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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
Quaker State Corporation
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(Exact name of registrant as specified in its charter)
Delaware 25-0742820
- ---------------------------------------- -------------------
(State of incorporation or organization) (IRS Employer
Identification No.)
Xerox Center, 222 West Las Colinas Blvd.,
Suite 1750, Irving, Texas 75039
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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 to Name of each exchange on which each
be so registered class is to be registered
Rights to Purchase Capital
Stock, $1.00 par value per share New York Stock Exchange
-------------------------------- -----------------------
Securities to be registered pursuant to Section 12(g) of the Act:
None
----------------
(Title of Class)
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ITEM 1. Description of Registrant's Securities to
be Registered
-----------------------------------------
On September 28, 1995 the, Board of Directors of Quaker State
Corporation (the "Registrant") declared a dividend of one Right for each
outstanding share of Capital Stock, $1.00 par value per share (the "Capital
Stock") of the Registrant. The Rights will be issued on October 18, 1995 to
the stockholders of record on October 18, 1995 and will expire in ten years,
subject to earlier redemption. Under certain circumstances, each Right
entitles the registered holder to purchase from the Registrant one share of
Capital Stock of the Registrant or, in certain circumstances, common stock of
an acquiring company at one-half the market price of such common stock. The
Rights are designed to make it more likely that all the Registrant's
stockholders receive fair and equal treatment in the event of any proposed
takeover of the Registrant and to guard against the use of partial tender
offers or other coercive tactics to gain control of the Registrant. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Registrant and Mellon Securities Trust Company,
as Rights Agent (the "Rights Agent").
Exercise Price
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When exercisable, except as set forth below, each Right entitles the
registered holder to purchase from the Registrant one share of Capital Stock,
at a price of $55 per share (the "Purchase Price"), subject to adjustment in
certain circumstances.
Transfer and Detachment
- -----------------------
Until the "Distribution Date," which is the earlier to occur of (i) ten
business days following the time (the "Stock Acquisition Time") of a public
announcement or notice to the Registrant that a person or group of affiliated
or associated persons (an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership (as defined in the Rights Agreement) of
15% or more of the outstanding shares of Capital Stock of the Registrant, and
(ii) ten business days, or such later date as may be determined by the Board of
Directors of the Registrant, after the date of the commencement or announcement
by a person of an intention to make a tender offer or exchange offer for an
amount of Capital Stock which, together with the shares of such stock already
owned by such person, constitutes 15% or more of the outstanding shares of such
Capital Stock, the Rights will be evidenced, with respect to any of the
Registrant's Capital Stock certificates outstanding as of October 18, 1995, by
such Capital Stock certificate with a copy of a Summary of Rights attached
thereto. The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Registrant's Capital Stock.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Capital Stock certificates issued after October 18, 1995, upon the
transfer or issuance of new shares of Capital Stock, will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for transfer
of any of the Registrant's Capital Stock certificates outstanding as of October
18, 1995, even without a copy of the Summary of Rights attached thereto, will
also constitute the transfer of the Rights associated with the shares of
Capital Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Capital Stock as of the close of business on the
Distribution Date, and such separate Right Certificates alone will evidence the
Rights.
Exercisability
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The Rights are not exercisable until the Distribution Date. The Rights
will expire on September 28, 2005 unless earlier redeemed by the Registrant.
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Right to Acquire Stock at Half Price
- ------------------------------------
In the event that after the Stock Acquisition Time, the Registrant is
acquired in a merger or other business combination transaction or 50% or more
of the Registrant's assets, cash flow or earning power are sold or otherwise
transferred, the Rights Agreement provides that proper provision shall be made
so that each holder of a Right, upon the exercise thereof at the then current
exercise price of the Right, shall thereafter be entitled to receive that
number of shares of common stock of the acquiring company which at the time of
such transaction would have a market value (as defined in the Rights Agreement)
of two times the exercise price of the Right. In the event that the Registrant
is the surviving corporation of a merger and its Capital Stock is changed or
exchanged, proper provision shall be made so that each holder of a Right will
thereafter have the right to receive upon exercise that number of shares of
common stock of the other party to the transaction having a market value of two
times the exercise price of the Right.
In the event that a person or group becomes an Acquiring Person
(otherwise than pursuant to a tender offer or exchange offer for all
outstanding shares of Capital Stock at a price and on terms which are
determined to be fair and in the best interests of the Registrant and its
stockholders by a majority of the members of the Board of Directors of the
Registrant who are not Acquiring Persons or representatives or nominees of or
affiliated or associated with an Acquiring Person), proper provision shall be
made so that each holder of a Right, other than Rights that were beneficially
owned by the Acquiring Person, which will thereafter be void, will thereafter
have the right to receive upon exercise that number of shares of Capital Stock
having a market value (as defined in the Rights Agreement) of two times the
exercise price of the Right. A person or group will not be deemed to be an
Acquiring Person if the Board of Directors of the Registrant determines that
such person or group became an Acquiring Person inadvertently and such person
or group promptly divests itself of a sufficient number of shares of Capital
Stock so that such person or group is no longer an Acquiring Person.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Registrant, including, without limitation, the
right to vote or to receive dividends.
Adjustments
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The Purchase Price payable and the number of shares of Capital Stock or
other securities or property issuable upon the exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on or a subdivision, combination or reclassification of the
shares of Capital Stock, (ii) upon the fixing of a record date for the issuance
to holders of Capital Stock of certain rights, options or warrants to subscribe
for shares of Capital Stock or convertible securities at less than the current
market price of shares of Capital Stock or (iii) upon the fixing of a record
date for the making of a distribution to holders of shares of Capital Stock of
evidences of indebtedness or assets (excluding regular periodic cash dividends
not exceeding 125% of the last regular periodic cash dividend or dividends
payable in shares of Capital Stock) or of subscription rights or warrants
(other than those referred to above). The number of Rights and the number of
shares of Capital Stock issuable upon exercise of each Right are also subject
to adjustment in the case of a stock split, combination or stock dividend on
the shares of Capital Stock prior to the Distribution Date.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional shares of Capital Stock will be issued and,
in lieu thereof, an adjustment in cash will be made based on the market value
of shares of Capital Stock on the last trading date prior to the date of
exercise.
