Common Stock outstanding after the stock split; (iii) each Right
would have an Exercise Amount equal to $90; (iv) each Right will
entitle its holder (when and if the Right becomes exercisable) to
purchase one two-thousandth of one share of Preferred Stock; and (v)
the Purchase Price for each one one-thousandth of a share of Preferred
Stock would remain $180 so that the price for each one two-thousandth
of a share of Preferred Stock purchasable with each Right would be
$90.
- 16 -
<PAGE>
(2) Adjustment in Rights Certificates: In the event the Distribution
Date shall occur and the Company shall issue separate
certificates to represent the Rights, the following provisions
shall thereafter apply:
(A) In the event the number of Rights outstanding are
increased pursuant to Section 11(a)(1), the Company shall
as promptly as reasonably possible distribute to the
record holders of the Rights on the record date for the
stock split giving rise to the increase in the number
of Rights certificates representing the additional Rights
issuable by reason of such stock split.
(B) In the event the number of Rights outstanding are reduced
pursuant to Section 11(a) by reason of the occurrence of a
reverse stock split or its functional equivalent, then each
Rights certificate outstanding prior to such reverse stock
split shall thereafter represent the reduced number of
Rights into which the Rights represented by such
certificate immediately prior to such reverse stock split
shall have been converted by reason of the occurrence of
that reverse stock split.
(b) Basic Triggering Event Adjustments: Upon the first occurrence of a
Triggering Event (except as otherwise provided in this Agreement), each Right
shall be changed so that immediately after the Triggering Event:
(1) it shall no longer be exercisable for Preferred Stock but rather
shall be exercisable for Common Stock;
(2) the number of shares of Common Stock which may be acquired upon
exercise of each Right shall be equal to the result obtained by
dividing (x) 50% of the Current Market Price per share of Common
Stock on the date of the occurrence of the Triggering Event into
(y) the Exercise Amount in effect immediately prior to the
Triggering Event; and
(3) the Purchase Price per Common Share purchasable with each Right
shall be equal to 50% of the Current Market Price per share of
Common Stock on the date of the occurrence of the Triggering
Event.
(c) Other Post Triggering Event Adjustments.
(1) Use of Common Equivalent Shares:In the event that the number of
shares of Common Stock which are authorized by the Company's
certificate of incorporation, but which are not outstanding or
reserved for issuance for purposes other than upon exercise of
the Rights ("Available Common Stock") is not sufficient to permit
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<PAGE>
the exercise in full of the Rights after the adjustment made in
accordance with Section 11(b), then:
(A) The Available Common Stock shall be allocated among the
outstanding Rights so that each Right shall entitle its
holder to purchase the same quantity of Available Common
Stock and a fraction of a share of Preferred Stock which
when multiplied times the Adjustment Number then in effect
under the terms of the Preferred Stock produces a product
equal to the remainder derived by subtracting the number of
shares of Common Stock purchasable with each Right after the
allocation specified above from the number of shares of
Common Stock which would have been purchasable with such
Right if the Corporation had a sufficient number of shares
of Common Stock to permit the Right to be exercisable
entirely for Common Stock (such remainder being referred to
herein as the "Unallocated Shares").
(B) The fraction of a share of Preferred Stock equal to the
reciprocal of the Adjustment Number in effect at the time
the term shall be applied shall be deemed to be a "Common
Equivalent Share" for purposes of this Agreement. The
Company shall take all actions reasonably necessary so that
as nearly as possible each Common Equivalent Share
represents substantially the same interest in the Company,
has the same dividend rate, and has other characteristics as
similar as possible to one share of Common Stock. The term
"Common Share" whenever it is used in this Agreement means
both a share of Common Stock and a Common Equivalent Share.
(C) If circumstances after the initial Trigger Date require the
use of Common Equivalent Shares, the Company shall use its
best efforts to obtain authorization to issue a sufficient
quantity of Common Stock to permit Common Stock to be issued
upon exercise of the Rights and/or any exercise of the
exchange right under the following Section. Each time the
Company's authorized Common Stock shall be increased, the
adjustment required under the preceding paragraphs shall be
redone to maximize the amount of Common Stock issuable upon
exercise of the Rights. To the extent excess authorized
Common Stock remains after the readjustment required by the
preceding sentence, the holder of any outstanding Common
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<PAGE>
Equivalent Share shall have the right at any time to require
the Company to exchange that share for a share of Common
Stock.
(D) In no event, however, shall the Company be obligated to
reserve any Common Stock for issuance under the Rights until
and unless a Triggering Event actually occurs.
(E) In no event shall the Company issue any Preferred Stock
except for issuances caused by exercise of the Rights and
except for issuances required by this Section 11(c) (1) or
Section 11(d)(6).
(2) Exchange Option:
(A) At any time after the occurrence of a Triggering Event and
prior to the earlier of (i) the time any Person (other than
an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of
50% or more of the Common Stock then outstanding and (ii)
the occurrence of a Business Combination (the earlier of
such time and occurrence begin referred to herein as the
"Exchange Option Exercise Deadline"), the Board of Directors
of the Company may, at its option, cause the Company to
exchange for all or part of the then-outstanding and
exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e)
hereof), shares of 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 of this Agreement (such
exchange ratio being referred to herein as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board of
Directors of the Company may exercise its option to effect
an exchange pursuant to this Section 11(c)(2) prior to the
Trigger Date effective upon the Trigger Date, even if the
Trigger Date coincides with the Exchange Option Exercise
Deadline. Any partial exchange shall be effected on a pro
rata basis based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
(B) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any particular Rights
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<PAGE>
pursuant to this Section 11(c)(2) and without any further
action and without any notice, the right to exercise those
particular Rights shall terminate and the only right a
holder shall have thereafter with respect to any of those
particular Rights shall be to receive the 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 and
in addition, the Company shall promptly mail a notice of any
such exchange to all of the holders of such Rights in
accordance with Section 25 of this Agreement; provided,
however, that the failure to give, any delay in giving or
any defect in, such notice shall not affect the validity of
such exchange. Each such notice of exchange will state the
method by which the exchange of the shares of Common Stock
for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. The
Company shall not be required to issue fractions of shares
of Common Stock or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of such
fractional shares of Common Stock, the Company shall pay to
the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) the
last sale price of the Company's Common Stock on the fifth
Trading Day following the public announcement of the
exchange by the Company, or, in case no such sale takes
place on such day, the average of the closing bid and asked
prices on such day, in either case on a when issued basis
(taking into account the exchange), as reported in the
principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the
NYSE (or, if the Company's Common Stock is not so listed or
traded, then as determined in the manner provided under the
definition of "Current Market Price," adjusted to take into
account the exchange). In determining whether any particular
holder shall be obligated to receive cash in lieu of a
fractional share, the holder shall be entitled to have all
Rights beneficially owned by such holder aggregated so that
only one fractional share shall be attributable to all the
Rights so beneficially owned.