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Redemption or Exchange
- ----------------------
At any time prior to the earlier of (i) the Stock Acquisition Time and
(ii) September 28, 2005, the Registrant, by resolution of its Board of
Directors, may redeem the Rights in whole, but not in part, at a price of $.01
per Right (the "Redemption Price"). Immediately upon the action of the Board
of Directors of the Registrant electing to redeem the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
At any time after a person becomes an Acquiring Person and prior to the
acquisition by such person of 50% or more of the outstanding Capital Stock of
the Registrant, the Board of Directors of the Registrant, may exchange the
Rights (other than Rights beneficially owned by such person which have become
void), in whole or in part, for Capital Stock of the Registrant at an exchange
ratio of one share of Common Stock per Right (subject to adjustment). The
Registrant may at its option substitute shares of any substantially similar
equity security of the Registrant for some or all of the shares of Capital
Stock exchangeable for Rights, at an exchange ratio of one share of such equity
security for each share of Capital Stock to be exchanged.
Amendment
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The Rights and the Rights Agreement can be amended by the Board of
Directors of the Registrant in any respect (including, without limitation, any
extension of the period in which the Right Certificates may be redeemed) at any
time prior to the Stock Acquisition Time. From and after such time, without
the approval of the stockholders of the Registrant or the holders of the
Rights, the Board of Directors may only supplement or amend the Rights
Agreement in order (i) to cure any ambiguity, (ii) to correct or supplement any
provision contained in the Rights Agreement which may be defective or
inconsistent with any other provision in the Rights Agreement, (iii) to shorten
or lengthen any time period under the Rights Agreement or (iv) to make any
changes or supplements which the Registrant may deem necessary or desirable
which shall not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an affiliate or associate of
any such person), provided that any such action by the Board of Directors must
have the concurrence of a majority of the Continuing Directors (as defined in
the Rights Agreement) and provided that the Continuing Directors constitute a
majority of directors then in office, and provided that the Rights Agreement
may not be supplemented or amended to lengthen (A) a time period relating to
when the Rights may be redeemed or to modify the ability (or inability) of the
Registrant's board of directors to redeem the Rights, in either case at such
time as the Rights are not then redeemable or (B) any other time period unless
such lengthening is for the purpose of protecting, enhancing or clarifying the
Rights of or the benefits to the holders of Rights (other than an Acquiring
Person or an affiliate or associate of any such person).
Issuance of Rights
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Each outstanding share of Capital Stock on September 1, 1995 will
receive one Right. As long as the Rights are attached to the shares of Capital
Stock, the Registrant will issue one Right with each share of Capital Stock it
issues, so that all such shares have attached Rights. Approximately 27,000,000
shares of Capital Stock have been reserved for issuance upon exercise of the
Rights.
A copy of the Rights Agreement, which includes as Exhibit A the form of
Right Certificate, is attached hereto as Exhibit 1 and is incorporated herein
by reference. The foregoing description of the Rights is qualified in its
entirety by reference to such Exhibit.
ITEM 2. Exhibits
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1. Rights Agreement between the Registrant and Mellon
Securities Trust Company, Rights Agent, dated as of
September 28, 1995, which includes as Exhibit A the
form of Right Certificate.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized.
QUAKER STATE CORPORATION
(Registrant)
By /s/ CONRAD A. CONRAD
----------------------
Name: Conrad A. Conrad
Title: Vice Chairman and
Chief Financial Officer
DATE: October 20, 1995
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EXHIBIT INDEX
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Exhibit No. Description
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1. Rights Agreement between the Registrant
and Mellon Securities Trust Company,
Rights Agent, dated as of September 28,
1995, which includes as Exhibit A the form
of Right Certificate.
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Exhibit 1
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QUAKER STATE CORPORATION
and
MELLON SECURITIES TRUST COMPANY
Rights Agent
________________
RIGHTS AGREEMENT
Dated as of September 28, 1995
================================================================================
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Section Page
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<S> <C>
1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. Issue of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . . . . . . . . . . . . . . . . . . 12
8. Cancellation and Destruction of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9. Reservation and Availability of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10. Capital Stock Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights . . . . . . . . . . . . . 17
12. Certificate of Adjusted Purchase Price or Number of Shares . . . . . . . . . . . . . . . . . . . . . . 26
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power . . . . . . . . . . . . . . . . . 27
14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
17. Right Certificate Holder Not Deemed a Shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . 32
18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . . . . . . . . . . . . . . . 33
20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
22. Issuance of New Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
23A. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
24. Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
25. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
26. Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
27. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
28. Determinations and Actions by the Board of Directors, etc . . . . . . . . . . . . . . . . . . . . . . 43
29. Benefits of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
30. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
31. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
33. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Exhibit A - Form of Right Certificate
Exhibit B - Form of Summary of Rights
</TABLE>
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RIGHTS AGREEMENT
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THIS RIGHTS AGREEMENT, dated as of September 28, 1995 (the "Agreement"),
between Quaker State Corporation, a Delaware corporation (the "Company"), and
Mellon Securities Trust Company (the "Rights Agent"),
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company has authorized and declared a
dividend of one Right (as hereinafter defined) for each share of Capital Stock,
par value $1.00 per share, of the Company outstanding at the Close of Business
(as hereinafter defined) on October 18, 1995 (the "Record Date"), each Right
representing the right to purchase one share of Capital Stock of the Company
and has further authorized the issuance of one Right with respect to each share
of Capital Stock of the Company that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Expiration Date and
the Final Expiration Date (as such terms are hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 15% or more of the shares of Capital Stock of the Company then
outstanding, but shall not include any employee benefit plan of the Company
or any Subsidiary of the Company or any Person organized, appointed or
established by the Company or such Subsidiary for or pursuant to the terms
of any such employee benefit plan. Notwithstanding the foregoing:
(i) no Person shall become an "Acquiring Person" as the result
of an acquisition of shares of Capital Stock by the Company which, by
reducing the number of shares of Capital Stock outstanding, increases
the proportionate number of shares Beneficially Owned by such Person
to 15% or more of the shares of Capital Stock of the Company then
outstanding, provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the shares of Capital Stock of the
Company by reason of share purchases by the Company and shall, after
such share purchases by the Company, at a time when such Person
Beneficially Owns 15% or more of the Capital Stock, become the
Beneficial Owner of any additional shares of Capital Stock of the
Company, then such Person shall be deemed to be an "Acquiring
Person";
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(ii) if the Board of Directors of the Company determines in
good faith that a Person who would otherwise be an "Acquiring Person"
has become such inadvertently (including, without limitation, because
(A) such Person was unaware that he or it Beneficially Owned a
percentage of Capital Stock that would otherwise cause such Person to
be an "Acquiring Person" or (B) such Person was aware of the extent
of his or its Beneficial Ownership but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and
without any intention of changing or influencing control of the
Company, and if such Person, as promptly as practicable after being
advised of such determination, divests himself or itself of
Beneficial Ownership of a sufficient number of shares of Capital
Stock so that such Person would no longer be an "Acquiring Person",
then such Person shall not be deemed to be or to have become an
"Acquiring Person" for any purposes of this Agreement; and
(iii) no Person shall become an "Acquiring Person" by virtue of
ownership of Capital Stock of the Company by any Affiliate and/or
Associate of such Person, which Affiliate and/or Associate is deemed
to be an Affiliate and/or Associate of such Person solely by reason
of such Affiliate and/or Associate being a director or officer of the
Company.
(b) "Adjustment Shares" shall have the meaning set forth in Section
11(a)(ii) hereof.
(c) "Affiliate" and "Associate", when used with reference to any
Person, shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as in effect on the Record
Date.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
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(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose
of, including pursuant to any agreement, arrangement or understanding
(whether or not in writing); provided, however, that a Person shall
not be deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy given to such
Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations of the Exchange Act and (2) is not also then reportable
on Schedule 13D under the Exchange Act (or any comparable or
successor report);
(ii) which such Person or any of such Person's Affiliates or
Associates has the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in
writing), or upon the exercise of conversion rights, exchange rights,
rights (other than these Rights), warrants or options, or otherwise,
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, (A) securities tendered pursuant to
a tender or exchange offer made by or on behalf of such Person or any
of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, or (B) securities
issuable upon exercise of Rights at any time prior to the occurrence
of either a Section 11(a)(ii) Event or a Section 13 Event, or (C)
securities issuable upon exercise of Rights from and after the
occurrence of either a Section 11(a)(ii) Event or a Section 13 Event,
which Rights were acquired by such Person or any of such Person's
Affiliates or Associates prior to the Distribution Date or pursuant
to Section 3(a) or Section 22 hereof (the "Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment
made with respect to any Original Rights; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person or any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in subparagraph (i) of this paragraph
(d)) or disposing of any securities of the Company in a manner that
relates or is reasonably likely potentially to relate to influencing
the control or management of the Company;
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provided, however, that nothing in this paragraph (d) shall cause a
person engaged in business as an underwriter of securities to be the
Beneficial Owner of, or to beneficially own, any securities acquired
through such person's participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 P.M., New
York, New York time, on such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 P.M., New York, New York time, on
the next succeeding Business Day.
(g) "Capital Stock" when used with reference to the Company shall mean
the Capital Stock, par value $1.00 per share, of the Company. "Capital
Stock" when used with reference to any Person other than the Company which
is organized in corporate form shall mean the capital stock with the
greatest voting power, or the equity securities or other equity interest
having power to control or direct the management, of such Person, or, if
such Person is a Subsidiary of another Person, the capital stock with the
greatest voting power of the Person which ultimately controls such
first-mentioned Person. "Capital Stock" when used with reference to any
Person which is not organized in corporate form shall mean units of
beneficial interest which (i) shall represent the right to participate
generally in the profits and losses of such Person (including, without
limitation, any flow-through tax benefits resulting from an ownership
interest in such Person) and which (ii) shall be entitled to exercise the
greatest voting power of such Person or, in the case of a limited
partnership, shall have the power to remove the general partner or
partners.
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(h) "Capital Stock Equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(i) "Company" shall have the meaning set forth in the first paragraph
of this Agreement.
(j) "Continuing Director" shall mean any member of the Board of
Directors of the Company (while such person is a member of such Board of
Directors) who either (i) was a member of such Board of Directors prior to
the Stock Acquisition Time or (ii) is not an Acquiring Person, an Affiliate
or Associate of an Acquiring Person, or a representative or nominee of an
Acquiring Person or of any such Affiliate or Associate, and subsequently
became a member of such Board of Directors, and whose nomination for
election or election thereto was recommended or approved by a majority of
the Continuing Directors then on such Board of Directors.
(k) "Current Market Price" shall have the meaning set forth in Section
11(d) hereof.
(l) "Current Value" shall have the meaning set forth in Section
11(a)(iii) hereof.
(m) "Distribution Date" shall have the meaning specified in Section
3(a) hereof.
(n) "Equivalent Capital Stock" shall have the meaning set forth in
Section 11(b) hereof.
(o) "Expiration Date" shall have the meaning specified in Section 7(a)
hereof.
(p) "Final Expiration Date" shall have the meaning specified in
Section 7(a) hereof.
(q) "NASDAQ" shall have the meaning set forth in Section 11(d) hereof.
(r) "Outside Directors" shall have the meaning set forth in Section
11(a)(ii) hereof.
(s) "Person" shall mean any individual, firm, corporation, partnership,
trust or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(t) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(u) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
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(v) "Record Date" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
(w) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(x) "Right" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.
(y) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(bb) "Rights Agent" shall have the meaning set forth in the first
paragraph of this Agreement.
(cc) "Section 11(a)(ii) Event" shall have the meaning set forth in
Section 11(a)(ii) hereof.
(dd) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) hereof.
(ee) "Section 13 Event" shall have the meaning set forth in Section
13(a) hereof.
(ff) "Spread" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(gg) "Stock Acquisition Time" shall mean the time of occurrence of
whichever of the following first occurs: (i) the first public announcement
by the Company or an Acquiring Person that the Acquiring Person has become
such, or (ii) the communication to the Company (including, without
limitation, to the directors of the Company) of any notice (including,
without limitation, any written consent or notice related thereto) from an
Acquiring Person indicating or reflecting that the Acquiring Person has
become such.
(hh) "Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership
interests having ordinary voting power sufficient, in the absence of
contingencies, to elect a majority of the board of directors or other
persons performing similar functions are at the time beneficially owned,
directly or indirectly, by such Person or otherwise controlled by such
Person.
(ii) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(jj) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.