(d) Antidilution Adjustments After the Trigger Date:
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<PAGE>
(1) In the event the Company shall at any time after the Trigger Date
effect any stock split with respect to its Common Stock, then the
Purchase Price to be in effect after such stock split shall be
determined by multiplying the Purchase Price in effect
immediately prior to such action by a fraction, the numerator of
which shall be the number of Common Shares outstanding
immediately prior to such stock split and the denominator of
which shall be the number of Common Shares outstanding
immediately after such stock split.
(2) In case the Company shall at any time after the Trigger Date fix
a record date for the making of a distribution to holders of
Common Stock (including any such distribution made in connection
with a reclassification of the Common Stock or a consolidation or
merger in which the Company is the surviving corporation) of
securities (other than Common Stock and rights, options or
warrants referred to in Section 11(d)(3)), cash (other than a
regular periodic cash dividend at an annual rate not in excess of
(x) 125% of the annual rate of the regular cash dividend paid on
the Common Stock during the immediately preceding fiscal year or
(y) in the event that a regular cash dividend was not paid on the
Common Stock during such preceding fiscal year, 5% of the Current
Market Price of the Common Stock on the date such regular cash
dividend was first declared), property, evidences of indebtedness
or assets, the Purchase Price to be in effect after such record
date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price per share of
Common Stock on such record date, less the fair market value (as
determined in good faith by a majority of the Board of Directors
of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of such securities, cash,
property, evidences of indebtedness or assets to be so
distributed in respect of one share of Common Stock, and the
denominator of which shall be such Current Market Price per share
of Common Stock on such record date. Such adjustments shall be
made successively whenever such a record date is fixed; and in
the event that such distribution is not made following such
adjustment, the Purchase Price shall be readjusted to be the
Purchase Price which would have been in effect if such record
date had not been fixed.
(3) If the Company shall at any time after the Trigger Date fix a
record date for the issuance of rights, options or warrants to
holders of Common Shares entitling them to subscribe for or
purchase Common Shares (or securities convertible into Common
Shares) at a price per Common Share (or, in the case of a
convertible security, having a conversion price per Common Share)
- 21 -
<PAGE>
less than the Current Market Price per share of Common Stock on
such record date and requiring that the conversion or purchase
right be exercised within 45 calendar days after 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 Shares
outstanding on such record date, plus the number of Common Shares
which the aggregate exercise and/or conversion price for the
total number of Common Shares which are obtainable upon exercise
and/or conversion of such rights, options, warrants or
convertible securities would purchase at such Current Market
Price, and the denominator of which shall be the number of shares
of Common Shares outstanding on such record date, plus the number
of additional Common Shares which may be obtained upon exercise
and/or conversion of such rights, options, warrants or
convertible securities. In case such subscription price may be
paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as
determined in good faith by a majority of the Board of Directors
of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the
Rights Agent. Common Shares owned by or held for the account of
the Company or any Subsidiary of the Company shall not be deemed
outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date
is fixed; and in the event that such rights, options or warrants
are not issued following such adjustment, the Purchase Price
shall be readjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(4) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that it in its sole
discretion shall determine to be advisable in order that any
combination or subdivision of the Common Stock, issuance wholly
for cash of any Common Stock at less than the Current Market
Price, issuance wholly for cash of Common Stock or securities
which by their terms are convertible into or exchangeable or
exercisable for Common Shares, stock dividends or issuance of
rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Common Shares,
shall not be taxable to such stockholders.
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<PAGE>
(5) After each adjustment of the Purchase Price pursuant to any of
subsections (1) - (4) immediately above, the number of Common
Shares purchasable with each Right shall be adjusted to the
quotient derived by dividing the Purchase Price as constituted
after giving effect to such adjustment into the Exercise Amount.
(6) The Company shall not take any of the actions described in any of
subsections (1) - (3) above at a time when any Common Equivalent
Shares are outstanding unless the Company shall take
substantively identical actions with respect to the outstanding
Common Stock and outstanding Common Equivalent Shares.
Conversely, the Company shall not take any actions with respect
to outstanding Common Equivalent Shares analogous to those
described in any of subsections (1) - (3) above unless the
Company shall take substantively identical actions with respect
to the outstanding Common Stock and outstanding Common Equivalent
Shares.
(e) Recapitalizations.
(1) In the event that after the Trigger Date, the Company shall issue
any securities in a reclassification of the Common Stock or in
any other recapitalization (including any such reclassification
in connection with a consolidation or merger in which the Company
is the surviving corporation), then in each such event:
(A) the property purchasable with each Right shall be adjusted
to be whatever the owner of that Right would have owned by
reason of both (i) the exercise of that Right immediately
prior to such recapitalization or reclassification and (ii)
the effect of that recapitalization or reclassification on
the property assumed to have been received in such exercise.
(B) The Exercise Amount shall be allocated among the shares of
stock and/or other units of property for which the Right
shall be exercisable after giving effect to the adjustment
cited in clause (A) based on the fair market value of such
property to determine the Purchase Price for each such share
and/or unit.
(2) To illustrate the intended operation of this provision, assume
that: (i) immediately prior to a reclassification, each Right
were exercisable for 6 Common Shares and the Exercise Amount
were $180 (resulting in a purchase price of $30 per Common
Share); (ii) as a result of the Reclassification, each
outstanding Common Share is reclassified into two New Common
Shares and one Series B Share; and (iii) immediately after
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<PAGE>
the reclassification, the market value of each New Common Share
was $25 and the market value of each Series B share was $10.
Immediately after the assumed reclassification, each Right would
be exercisable for 12 New Common Shares at a purchase price
of $12.50 per share and six Series B Shares at a purchase price
of $5 per share.
(f) In the event a Triggering Event shall occur, or in the event there
shall be a recapitalization or reclassification pursuant to Section 11(e), or in
the event there shall be any merger or other action which shall cause a change
in the property purchasable with the Rights under Section 13, or in the event
there shall be any other occurrence or development which shall cause the
property purchasable with the Rights to consist in whole or in part of anything
other than Preferred Stock, then and in any such event:
(1) The certificates representing the Rights shall automatically be
deemed to represent the adjusted terms of the Rights without the
need to replace such certificates. The Company shall thereafter
make arrangements for the production of certificates representing
the revised terms of the Rights resulting from such adjustment
and shall use such certificates to represent Rights for which new
certificates shall be issuable by reason of a transfer of record
ownership or by reason of a request by the existing record owner
for a replacement certificate representing the revised terms of
the Rights.
(2) The principles underlying the adjustment provisions in this
Section 11 and elsewhere in this Agreement shall be applied to
fairly and proportionately adjust the shares or other property
purchasable with the Rights and the purchase price for each share
or other property unit purchasable with the Rights after giving
effect to the adjustments required by reason of such event to
reflect any subsequent capital changes or other events. Without
limiting by implication the generality of the preceding sentence,
the provisions of Sections 7, 9, 10, 12, 13, 14 and 24 of this
Agreement which related to the Preferred Stock shall after the
occurrence of any such event apply in a substantively identical
manner to the shares or other property purchasable with the
Rights after giving effect to such event.
(g) Before taking any action that would cause an adjustment reducing
the Purchase Price per share at which shares are purchasable with the Rights
below the par value of those shares, the Company shall take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares at
such adjusted Purchase Price.
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<PAGE>
(h) In any case in which this Section 11 shall require that an adjustment
be made effective as of a record date for a specified event, the Company may
elect to defer until the occurrence of such event the issuance to the holder of
any Right exercised after such record date the shares of Common Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
over and above the shares of Common Stock and other securities, cash or property
of the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares (fractional or
otherwise) or other securities, cash or property upon the occurrence of the
event requiring such adjustment.
(i) The Company covenants and agrees that on and after the Trigger Date
neither it nor any combination of it and its subsidiaries shall (i) consolidate
with any other Person, or (ii) merge with or into any other Person or (iii)
directly or indirectly sell, lease, or otherwise transfer or dispose of (in one
transaction or a series of related transactions) assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries taken as a whole to any other Person if (A) at the time of or
immediately after such consolidation, merger, sale, lease, transfer, or
disposition there are any rights, warrants, securities or other instruments
outstanding or agreements in effect which would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (B)
prior to, simultaneously with or immediately after such consolidation, merger,
sale, lease, transfer, or disposition the stockholders (or equity holders) of
the Person who constitutes, or would constitute, the Principal Party in such
transaction shall have received a distribution of Rights previously owned by
such Person or any of its Affiliates or Associates or (C) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights. The Company shall not consummate any such consolidation, merger,
sale, lease, transfer, or disposition unless prior thereto the Company and such
other Person shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with this Section 11(i).
(j) The Company covenants and agrees that, after the Trigger Date it will
not, except as permitted by Section 11(c)(2) of this Agreement, 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, directly or indirectly, diminish
or otherwise eliminate the benefits intended to be afforded by the Rights.
Section 12. Certification of Adjustments.
----------------------------
Whenever an adjustment is made as provided in Sections 11 and 13, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the stock then
purchasable with the Rights a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, if no Rights
Certificates have been issued, to each holder of a certificate representing
shares of Common Stock) in accordance with Section 25. Notwithstanding the
foregoing sentence, the failure of the Company to give such notice shall not
affect the validity of or the force or effect of or the requirement for such
adjustment. Any adjustment to be made pursuant to Sections 11 and 13 of this
Agreement shall be effective as of the date of the event giving rise to such
adjustment. The Rights Agent shall be fully protected in relying on any such
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<PAGE>
certificate and on any adjustment therein contained and shall not be obligated
or responsible for calculating any adjustment nor shall it be deemed to have
knowledge of such adjustment unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
-----------------------------------------------------------------
Power.
- -----
(a) A "Business Combination" shall be deemed to occur in the event that, in
or following a Triggering Event, (i) the Company shall, directly or indirectly,
consolidate with, or merge with and into, any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(i) and
Section 11(j) of this Agreement) in a transaction in which the Company is not
the continuing, resulting or surviving corporation of such merger or
consolidation, (ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(i) and Section 11(j) of this
Agreement) shall, directly or indirectly, consolidate with the Company, or shall
merge with and into the Company, in a transaction in which the Company is the
continuing, resulting or surviving corporation of such merger or consolidation
and, in connection with such merger or consolidation, all or part of the Common
Stock shall be changed (including, without limitation, any conversion into or
exchange for securities of the Company or of any other Person, cash or any other
property), (iii) the Company shall, directly or indirectly, effect a share
exchange in which all or part of the Common Stock shall be changed (including,
without limitation, any conversion into or exchange for securities of any other
Person, cash or any other property) or (iv) the Company shall, directly or
indirectly, sell, lease, exchange, mortgage, pledge or otherwise transfer or
dispose of (or one or more of its Subsidiaries shall directly or indirectly
sell, lease, exchange, mortgage, pledge or otherwise transfer or dispose of), in
one transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person (other than the Company or
any of its Subsidiaries in one or more transactions each and all of which comply
with Section 11(i) and Section 11(j) of this Agreement).
In the event of a Business Combination, proper provision shall be made so
that each holder of a Right (except as otherwise provided in this Agreement)
shall thereafter have the right to receive, upon the exercise of each Right,
such number of shares of Common Stock of the Principal Party as shall be equal
to the result obtained by dividing the Exercise Amount in effect prior to the
Business Combination by 50% of the Current Market Price per share of the Common
Stock of such Principal Party immediately prior to the consummation of such
Business Combination. All shares of Common Stock of any Person for which any
Right may be exercised after consummation of a Business Combination as provided
in this Section 13(a) shall, when issued upon exercise thereof in accordance
with this Agreement, be duly and validly authorized and issued, fully paid,
nonassessable, freely tradeable, not subject to liens or encumbrances, and free
of preemptive rights, rights of first refusal or any other restrictions or
limitations on the transfer or ownership thereof of any kind or nature
whatsoever. The Purchase Price per share for such Common Stock immediately after
such Business Combination shall be equal to 50% of the Current Market Price per
share of the Common Stock of such Principal Party immediately prior to the
consummation of such Business Combination.
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<PAGE>
(b) After consummation of any Business Combination, (i) the Principal Party
shall be liable for, and shall assume, by virtue of such Business Combination
and without the necessity of any further act, all the obligations and duties of
the Company pursuant to this Agreement, (ii) the term "Company" as used in this
Agreement shall thereafter be deemed to refer to such Principal Party and (iii)
such Principal Party shall take all steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock in accordance
with Section 9) in connection with such Business Combination as necessary to
ensure that the provisions of this Agreement shall thereafter be applicable, as
nearly as reasonably may be, in relation to the shares of its Common Stock
thereafter deliverable upon the exercise of the Rights.