(kk) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
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Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the earlier of the
Close of Business on (i) the tenth Business Day after the Stock Acquisition
Time, or (ii) the tenth Business Day, or such specified or unspecified later
date as may be determined by action of the Board of Directors of the Company,
after the date of the commencement of (as determined by reference to Rule
14d-2(a), as in effect under the Exchange Act on the Record Date), or first
public announcement of the intent of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person organized, appointed or established by
the Company or such Subsidiary as a fiduciary pursuant to the terms of any such
employee benefit plan) to commence (which intention to commence remains in
effect for five Business Days after such announcement), a tender or exchange
offer for an amount of Capital Stock of the Company which, together with the
shares of such stock already owned by such Person, constitutes 15% or more of
the outstanding Capital Stock of the Company (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights) (the
earlier of such dates described in clauses (i) and (ii) above being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for shares of Capital Stock registered in the names of the holders
of Capital Stock (which certificates for Capital Stock shall be deemed also to
be certificates for Rights) and not by separate Right Certificates, and (y) the
right to receive Right Certificates will be transferable only in connection
with the transfer of the underlying Capital Stock. As soon as practicable
after the Distribution Date, the Rights Agent will send, by first class,
insured, postage-prepaid mail, to each record holder of Capital Stock as of the
Close of Business on the Distribution Date, at the address of such holder shown
on the records of the Company, a Right Certificate, in substantially the form
of Exhibit B hereto (a "Right Certificate"), evidencing one Right for each
share of Capital Stock so held, subject to adjustment as provided herein and to
the provisions of Section 14(a) hereof. As of the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
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<PAGE> 10
(b) On the Record Date or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Capital Stock, in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Capital Stock as
of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company. With respect to certificates for Capital
Stock outstanding as of the Record Date, until the earlier of the Distribution
Date or the Expiration Date, the Rights will be evidenced by such certificates
for Capital Stock registered in the names of the holders of Capital Stock with
a copy of the Summary of Rights attached thereto. Until the earliest of the
Distribution Date, the Expiration Date and the Final Expiration Date, the
surrender for transfer of any of the certificates for Capital Stock outstanding
on the Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with the
Capital Stock represented by such certificate.
(c) Certificates for Capital Stock issued (or delivered from the Company's
treasury) after the Record Date but prior to the earliest of the Distribution
Date, the Expiration Date and the Final Expiration Date shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Quaker State
Corporation (the "Corporation") and Mellon Securities Trust Company, dated
as of September 28, 1995 (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 the Corporation. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate. The Corporation will mail to the holder of this certificate a
copy of the Rights Agreement without charge promptly after receipt of a
written request therefor. Under certain circumstances set forth in the
Rights Agreement, Rights issued to an Acquiring Person or any Associate or
Affiliate thereof (as such terms are defined in the Rights Agreement) may
be null and void. The Rights shall not be exercisable, and shall be void so
long as held, by a holder in any jurisdiction where the requisite
qualification for the issuance to such holder, or the exercise by such
holder of the Rights in such jurisdiction, shall not have been obtained or
be obtainable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Capital Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Capital Stock represented by such
certificates.
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<PAGE> 11
Section 4. FORM OF RIGHT CERTIFICATES. (a) The Right Certificates (and
the forms of election to purchase shares, certification and assignment to be
printed on the reverse thereof) shall be substantially in the form set forth in
Exhibit A hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Sections 11 and 22 hereof, the Right
Certificates, whenever distributed, which are distributed in respect of shares
of Capital Stock which were issued and outstanding as of the Record Date, shall
be dated as of the Record Date, and all Right Certificates which are
distributed in respect of other shares of Capital Stock shall be dated as of
the respective dates of issuance of such Capital Stock, and in each such case
on their face shall entitle the holders thereof to purchase such number of
shares of Capital Stock as shall be set forth therein at the price per share of
Capital Stock set forth therein (the "Purchase Price"), but the number and type
of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided in this Agreement.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding (whether or not in
writing) which has as a primary purpose or effect the avoidance of the
provisions of Section 7(e), Section 11(a)(ii) or of Section 13 hereof with
respect to the limitation of the Rights beneficially owned by an Acquiring
Person (or any Associate or Affiliate thereof), and any Right Certificate
issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend modified
as necessary to apply to such Person:
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<PAGE> 12
The Rights represented by this Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement).
Accordingly, this Certificate and the Rights represented hereby may become
null and void in the circumstances specified in Section 7(e) of the Rights
Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right Certificates
shall be executed on behalf of the Company manually or by facsimile signature
by the Chairman of the Board, the President or any Vice President and have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or any Assistant Secretary, either manually or by
facsimile signature. The Right Certificates shall be countersigned by the
Rights Agent manually and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same force and effect
as though the person who signed such Right Certificates had not ceased to be
such officer of the Company; and any Right Certificate may be signed on behalf
of the Company by any person who, at the actual date of the execution of such
Right Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office in Ridgefield Park, New Jersey, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date and certificate number of each of the Right
Certificates.
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<PAGE> 13
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. (a)
Subject to the provisions of Sections 4(b) and 14 hereof, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of
Business on the earlier of the Expiration Date and the Final Expiration Date,
any Right Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of shares of Capital
Stock (or other securities, cash, and/or assets, as the case may be) as the
Right Certificate or Right Certificates surrendered then entitled such holder
to purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged, with the form
of assignment and certificate appropriately executed, at the principal office
of the Rights Agent in Ridgefield Park, New Jersey. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect
to the transfer of any such surrendered Right Certificate or Right Certificates
until the registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Right
Certificate or Right Certificates and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of any Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, if requested by the
Company, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will execute
and deliver a new Right Certificate of like tenor to the Rights Agent for
counter-signature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
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<PAGE> 14
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office of the Rights Agent in Ridgefield Park, New Jersey
together with payment of the Purchase Price for each share of Capital Stock as
to which the Rights are exercised, at or prior to the earliest of (i) the Close
of Business on September 28, 2005 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof, (iii) the
time at which the Rights are exchanged as provided in Section 23A hereof, or
(iv) the time at which the Rights expire pursuant to Section 13(d) hereof (the
earliest of such times being herein referred to as the "Expiration Date").
(b) The Purchase Price for each share of Capital Stock issued pursuant to
the exercise of a Right shall initially be $50, shall be subject to adjustment
from time to time as provided in Sections 11 and 13 hereof and shall be payable
in lawful money of the United States of America in accordance with paragraph
(c) below.
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<PAGE> 15
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and certificate duly executed,
accompanied by payment (by certified check or bank draft payable to the order
of the Company) of the Purchase Price for the Capital Stock (or other shares,
securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax required to be paid by the holder
of the Rights pursuant hereto in cash, or by certified check or bank draft
payable to the order of the Company, the Rights Agent shall, subject to Section
20(k) hereof, (i)(A) promptly requisition from any transfer agent of the
Capital Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Capital Stock to be purchased (and the
Company hereby irrevocably authorizes its transfer agent to comply with all
such requests), or (B) if the Company shall have elected to deposit the total
number of shares of Capital Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of shares of Capital Stock as are
to be purchased (in which case certificates for the shares of Capital Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) and the Company hereby directs the depositary agent to comply
with such request, (ii) when appropriate, requisition from the Company the
amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof, (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder, and (iv) when
appropriate, after receipt, promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate. In the event that the Company
is obligated to issue other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 14
hereof.