(c) The Company shall not consummate any Business Combination unless prior
thereto (i) the Principal Party shall have a sufficient number of authorized
shares of its Common Stock which have not been issued or reserved for issuance
(other than shares reserved for issuance pursuant to this Agreement to the
holders of Rights) to permit the exercise in full of the Rights in accordance
with this Section 13, (ii) the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the fulfillment of the Principal Party's obligations and the terms as set
forth in paragraphs (a) and (b) of this Section 13 and further providing that,
as soon as practicable on or after the date of such Business Combination, the
Principal Party, at its own expense, shall (A) prepare and file, if necessary, a
registration statement on an appropriate form under the Securities Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights, (B) use its best efforts to cause such registration statement to become
effective as soon as practicable after such filing and remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date, (C) 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 (or any successor
form) under the Exchange Act, (D) use its best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the Rights under the
state securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate, (E) use its best efforts to list the Rights and the securities
purchasable upon exercise of the Rights on a United States national securities
exchange and (F) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights, (iii) the Company and the Principal Party
shall have furnished to the Rights Agent an opinion of independent counsel
stating that such supplemental agreement is a legal, valid and binding agreement
of the Principal Party enforceable against the Principal Party in accordance
with its terms, and (iv) the Company and the Principal Party shall have filed
with the Rights Agent a certificate of a nationally recognized firm of
independent accountants setting forth the number of shares of Common Stock of
such issuer which may be purchased upon the exercise of each Right after the
consummation of such Business Combination.
(d) The provisions of this Section 13 shall similarly apply to successive
Business Combinations. In the event a Business Combination shall be consummated
at any time after the occurrence of a Triggering Event, the Rights which have
not theretofore been exercised shall thereafter be exercisable for the
consideration and in the manner described in Section 13(a). The provisions of
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<PAGE>
Section 11(b) of this Agreement shall be applicable to events which occur after
a Business Combination.
(e) Notwithstanding any other provision of this Agreement, no adjustment to
the number or kind of shares (or fractions of a share), cash or other property
for which a Right is exercisable or the number of Rights outstanding or
associated with each share of Common Stock or any similar or other adjustment
shall be made or be effective if such adjustment would have the effect of
reducing or limiting the benefits the holders of the Rights would have had
absent such adjustment, including, without limitation, the benefits under
Sections 11 and 13, unless the terms of this Agreement are amended so as to
preserve such benefits, provided that this paragraph shall not prevent any
change prior to the Trigger Date permitted by Section 26(a) and provided that
this Section 13(e) shall not be deemed to limit or impair the right to engage in
an exchange pursuant to Section 11(c)(2).
(f) The Company covenants and agrees that it shall not effect any Business
Combination if at the time of, or immediately after such Business Combination,
there are any rights, options, warrants or other instruments outstanding which
would diminish or otherwise eliminate the benefits intended to be afforded by
the Rights.
(g) Without limiting the generality of this Section 13, in the event the
nature of the organization of any Principal Party shall preclude or limit the
acquisition of Common Stock of such Principal Party upon exercise of the Rights
as required by Section 13(a) as a result of a Business Combination, it shall be
a condition to such Business Combination that such Principal Party shall take
such steps (including, but not limited to, a reorganization) as may be necessary
to ensure that the benefits intended to be derived under this Section 13 upon
the exercise of the Rights are assured to the holders thereof.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractional Rights or to
distribute Rights Certificates which evidence fractional Rights.
(b) The Company shall permit the issuance and trading of Preferred Stock in
fractional shares such that the smallest fractional share tradeable at any
particular time shall equal the reciprocal of the Adjustment Number in effect at
that particular time. The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
the reciprocal of the Adjustment Number) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of the reciprocal of the
Adjustment Number). Fractions of shares of Preferred Stock may, at the election
of the Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Stock. In lieu of fractional shares of
Preferred Stock that are not integral multiples of the reciprocal of the
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<PAGE>
Adjustment Number, the Company may at its option (i) issue scrip or warrants in
registered form (either represented by a certificate or uncertificated) or in
bearer form (represented by a certificate) which shall entitle the holder to
receive the reciprocal of the Adjustment Number of one share of Preferred Stock
upon the surrender of such scrip or warrants aggregating the reciprocal of the
Adjustment Number of one share of Preferred Stock, or (ii) pay to the registered
holders of Rights Certificates at the time such Rights Certificates are
exercised as provided in this Agreement an amount in cash equal to the same
fraction of the relevant closing price of a share of Preferred Stock. For
purposes of this Section 14(b), the relevant closing price of a share of
Preferred Stock shall be the closing price of a share of Preferred Stock (as
determined pursuant to the second sentence of the definition of "Current Market
Price" in Section 1) for the Trading Day immediately prior to the date of such
exercise.
(c) The Company shall not be required to issue fractions of shares of
Common Stock or Common Equivalent Shares or to distribute certificates which
evidence fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount in cash equal to the product derived by
multiplying (x) the subject fraction, by (y) the closing price of a share of
Common Stock (as determined pursuant to the second sentence of the definition of
"Current Market Price" in Section 1) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by his acceptance thereof expressly waives any
right to receive any fractional Rights or any fractional shares upon exercise of
a Right (except as otherwise provided in this Agreement).
Section 15. Rights of Action.
----------------
Except as otherwise provided, all rights of action in respect of this Agreement
are vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, any registered holders of associated Common
Stock); and any registered holder of any Rights Certificate (or, prior to the
Distribution Date, any share of associated Common Stock), without the consent of
the Rights Agent or of the holder of any other Right, may, on his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
rights pursuant to this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Rights Holders Concerning Transfer and Ownership of
-----------------------------------------------------------------
Rights.
- ------
Every holder of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of Common Stock;
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<PAGE>
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal stock transfer office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in whose
name a Rights Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Rights Certificate or the associated Common Stock certificate made by
anyone other than the Company, the transfer agent for the stock purchasable with
such Right or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.
Section 17. Rights Holder Not Deemed a Stockholder.
-----------------------------------------
No holder, as such, of any Rights Certificate shall be entitled to vote or to
receive dividends or distributions or shall be deemed for any purpose the holder
of Preferred Stock or any other securities, cash or other property which may at
any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained in this Agreement or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of
the rights of a stockholder of the Company, including, without limitation, any
right (i) to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, (ii) to give or withhold consent to any
corporate action, (iii) to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), (iv) to receive dividends,
distributions or subscription rights, (v) to institute, as a holder of Preferred
Stock or other securities issuable on exercise of the Rights represented by any
Rights Certificate, any derivative action on behalf of the Company, or
otherwise, until and only to the extent that the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions of this Agreement.
Section 18. Concerning the Rights Agent.
----------------------------
The Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability or
expense, incurred without negligence, bad faith, willful misconduct or breach of
this Agreement on the part of the Rights Agent, for anything done or omitted by
the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises. The indemnity provided for herein shall survive the
expiration of the Rights, the termination of this Agreement, and the resignation
or removal of the Rights Agent. The costs and expenses of enforcing this right
of indemnification shall also be paid by the Company.
The Rights Agent may conclusively rely upon and shall be protected and
shall incur no liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Preferred Stock or
Common Stock or for other securities of the Company, instrument of assignment or
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<PAGE>
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement or other paper or document reasonably believed
by it to be genuine and to be signed, executed and, when necessary, verified or
acknowledged, by the proper Person or Persons.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the Rights Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Rights Agent has been advised of the likelihood of such loss or damage
and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
----------------------------------------------------------------
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust 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 document or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificate so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificate either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
----------------------
The Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions and no implied duties or obligations
shall be read into this Agreement against the Rights Agent, by all of which the
Company and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:
(a) Before the Rights Agent acts or refrains from acting, 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.
- 31 -
<PAGE>
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or the determination of Current
Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman,
the Chief Executive Officer, the President, the Chief Financial Officer, the
General Counsel, the Treasurer, any Vice President 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 the negligence, bad
faith, willful misconduct or breach of this Agreement by it or its attorneys or
agent.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except 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 of this Agreement
(except the due execution and delivery of this Agreement by the Rights Agent) or
in respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change or adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Sections 3, 11, 13 or 23 or the ascertaining of the existence of
facts that would require any such change or adjustment (except with respect to
the exercise of Rights evidenced by Rights Certificates after actual notice of
any change or adjustment is required); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock, Common Stock or other securities
to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of Preferred Stock, Common Stock or other securities will,
when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performance by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman, the Chief Executive Officer, the President, the Chief Financial
Officer, the General Counsel, the Treasurer, any Vice President or the Secretary
of the Company, and to apply to such officers for advice or instructions in
- 32 -
<PAGE>
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. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any
action proposed to be taken or omitted by the Rights Agent under this Rights
Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than ten Business Days after the date
any officer of the Company actually receives such application, unless any such
officer shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application subject to the proposed action or omission and/or specifying the
action to be taken or omitted.
(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 the Rights Agent were not serving as
such under this Agreement. Nothing in this Agreement shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents.
(j) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(k) 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.
(l) The Rights Agent shall not be required to take notice or be deemed to
have notice of any fact, event or determination (including, without limitation,
any dates or events defined in this Agreement or the designation of any Person
as an Acquiring Person, Affiliate or Associate) under this Agreement unless and
until the Rights Agent shall be specifically notified in writing by the Company
of such fact, event or determination.
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 notice of 30 days in writing mailed to
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<PAGE>
the Company and to each transfer agent of the Common Stock or Preferred Stock by
registered or certified mail and, at the expense of the Company, to the holders
of the Rights Certificates by either (i) first-class mail or (ii) by disclosure
in a periodic report of the Company required to be filed under the Exchange Act,
any permitted report under the Exchange Act, a press release of the Company or
in any proxy or other communication of the Company with its stockholders. The
Company may remove the Rights Agent or any successor Rights Agent upon notice of
30 days in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock or Preferred Stock
by registered or certified mail, and to the holders of the Rights Certificates
by either (i) first-class mail or (ii) by disclosure in a periodic report of the
Company required to be filed under the Exchange Act, any permitted report under
the Exchange Act, a press release of the Company or in any proxy or other
communication of the Company with its stockholders. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Rights Agent. Notwithstanding any other
provision of this Agreement, in no event shall the resignation or removal of a
Rights Agent be effective until a successor Rights Agent shall have been
appointed and have accepted such appointment. If the Company shall fail to make
such appointment within a period of 30 days after such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by any holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the incumbent Rights Agent or the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be (i) a corporation organized and doing
business under the laws of the United States or of the State of Illinois or the
State of New York (or of any other state of the United States so long as such
corporation is authorized to conduct a banking, corporate trust or stock
transfer business in the State of Illinois or the State of New York) in good
standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50,000,000 or (ii) a subsidiary of a
corporation described in clause (i) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
such purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock or Preferred Stock; the Company
shall also either (i) mail a notice thereof in writing to the registered holders
of the Rights Certificates or (ii) make a disclosure with respect thereto in a
periodic report of the Company required to be filed under the Exchange Act, any
permitted report under the Exchange Act, a press release of the Company or in
any proxy or other communication of the Company with its stockholders. 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.
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<PAGE>
Section 22. Issuance of New Rights Certificates.
------------------------------------
Notwithstanding any of the provisions of this Agreement or of the Rights
Certificates to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by a majority of
the Board of Directors of the Company to reflect any adjustment or change in the
Purchase Price per share and the number or kind or class of securities, cash or
other property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement.
Section 23. Redemption and Termination.
----------------------------
(a) The Board of Directors of the Company may, at its option, at any time
prior to the earlier of (i) the Trigger Date and (ii) the Expiration Date,
redeem all but not less than all of the then-outstanding Rights at a redemption
price of $.01 per Right (the "Redemption Price") appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date of this Agreement. The Company may, at its option, pay the Redemption
Price in cash, shares (including fractional shares) of Common Stock (based on
the Current Market Price of the Common Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors. The
redemption of the Rights by the Board of Directors of the Company may be made
effective at such time, on such basis and with such conditions as the Board of
Directors of the Company in its sole discretion may establish.
(b) At the time and date of effectiveness set forth in any resolution of
the Board of Directors of the Company ordering the redemption of the Rights,
without any further action and without any further notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price; provided, however, that such
resolution of the Board of Directors of the Company may be revoked, rescinded or
otherwise modified at any time prior to the time and date of effectiveness set
forth in such resolution, in which event the right to exercise will not
terminate at the time and date originally set for such termination by the Board
of Directors of the Company. The Company shall promptly give public notice of
any such redemption; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such redemption. The
Company shall also give notice of such redemption to the Rights Agent. The
Company may elect to 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 issuance of Rights Certificates, on the registry books of the transfer
agent for the Common Stock. Any notice which is mailed in the manner provided in
this Agreement shall be deemed given, whether or not the holder receives the
notice. In connection with any redemption permitted under this Section 23, the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights and (ii) mailing payment of the Redemption Price to the registered
holders of the Rights at their last addresses as they appear on the registry
books of the Rights Agent or, prior to the issuance of the Rights Certificates,
on the registry books of the transfer agent for the Common Stock, and upon such
action, all outstanding Rights Certificates shall be null and void without any
further action by the Company. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
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<PAGE>
any manner other than that specifically set forth in this Section 23, and other
than in connection with the purchase of shares of Common Stock prior to the
earlier of the Trigger Date and the Expiration Date.