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<PAGE> 16
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of
an Acquiring Person, (ii) a transferee of any such Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after such Acquiring
Person becomes such, or (iii) a transferee of any such Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with such Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from such
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Right Certificates or any other Person
as a result of its failure to make any determination with respect to an
Acquiring Person or any of its respective Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder of any Right Certificate upon the
occurrence of any purported transfer or exercise as set forth in this Section 7
unless such registered holder shall have (i) completed and signed the
certificate following the form of assignment or election to purchase set forth
on the reverse side of the Right Certificate surrendered for such assignment or
exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
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<PAGE> 17
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK. (a) The Company
covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued shares of Capital Stock or any authorized and
issued shares of Capital Stock held in its treasury (and will use its best
efforts, following the occurrence of a Section 11(a)(ii) Event, to cause to be
reserved and kept available out of its authorized and unissued shares of other
securities or out of its authorized and issued shares of other securities held
in its treasury), the number of shares of Capital Stock (and, following the
occurrence of a Section 11(a)(ii) Event, other securities) that will be
sufficient to permit the exercise in full of all outstanding Rights.
(b) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Section
11(a)(ii) Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section
11(a)(iii) hereof, or as soon as is required by law following the Distribution
Date, as the case may be, a registration statement under the Securities Act of
1933, as amended (the "Act"), with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities, and
(B) the Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
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<PAGE> 18
The Company may, acting by resolution of its Board of Directors, temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(b), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained.
(c) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Capital Stock (and, following the
occurrence of a Section 11(a)(ii) Event, other securities) delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(d) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Capital Stock (or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or the issuance or delivery of
certificates or depositary receipts for a number of shares of Capital Stock (or
other securities, as the case may be), in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or to issue or deliver any certificates for shares of Capital Stock
(or other securities, as the case may be) or depositary receipts for Capital
Stock upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.
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Section 10. CAPITAL STOCK RECORD DATE. Each person in whose name any
certificate for a number of shares of Capital Stock (or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of shares of Capital Stock (or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Capital Stock (or
other securities, as the case may be) transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares
(fractional and otherwise) on, and such certificate shall be dated, the next
succeeding Business Day on which the Capital Stock (or other securities, as the
case may be) transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Right Certificate, as such, shall
not be entitled to any rights of a stockholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any meetings or other proceedings of the Company, except as provided
herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares, or
fractions thereof, covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.
(a)(i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Capital Stock payable in shares of
Capital Stock, (B) subdivide the outstanding Capital Stock into a greater
number of shares, (C) combine or consolidate the outstanding Capital Stock into
a smaller number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Capital Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), except as otherwise provided in Section
7(e) hereof and this Section 11(a), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of Capital
Stock or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the Purchase Price then in
effect, the aggregate number and kind of shares of Capital Stock or capital
stock, as the case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Capital Stock transfer books of the
Company were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification.
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<PAGE> 20
If an event occurs which would require an adjustment under both Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that any Person, alone
or together with its Affiliates and Associates, shall become an Acquiring
Person, unless the event causing such Person to become an Acquiring Person is a
Section 13 Event or is an acquisition of Capital Stock of the Company pursuant
to a tender or exchange offer for all outstanding Capital Stock of the Company
at a price and on terms determined by at least a majority of the members of the
Board of Directors of the Company who are not Acquiring Persons or
representatives, nominees, Affiliates or Associates of an Acquiring Person (the
"Outside Directors"), after receiving advice from one or more investment
banking firms, to be (A) at a price which is fair to stockholders (taking into
account all factors which such Outside Directors deem relevant, including,
without limitation, prices which could reasonably be achieved if the Company or
its assets were to be sold on an orderly basis designed to realize maximum
value) and (B) otherwise in the best interests of the Company and its
stockholders, then proper provision shall be made so that each holder of a
Right (except as provided below and in Section 7(e) hereof), shall thereafter
have the right to receive, upon exercise thereof following the Distribution
Date at the then current Purchase Price in accordance with the terms of this
Agreement, such number of shares of Capital Stock of the Company as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the
then number of shares of Capital Stock for which a Right was exercisable
immediately prior to the first occurrence of such Section 11(a)(ii) Event,
whether or not such Right was then exercisable, and (y) dividing that product
(which, following such first occurrence, shall thereafter be referred to as the
"Purchase Price" for each Right and for all purposes of this Agreement) by 50%
of the Current Market Price per share of the Capital Stock of the Company
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such Section 11(a)(ii) Event (such number of shares being hereinafter referred
to as the "Adjustment Shares"). The Company shall notify the Rights Agent as
to any Persons who are deemed by the Company to be Acquiring Persons or
Associates, Affiliates or transferees (as described in subparagraphs (ii) and
(iii) of Section 7(e) hereof) of such Persons and shall identify any Rights
pertaining thereto.
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<PAGE> 21
(iii) In lieu of issuing shares of Capital Stock of the Company in
accordance with Section 11(a)(ii) hereof, the Company, acting by resolution of
its Board of Directors (which resolution shall be effective only with the
concurrence of a majority of the Continuing Directors), may (and, in the event
that the number of shares of Capital Stock which are authorized by the
Company's Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit the exercise in full of the Rights in accordance with Section
11(a)(ii) hereof, the Company, acting by resolution of its Board of Directors
(which resolution shall be effective only with the concurrence of a majority of
the Continuing Directors), shall): (A) determine the excess of (1) the value
of the Adjustment Shares issuable upon the exercise of a Right (the "Current
Value"), over (2) the Purchase Price attributable to each Right (such excess,
the "Spread") and (B) with respect to each Right (subject to Section 7(e)
hereof), make adequate provision to substitute for the Adjustment Shares, upon
payment of the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board of
Directors of the Company (with the concurrence of a majority of the Continuing
Directors) has deemed to have the same value as shares of Capital Stock of the
Company (such shares or units of preferred stock hereinafter called "Capital
Stock Equivalents")), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing having an aggregate value equal to the
Current Value, where such aggregate value has been determined by action of the
Board of Directors of the Company (with the concurrence of a majority of the
Continuing Directors) based upon the advice of a nationally recognized
investment banking firm selected by the Board of Directors of the Company which
has theretofore performed no services for the Company or any Subsidiary of the
Company in the past five years; provided, however, if the Company shall not
have made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the first date that the right to redeem the
Rights pursuant to Section 23 hereof, as such date may be amended pursuant to
19
<PAGE> 22
Section 26 hereof, shall expire (the later of (x) and (y) being referred to
herein as the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Capital Stock of the Company
(to the extent available) and then, if necessary, cash, securities and/or
assets, that in the aggregate have a value equal to the Spread. If, after the
occurrence of a Section 11(a)(ii) Event, the number of shares of Capital Stock
that are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof and the Company, acting by resolution
of its Board of Directors (which resolution shall be effective only with the
concurrence of a majority of the Continuing Directors), shall determine in good
faith that it is likely that sufficient additional shares of Capital Stock
could be authorized for issuance upon exercise in full of the Rights, the
thirty (30) day period set forth above may be extended to the extent necessary,
but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in
order that the Company may seek stockholder approval for the authorization of
such additional shares (such period as it may be extended, the "Substitution
Period"). To the extent that the Company determines that some action is to be
taken pursuant to the terms of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall apply uniformly
to all outstanding Rights, and (y) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek such
stockholder approval for the authorization of additional shares and/or to
decide the appropriate form of distribution to be made pursuant to the first
sentence of this Section 11(a)(iii) and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the suspension is no longer in
effect. For purposes of this Section 11(a)(iii), the value of the Capital
Stock shall be the Current Market Price per share of Capital Stock (as
determined pursuant to Section 11(d) hereof) on the date of the first
occurrence of the Section 11(a)(ii) Event, and the per share or per unit value
of any Capital Stock Equivalents shall be deemed to equal the Current Market
Price per share of the Capital Stock of the Company on such date.