Section 24. Notice of Certain Events.
------------------------
In case the Company, on or after the Distribution Date, shall propose to (a) pay
any dividend payable in stock of any class to the holders of its Common Shares
or to make any other distribution to the holders of its Common Shares (other
than a regular periodic cash dividend at an annual rate not in excess of 125% of
the annualized rate of the cash dividend paid on the Common Shares during the
immediately preceding fiscal year), or (b) offer to the holders of its Common
Shares rights, options or warrants to subscribe for or to purchase any
additional shares of Common Shares or shares of stock of any class or any other
securities, rights or options, or (c) effect any reclassification of the Common
Shares (other than a reclassification involving only the subdivision of
outstanding shares of Common Shares, a change in the par value of such Common
Shares or a change from par value to no par value), or (d) directly or
indirectly effect any consolidation or merger into or with, or effect any sale,
lease, exchange, or other transfer or disposition (or to permit one or more of
its Subsidiaries to effect any sale, lease, exchange or other transfer or
disposition), in one transaction or a series of related transactions, of more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, or (e) effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 25, a notice of
such proposed action, which shall specify any record date for the purposes of
such stock dividend or distribution of rights, or the date on which such
reclassification, consolidation, merger, sale, lease, exchange, transfer,
disposition, liquidation, dissolution or winding up is to take place and if such
holders will or may participate therein, the date of participation therein by
the holders of Common Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (a) or (b) above
at least 20 days prior to the record date for determining holders of the Common
Shares for purposes of such action, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein, if any, by the holders of Common Shares,
whichever shall be the earlier. The failure to give notice as required by this
Section 24 or any defect therein shall not affect the legality or validity of
the action taken by the Company or the vote upon any such action.
In case any Triggering Event or Business Combination shall occur, then, in
any such case, the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, in accordance with Section 25, notice of the
occurrence of such Triggering Event or Business Combination, which shall specify
the Triggering Event or Business Combination and include a description of the
consequences of such event to holders of Rights under Section 11 or 13.
Section 25. Notices.
-------
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Navistar International Corporation
455 North Cityfront Plaza Drive
Chicago, Illinois 60611
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<PAGE>
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sent by registered or certified
mail, and shall be deemed given upon receipt, addressed (until another address
is filed in writing with the Company) as follows:
Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60609
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Stock at the address of such holder as shown on
the Company's Common Stock registry books).
Section 26. Supplements and Amendments.
--------------------------
(a) At any time prior to the Trigger Date, a majority of the Board of
Directors of the Company may, and the Rights Agent shall, if so directed,
supplement or amend any provision of this Agreement, including, without
limitation, the Beneficial Ownership percent as set forth in Section 1 at which
a Person becomes an Acquiring Person and the definition of Exempt Person as set
forth in Section 1 to include any Person in addition to the Persons described
therein, without the approval of any holders of Rights.
(b) Except as otherwise provided in Section 26(c):
(1) The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement
and to exercise all rights and powers specifically granted to
the Board of Directors or the Company, or as may be necessary
or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the
provisions of this Agreement and (ii) make all determinations
deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the
Rights, to exchange or not exchange the Rights for Common Stock,
or to amend or supplement this Agreement).
- 37 -
<PAGE>
(2) All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done
or made by the Board of Directors of the Company in good
faith shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all
other Persons and (y) not subject the Board of Directors of the
Company to any liability to the holders of the Rights.
(c) From and after the Trigger Date:
(1) No amendment or other change shall be made in this Agreement
or the terms of the Rights which is inconsistent with the
provisions set forth in Section 11(j) or Section 13(f) or which
would otherwise adversely affect the interests of the holders
of Rights Certificates (other than an Acquiring Person or any
other Person in whose hands the Rights are void under the
provisions of Section 7(e)). Notwithstanding the foregoing, a
majority of the Board of Directors may, and the Rights Agent
shall, if so directed, amend this Agreement prior to the Trigger
Date effective upon the Trigger Date.
(2) The Board of Directors of the Company shall not be entitled to
exercise the powers specified in Section 26(b) after the Trigger
Date unless the Board of Directors can establish by clear and
convincing evidence that its action satisfies the requirement in
Section 26(c)(1).
(d) Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment that changes the rights and duties of the Rights Agent
under this Agreement will be effective against the Rights Agent without the
execution of such supplement or amendment by the Rights Agent.
Section 27. Successors.
----------
All the covenants and provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 28. 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 Rights any
legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights.
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<PAGE>
Section 29. Severability.
------------
Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be valid and enforceable under applicable law, but if any provision
of this Agreement shall be held to be prohibited by or unenforceable under
applicable law, (i) such provision shall be applied to accomplish the objectives
of the provision as originally written to the fullest extent permitted by law
and (ii) all other provisions of this Agreement shall remain in full force and
effect. No rule of strict construction, rule resolving ambiguities against the
person who drafted the provision giving rise to such ambiguities, or other such
rule of interpretation shall be applied against any party with respect to this
Agreement.
Section 30. Governing Law.
--------------
This Agreement and each Rights Certificate issued hereunder shall be deemed to
be a contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the internal laws of
Delaware applicable to contracts to be made and performed entirely within
Delaware.
Section 31. Counterparts.
------------
This Agreement may be executed in counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and both such counterparts
shall together constitute but one and the same instrument.
Section 32. 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 of this Agreement.
Section 33. Grammatical Construction.
-------------------------
Throughout this Agreement, where such meanings would be appropriate, (a) any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms (e.g., references to "he" shall also include "she" and "it" and
references to "who" and "whom" shall also include "which") and (b) the plural
form of nouns and pronouns shall include the singular and vice-versa.