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<PAGE> 23
(b) In the event that the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of shares of Capital Stock
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Capital Stock (or shares having the same
rights, privileges and preferences as the shares of Capital Stock ("Equivalent
Capital Stock")) or securities convertible into shares of Capital Stock or
Equivalent Capital Stock at a price per share of Capital Stock or Equivalent
Capital Stock (or having a conversion price per share, if a security
convertible into shares of Capital Stock or Equivalent Capital Stock) less than
the Current Market Price per share of the Capital Stock (as defined in Section
11(d) hereof) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Capital Stock outstanding on such record
date plus the number of additional shares of Capital Stock and/or Equivalent
Capital Stock which the aggregate offering price of the total number of such
shares so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current Market
Price, and the denominator of which shall be the number of shares of Capital
Stock outstanding on such record date plus the number of additional shares of
Capital Stock and/or Equivalent Capital Stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board
of Directors of the Company (with the concurrence of a majority of the
Continuing Directors), whose determination shall be described in a statement
filed with the Rights Agent. Capital Stock owned by or held for the account of
the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or warrants are not
so issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of Capital Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness or assets
(other than a regular periodic cash dividend at a rate not in excess of 125% of
the rate of the last regular periodic cash dividend theretofore paid or a
dividend payable in Capital Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Current Market Price per share of Capital
Stock (as defined in Section 11(d) hereof) on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, with the concurrence of a majority of the Continuing Directors, whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one share of Capital
Stock, and the denominator of which shall be such Current Market Price per
share of Capital Stock. Such adjustments shall be made successively whenever
such a record date is fixed, and in the event that such distribution is not so
made, the Purchase Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
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<PAGE> 24
(d) For the purpose of any computation hereunder, the "Current Market
Price" per share of Capital Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Capital Stock for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the Current
Market Price per share of Capital Stock is determined during a period following
the announcement by the issuer of such Capital Stock of (i) a dividend or
distribution on such Capital Stock payable in shares of such Capital Stock or
securities convertible into such Capital Stock or (ii) any subdivision,
combination or reclassification of such Capital Stock, and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, as the case may be, then, and in each such case, the "Current
Market Price" shall be appropriately adjusted to take into account the
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of Capital Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Capital Stock
are listed or admitted to trading or, if the shares of Capital Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or, if on any such date the shares of Capital Stock are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in shares of
Capital Stock selected by the Company, acting by resolution of the Board of
Directors of the Company (which resolution shall be effective only with the
concurrence of a majority of the Continuing Directors). If on any such date no
market maker is making a market in shares of Capital Stock, the fair value of
such shares on such date as determined in good faith by the Company, acting by
resolution of the Board of Directors of the Company (which resolution shall be
effective only with the concurrence of a majority of the Continuing Directors),
shall be used. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares of Capital Stock are listed or
admitted to trading is open for the transaction of business or, if the shares
of Capital Stock are not listed or admitted to trading on any national
securities exchange but are quoted on NASDAQ, a day on which NASDAQ is in
operation or if the shares of Capital Stock are neither listed or admitted to
trading on any national securities exchange nor quoted on NASDAQ, a Business
Day. If the current per share market price of the Capital Stock cannot be
determined in the manner provided above, or if the Capital Stock is not
publicly held or not so listed or traded, "Current Market Price" per share of
Capital Stock shall mean the fair value per share as determined in good faith
by the Company, acting by resolution of the Board of Directors of the Company
(which resolution shall be effective only with the concurrence of a majority of
the Continuing Directors), whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all purposes.
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<PAGE> 25
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such price; provided, however, that any
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Capital Stock. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section
11 shall be made no later than the earlier of (i) three years from the date of
the transaction which requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Capital Stock, thereafter the Purchase Price and the number of such other
shares so receivable upon exercise of any Right and the number of Rights
outstanding shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Capital Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j),
(k) and (m) and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Capital Stock shall apply on like terms to any such other shares, provided,
however, that the Company shall not be liable for its inability or failure to
reserve and keep available for issuance upon exercise of the Rights pursuant to
Section 11(a)(ii) a number of shares of Capital Stock greater than the number
then authorized by the Certificate of Incorporation of the Company but not
outstanding or reserved for any other purpose.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Capital Stock
purchasable from time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made in Section 11(b) and (c) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of shares of
Capital Stock (calculated to the nearest ten-thousandth of a share of Capital
Stock) obtained by (i) multiplying (A) the number of shares covered by a Right
immediately prior to such adjustment of the Purchase Price by (B) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
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<PAGE> 26
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of shares of Capital Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of shares of Capital
Stock for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and
may bear, at the option of the Company, the adjusted Purchase Price) and shall
be registered in the names of the holders of record of Right Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Capital Stock, or fraction thereof, issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price per share and the number of
shares which were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the shares of Capital Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Capital Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the Capital
Stock and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the Capital Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
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<PAGE> 27
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company, acting by resolution of its Board of Directors (which resolution shall
be effective only with the concurrence of a majority of the Continuing
Directors), shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Capital Stock, any issuance
wholly for cash of any Capital Stock at less than the current market price, any
issuance wholly for cash of Capital Stock or securities which by their terms
are convertible into or exchangeable for Capital Stock, any stock dividends or
any issuance of rights, options or warrants referred to herein above in this
Section 11, hereafter made by the Company to holders of its Capital Stock shall
not be taxable to such shareholders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or in a series of related transactions, assets, cash flow or
earning power aggregating more than 50% of the assets, cash flow or earning
power of the Company and its Subsidiaries (taken as a whole) to any other
Person or Persons (other than the Company and/or any of its Subsidiaries in one
or more transactions each of which complies with Section 11(o) hereof), if (x)
at the time of or immediately after such consolidation, merger or sale there
are any rights, warrants or other instruments or securities outstanding or
agreements in effect that would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale,
the stockholders of the Person who constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken
it is reasonably foreseeable that such action will diminish substantially or
eliminate the benefits intended to be afforded by the Rights.
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<PAGE> 28
(p) Anything in this Agreement to the contrary notwithstanding, in the
event the Company shall at any time after the date of this Agreement and prior
to the Distribution Date (i) declare or pay any dividend on the Capital Stock
of the Company payable in such Capital Stock or (ii) subdivide the outstanding
Capital Stock of the Company into a greater number of shares (by
reclassification or otherwise than by payment of dividends in such Capital
Stock) or (iii) combine or consolidate the outstanding Capital Stock of the
Company into a smaller number of shares, then in any such case, (x) the number
of shares of Capital Stock purchasable after such event upon proper exercise of
each Right shall be determined by multiplying the number of shares of Capital
Stock so purchasable immediately prior to such event by a fraction, the
numerator of which is the number of shares of Capital Stock of the Company
outstanding immediately before such event and the denominator of which is the
number of shares of such Capital Stock outstanding immediately after such event
and (y) action shall be taken such that each share of Capital Stock of the
Company outstanding immediately after such event shall have issued with respect
to it that number of Rights which each share of such Capital Stock outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or
consolidation is effected. If an event occurs which would require an
adjustment under Section 11(a)(ii) hereof and this Section 11(p), the
adjustments provided for in this Section 11(p) shall be in addition and prior
to any adjustment required pursuant to Section 11(a)(ii) hereof.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with the transfer agent for the Capital Stock a
copy of such certificate and (c) mail a brief summary thereof to each holder of
a Right Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Capital Stock) in accordance with Section 25
of this Agreement. Notwithstanding the foregoing sentence, the failure of the
Company to make such certificates or give such notice shall not affect the
validity or the force or effect of the requirement for such adjustment. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained. Any adjustment to be made pursuant to
Sections 11 and 13 hereof shall be effective as of the date of the event giving
rise to such adjustment.
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<PAGE> 29
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER. (a) In the event (a "Section 13 Event") that, following the Stock
Acquisition Time, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof) and the
Company shall not be the surviving or continuing corporation of such merger,
consolidation or combination, (y) any Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof) shall
consolidate with the Company, or merge with and into the Company, and the
Company shall be the surviving or continuing corporation of such merger or
consolidation and, in connection therewith, all or part of the Capital Stock
shall be changed into or exchanged for stock or other securities of the Company
or of any Person or cash or any other property, or (z) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets, cash flow or earning
power aggregating more than 50% of the assets, cash flow or earning power of
the Company and its Subsidiaries (taken as a whole and calculated on the basis
of the Company's most recent regularly prepared financial statement) to any
other Person or Persons (other than the Company or any Subsidiary of the
Company in one or more transactions each of which complies with Section 11(o)
hereof), then, and in each such case (except as provided in Section 13(d)
hereof), proper provision shall be made so that (i) each holder of a Right
(except as otherwise provided in Section 7(e) hereof) shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid, nonassessable and freely tradable shares of
Capital Stock of the Principal Party (as hereinafter defined), not subject to
any liens, encumbrances, rights of call, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (A) multiplying the
then current Purchase Price by the number of shares of Capital Stock for which
a Right was exercisable immediately prior to the first occurrence of a Section
13 Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of shares of Capital
Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and dividing that product (which,
following the first occurrence of a Section 13 Event, shall be referred to as
the "Purchase Price" for each Right and for all purposes of this Agreement) by
(B) 50% of the Current Market Price per share of Capital Stock of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such merger, consolidation, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Capital Stock in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be possible, in
relation to its Capital Stock thereafter deliverable upon the exercise of the
Rights; and (v) the provisions of Section 11(a)(ii) hereof shall be of no
effect following the first occurrence of any Section 13 Event. The Company
shall not consummate any such merger, consolidation, sale or transfer unless
prior thereto the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement containing the provisions required by
this Section 13.
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<PAGE> 30
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a) hereof, the Person that is the issuer
of any securities into which shares of Capital Stock of the Company are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or consolidation;
and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets, cash flow or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Capital Stock of such
Person is not at any time and has not been continuously over the preceding
twelve month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the Capital Stock
of which is and has been so registered, "Principal Party" shall refer to such
other Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Capital Stock of two or more of which
are and have been so registered, "Principal Party" shall refer to whichever of
such Persons is the issuer of the Capital Stock having the greatest aggregate
market value.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of shares of authorized Capital
Stock which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless
prior thereto the Company and such issuer shall have executed and delivered to
the Rights Agent a supplemental agreement containing the provisions set forth
in paragraphs (a) and (b) of this Section 13 and further providing that, as
soon as practicable after the date of any such Section 13 Event, the Principal
Party will:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; and
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
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<PAGE> 31
The provisions of this Section 13 shall similarly apply to successive mergers
or consolidations or sales or other transfers. In the event that a Section 13
Event shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall thereafter
become exercisable in the manner described in Section 13(a) hereof.
(d) Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) hereof if (i) such transaction is consummated with
a Person or Persons who acquired Capital Stock of the Company pursuant to a
tender offer or exchange offer for all outstanding Capital Stock of the Company
which complies with the provisions of Section 11(a)(ii) hereof (or a wholly
owned Subsidiary of any such Person or Persons), (ii) the price per share of
Capital Stock of the Company offered in such transaction is not less than the
price per share of Capital Stock of the Company paid to all holders of Capital
Stock of the Company whose shares were purchased pursuant to such tender offer
or exchange offer and (iii) the form of consideration being offered to the
remaining holders of Capital Stock of the Company pursuant to such transaction
is the same as the form of consideration paid pursuant to such tender offer or
exchange offer. Upon consummation of any such transaction contemplated by this
Section 13(d), all Rights hereunder shall expire.
(e) The Company covenants and agrees that it will not, after the Stock
Acquisition Time, engage in any Section 13 Event if at the time of or after
such event there are any charter or by-law provisions or any rights, warrants
or other instruments outstanding or any other action taken which would diminish
or otherwise eliminate the benefits intended to be afforded by the Rights.