* * * * *
- 39 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
NAVISTAR INTERNATIONAL CORPORATION
By /s/ Robert C. Lannert
-----------------------------------
Robert C. Lannert
Title: Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
HARRIS TRUST AND SAVINGS BANK
as Rights Agent
By /s/ Charles V. Zade
-----------------------------------
Charles V. Zade
Title: Vice President
- 40 -
<PAGE>
Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
OF
NAVISTAR INTERNATIONAL CORPORATION
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, Steven K. Covey, Corporate Secretary of Navistar International
Corporation, a corporation organized and existing under the General Corporation
Law of the State of Delaware, in accordance with the provisions of Section 151
thereof, DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, the Board of Directors on April
20, 1999, adopted the following resolution creating a series of 200,000 shares
of Preferred Stock designated as Junior Participating Preferred Stock, Series A:
RESOLVED, that, pursuant to the authority vested in the Board of Directors
by PART I of ARTICLE FOURTH of the Restated Certificate of Incorporation and out
of the Preferred Stock authorized therein, the Board hereby authorizes that a
series of Preferred Stock of the Corporation be, and it hereby is, created and
approved for issuance in accordance with the Rights Agreement dated as of April
20, 1999 between the Corporation and Harris Trust and Savings Bank, and that the
designation and amount thereof and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof be, and hereby are,
as follows:
Section 1. Designation and Amount.
----------------------
The shares of such series shall be designated as "Junior Participating Preferred
Stock, Series A" (the "Series A Preferred Stock") and the number of shares
constituting such series shall be 200,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
<PAGE>
Section 2. Dividends and Distributions.
----------------------------
(a) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock and of
any other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the fifteenth day of March, June,
September and December in each year (each such date being referred to herein
as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a
share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $25.00 or(b) the Adjustment Number
(as defined below) times the aggregate per share amount of all cash dividends,
and the Adjustment Number times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise), declared on the Common
Stock since the immediately preceding Quarterly Dividend Payment Date or,
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock. The
"Adjustment Number" shall initially be 1000. In the event the Corporation
shall at any time after May 3, 2009 (i) declare or pay any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock into a greater number of shares or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (a) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $25.00 per share on
the Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(c) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
- 2 -
<PAGE>
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue
and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of
Series A Preferred Stock in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive payment of a dividend or distribution declared thereon, which record
date shall be no more than 30 days prior to the date fixed for the payment
thereof.
Section 3. Voting Rights.
-------------
The holders of shares of Series A Preferred Stock shall have the following
voting rights:
(a) Each share of Series A Preferred Stock shall entitle the holder thereof
to a number of votes equal to the Adjustment Number (as adjusted from time to
time pursuant to Section 2(a) hereof) on all matters submitted to a vote of
the stockholders of the Corporation.
(b) Except as otherwise provided herein, by law or in the Certificate of
Incorporation or By-Laws, the holders of shares of Series A Preferred Stock
and the holders of shares of Common Stock and any other capital stock of
the Corporation having general voting rights shall vote together as one class
on all matters submitted to a vote of stockholders of the Corporation.
(i) If at any time dividends on any Series A Preferred Stock shall
be in arrears in an amount equal to six quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (herein
called a "default period") that shall extend until such time when all accrued
and unpaid dividends for all previous quarterly dividend periods and for the
current quarterly period on all shares of Series A Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each default period, (1) the number of Directors shall be increased by two,
effective as of the time of election of such Directors as herein provided,
and (2) the holders of Series A Preferred Stock and the holders of other
Preferred Stock upon which these or like voting rights have been conferred and
are exercisable (the "Voting Preferred Stock") with dividends in arrears
equal to six quarterly dividends thereon, voting as a class, irrespective of
series, shall have the right to elect such two Directors.
- 3 -
<PAGE>
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(b) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that such voting right shall not be exercised unless the holders of
at least one-third in number of the shares of Voting Preferred Stock
outstanding shall be present in person or by proxy. The absence of a quorum
of the holders of Common Stock shall not affect the exercise by the holders
of Voting Preferred Stock of such voting right.
(iii)Unless the holders of Voting Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 10% of the total number of
shares of Voting Preferred Stock outstanding, irrespective of series, may
request, the calling of a special meeting of the holders of Voting Preferred
Stock, which meeting shall thereupon be called by the Chairman of the Board,
the President, an Executive Vice President, a Vice President or the Secretary
of the Corporation. Notice of such meeting and of any annual meeting at which
holders of Voting Preferred Stock are entitled to vote pursuant to this
paragraph (b)(iii) shall be given to each holder of record of Voting
Preferred Stock by mailing a copy of such notice to him at his last address
as the same appears on the books of the Corporation. Such meeting shall be
called for a time not earlier than 10 days and not later than 60 days after
such order or request or, in default of the calling of such meeting within 60
days after such order or request, such meeting may be called on similar notice
by any stockholder or stockholders owning in the aggregate not less than
10% of the total number of shares of Voting Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (b)(iii), no such special
meeting shall be called during the period within 60 days immediately preceding
the date fixed for the next annual meeting of the stockholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect Directors voting as a class,
(x) the Directors so elected by the holders of Voting Preferred Stock shall
continue in office until their successors shall have been elected by such
holders or until the expiration of the default period, and (y) any vacancy
in the Board of Directors may be filled by vote of a majority of the
remaining Directors theretofore elected by the holders of the class or
classes of stock which elected the Director whose office shall have become
vacant. References in this paragraph (b) to Directors elected by the holders
of a particular class or classes of stock shall include Directors elected
by such Directors to fill vacancies as provided in clause (y) of the foregoing
sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Voting Preferred Stock as a class to elect
Directors shall cease, (y) the term of any Directors elected by the
holders of Voting Preferred Stock as a class shall terminate and (z) the
number of Directors shall be such number as may be provided for in the
- 4 -
<PAGE>
Certificate of Incorporation or By-Laws irrespective of any increase made
pursuant to the provisions of paragraph (b) of this Section 3 (such number
being subject, however, to change thereafter in any manner provided by law
or in the Certificate of Incorporation or By-Laws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(c) Except as set forth herein, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(a) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions on,
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
(iii)redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other relative
- 5 -
<PAGE>
rights and preferences of the respective series and classes, shall determine
in good faith will result in fair and equitable treatment among the respective
series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section
4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares.
-----------------
Any shares of Series A Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of preferred stock and may be reissued as
part of a new series of preferred stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein, in the Certificate of Incorporation
or By-laws or otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
--------------------------------------
Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (A) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received the greater of (i) $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, and (ii) an aggregate amount per
share, equal to the Adjustment Number (as adjusted from time to time pursuant to
Section 2(a) hereof) times the aggregate amount to be distributed per share to
holders of Common Stock, or (B) to the holders of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc.
--------------------------
In case the Corporation shall enter into any consolidation, merger, combination
or other transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other property, then in
any such case the shares of Series A Preferred Stock then outstanding shall at
the same time be similarly exchanged or changed in an amount per share equal to
the Adjustment Number (as adjusted from time to time pursuant to Section 2(a)
hereof) times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. 4.
Section 8. No Redemption.
-------------
The shares of Series A Preferred Stock shall not be redeemable.
- 6 -
<PAGE>
Section 9. Amendment.
---------
The Certificate of Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers, preferences or special
rights of the Series A Preferred Stock so as to affect them adversely without
the affirmative vote of the holders of two-thirds of the outstanding shares of
Series A Preferred Stock, voting together as a single class.
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 20th day of
April, 1999.
--------------------------------------
Steven K. Covey
Corporate Secretary
- 7 -
<PAGE>
Exhibit B
---------
[Form of Rights Certificate]
Certificate No. R- Rights
--------
NOT EXERCISABLE AFTER MAY 3, 2009 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE, AT
THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT.
Rights Certificate
NAVISTAR INTERNATIONAL CORPORATION
This certifies that _________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of April 20, 1999, (the "Rights Agreement")
between Navistar International Corporation, a Delaware corporation (the
"Company"), and Harris Trust and Savings Bank, an Illinois banking corporation
(the "Rights Agent"), unless notice of redemption or exchange shall have been
previously given by the Company, to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M. (New York, New York time) on May 3, 2009, at the principal
corporate trust office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-thousandth of a fully paid nonassessable share of the
Junior Participating Preferred Stock, Series A, par value $1.00 per share, of
the Company (the "Preferred Stock"), at a purchase price (the "Purchase Price")
of $ per one one-thousandth share, upon presentation and surrender of this
Rights Certificate with the Form of Election to Purchase duly executed. The
Purchase Price may be paid in cash or by certified bank check or bank draft
payable to the order of the Company.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of the
Rights Agent.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Preferred Stock or other securities, cash or other property which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
<PAGE>
If the Rights evidenced by this Rights Certificate are or were formerly
beneficially owned, on or after the earlier of the Distribution Date and the
Trigger Date, by (i) an Acquiring Person or any Associate or Affiliate of an
Acquiring Person, (ii) a direct or indirect transferee of an Acquiring Person
(or of any Associate or Affiliate of an Acquiring Person) who becomes or becomes
entitled to be a transferee after the Acquiring Person becomes such, or (iii) a
direct or indirect transferee of an Acquiring Person (or of an Associate or
Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person (or from an
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or to holders of equity interests in any Associate or
Affiliate of such Acquiring Person) or to any Person with whom the Acquiring
Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a direct or indirect transfer which a majority of the Board of
Directors of the Company determines is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of Section
7(e) of the Rights Agreement, such Rights shall, immediately upon the occurrence
of a Triggering Event and without any further action, be null and void and no
holder of such Rights (including any subsequent holder) shall have any rights
whatsoever with respect to such Rights whether under the Rights Agreement or
otherwise, provided, however, that, in the case of transferees under clause (ii)
or clause (iii) above, any Rights beneficially owned by such transferee shall be
null and void only if and to the extent such Rights were formerly beneficially
owned by a Person who was, at the time such Person beneficially owned such
Rights, or who later became, an Acquiring Person or an Affiliate or Associate of
such Acquiring Person.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal corporate trust office of the Rights Agent, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (a) may be redeemed by the Board of Directors of the Company at
its option at a redemption price of $.01 per Right, subject to adjustment,
payable, at the election of the Company, in cash or shares (including fractional
shares) of Common Stock or such other consideration as the Board of Directors of
the Company may determine, at any time prior to the earlier of (i) the Trigger
Date and (ii) the Expiration Date, or (b) may be exchanged by the Board of
Directors of the Company, at its option, in whole or in part, for shares of the
Company's Common Stock on a one-for-one basis, at any time after the Trigger
Date and prior to (i) any Person (other than an Exempt Person), together with
all Affiliates and Associates of such Person, becoming the Beneficial Owner of
50% or more of the Common Stock then outstanding and (ii) the occurrence of a
Business Combination.
- 2 -
<PAGE>
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depository receipts) are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
but in lieu thereof the Company may elect to (i) evidence fractional shares by
depositary receipts, (ii) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or in bearer form (represented
by a certificate) which shall entitle the holder to receive a full share upon
the surrender of such scrip or warrants aggregating a full share, or (iii) make
a cash payment, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
to receive dividends on, or shall be deemed for any purpose the holder of,
Preferred Stock or any other securities, cash or property which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or this Certificate be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company, including, without
limitation, any right to vote for the election of directors or upon any 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 to institute, as a holder of
Preferred Stock or other securities issuable on the exercise of the Rights
represented by this Certificate, any derivative action, or otherwise, until and
only to the extent the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
* * * * *
- 3 -
<PAGE>
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of
--------------- --, ---- .
NAVISTAR INTERNATIONAL CORPORATION
By:
--------------------------------
Title:
Countersigned:
HARRIS TRUST AND SAVINGS BANK
as Rights Agent
By:
--------------------------
Authorized Officer
- 4 -
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED the undersigned
--------------------------------
hereby sells, assigns and transfers unto
--------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
________________________ with a power of Attorney to transfer the said Rights
and a Rights Certificate evidencing such Rights on the books of Navistar
International Corporation, with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to (complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the undersigned):
Please insert Social Security or
other identifying number of transferee:
------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- 1 -
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate or any Rights evidenced hereby [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire any of the Rights evidenced by this
Rights Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:
--------------------------- ------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Assignment must correspond to the
name as written upon the face of this Rights Certificate in every particular,
without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Assignment is
not completed, the Company will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and, in the case of an
assignment or other transfer of this Rights Certificate or any Rights evidenced
hereby, will affix a legend to that effect on any Rights Certificate issued in
whole or partial exchange for this Rights Certificate.
- 2 -
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: NAVISTAR INTERNATIONAL CORPORATION
The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Rights Certificate to purchase
the shares of Preferred Stock or other securities, cash or other property
issuable upon the exercise of such Rights and requests that certificates for
such shares or other securities be issued in the name of, and such cash or other
property be paid to:
Please insert social security
or other identifying number:
--------------------
- ------------------------------------------------------------------------------
(Please print name and address)
- ------------------------------------------------------------------------------
A new Rights Certificate evidencing the remaining balance, if
any, of such Rights not hereby exercised shall be mailed to and registered in
the name of the undersigned unless such person requests that such Rights
Certificate be registered in the name of and mailed to (complete only if Rights
Certificate evidencing any remaining balance of Rights is to be registered in a
name other than the undersigned):
Please insert social security
or other identifying number:
-------------------
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
- 1 -
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:
-------------------------- ------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Election to Purchase must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Election to
Purchase is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
- 2 -