29
<PAGE> 32
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractions of Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a
whole Right. For the purposes of this Section 14(a), the current market value
of a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Rights are listed or admitted to trading or,
if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ
or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Rights (selected by the Company, acting by resolution of its Board of
Directors, which resolution shall be effective only with the concurrence of a
majority of the Continuing Directors). If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such
date as determined in good faith by the Company, acting by resolution of its
Board of Directors (which resolution shall be effective only with the
concurrence of a majority of the Continuing Directors), shall be used.
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(b) The Company shall not be required to issue fractions of shares of
Capital Stock or Capital Stock Equivalents upon exercise of the Rights or to
distribute certificates which evidence fractional shares. In lieu of
fractional shares, the Company may pay to the registered holders of Right
Certificates at the time such Right Certificates are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one share of Capital Stock or Capital Stock Equivalent. For purposes
of this Section 14(b), the current market value of a share of Capital Stock or
Capital Stock Equivalent shall be the closing price of a share of Capital Stock
(as determined pursuant to the second sentence of Section 11(d)(ii) hereof) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, except the rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
Capital Stock); and any registered holder of any Right Certificate (or, prior
to the Distribution Date, of Capital Stock), without the consent of the Rights
Agent or of any holder of any other Right Certificate (or, prior to the
Distribution Date, of Capital Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations hereunder, and injunctive relief against actual
or threatened violations of the obligations of any Person subject to this
Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right by
accepting such Right consents and agrees with the Company and with every other
holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the certificates for shares of Capital Stock registered in the name of the
holders of such shares (which certificates for shares of Capital Stock
shall also constitute certificates for Rights) and each Right will be
transferable only in connection with the transfer of Capital Stock;
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(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied
by a proper instrument of transfer and with the appropriate forms and
certificates duly completed and fully executed;
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Capital Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Right Certificates or the associated Capital
Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary
or permanent injunction or other order, decree or ruling issued by a court
of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as
possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder,
as such, of any Right or Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of a share of Capital Stock
or any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
or Right Certificate, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 24 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
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Section 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or expense, incurred
without negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Right Certificate or
certificate for Capital Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. (a)
Any corporation into which the Rights Agent or any successor Rights Agent may
be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, however, that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21
hereof. The purchase of all or substantially all of the Rights Agent's assets
employed in the performance of transfer agent activities shall be deemed a
merger or consolidation for purposes of this Section 19. In case at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Right Certificates so
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
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(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in
its changed name; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of an Acquiring Person and the
determination of the Current Market Price per share of Capital Stock) be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the
Board, the President, any Vice President, the Treasurer or the Secretary of
the Company and delivered to the Rights Agent; and such certificate shall
be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except as to its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Company only.
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(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under
the provisions of Section 11 or 13 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after
actual notice of any such adjustment), nor shall it be responsible for any
determination by the Board of Directors of the Company (with the
concurrence of a majority of the Continuing Directors) of the Current
Market Price of the Rights or Capital Stock, nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Capital Stock or other
securities to be issued pursuant to this Agreement or any Right Certificate
or as to whether any shares of Capital Stock or other securities will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
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(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Company or for
any other legal entity, except it may not act for an Acquiring Person in an
investment banking capacity, or otherwise assist an Acquiring Person in
ways hostile to the Company, without the consent of the Company.
(i) The Rights Agent may execute and exercise any of the rights and
powers hereby vested in it or perform any duty hereunder either itself or
by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, omission, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
or to holders of the Rights resulting from any such act, omission, default,
neglect or misconduct, provided reasonable care was exercised in the
selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is
not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting
with the Company.
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Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to the transfer agent
of the Capital Stock by registered, certified or express mail, and to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to the transfer agent of the Capital Stock by registered, certified or express
mail, and to the holders of the Right Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of 30 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his
Right Certificate for inspection by the Company), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation organized
and doing business under the laws of the United States or of any state of the
United States, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $100
million. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and the transfer
agent of the Capital Stock, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
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Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by resolution of its Board of Directors (which resolution
shall, if adopted after the Stock Acquisition Time, be effective only with the
concurrence of a majority of the Continuing Directors), to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of Capital Stock following
the Distribution Date and prior to the redemption or expiration of the Rights,
the Company (a) shall, with respect to shares of Capital Stock so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities, notes
or debentures hereinafter issued by the Company, and (b) may, in any other
case, if deemed necessary or appropriate by the Board of Directors of the
Company (with the concurrence of a majority of the Continuing Directors), issue
Right Certificates representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) no such Right
Certificates shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Right Certificates would be issued, and (ii) no such Right Certificates shall
be issued if, and to the extent that, appropriate adjustment shall otherwise
have been made in lieu of the issuance thereof.
Section 23. REDEMPTION. (a) The Company may, by resolution of its Board
of Directors, at its option, at any time prior to the earlier of (x) the Stock
Acquisition Time or (y) the Close of Business on the Final Expiration Date,
redeem all but not less than all of the then outstanding Rights at a redemption
price of $0.01 per Right (payable in cash, shares of Capital Stock (based on
the Current Market Price of the Capital Stock at the time of redemption) or any
other form of consideration deemed appropriate by the Board of Directors of the
Company), appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price
being hereinafter referred to as the "Redemption Price").
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(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights (or at such time subsequent to such
action as the Board of Directors may determine), and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the holders of the then outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Capital Stock. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase any
Rights at any time in any manner other than that specifically set forth in this
Section 23, and other than in connection with the repurchase of Capital Stock
of the Company prior to the Distribution Date.
Section 23A. EXCHANGE. (a) The Board of Directors of the Company may, at
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section
7(e)) for Capital Stock at an exchange ratio of one share of Capital Stock per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any wholly owned
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Capital Stock as a fiduciary for or pursuant
to the terms of any such employee benefit plan), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Capital Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to paragraph (a) of this Section
23A, evidence of which shall have been filed with the Rights Agent, and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Capital Stock equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company shall promptly mail a notice of any
such exchange to all of the holders of such Rights at their last addresses as
they appear upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the Capital Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 7(e) hereof) held by each holder of Rights.
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(c) In any exchange pursuant to this Section 23A, the Company, at its
option, may substitute shares of Capital Stock Equivalents for some or all of
the shares of Capital Stock exchangeable for Rights.
(d) In the event that there shall not be sufficient shares of Capital Stock
(or Capital Stock Equivalents) issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 23A, the Company shall take all such action as may be necessary to
authorize additional shares of Capital Stock (or Capital Stock Equivalents) for
issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of Capital Stock
or to distribute certificates which evidence fractional Capital Stock. In lieu
of such fractional shares, the Company shall pay to the registered holders of
the Right Certificates with regard to which such fractional shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of a whole share of Capital Stock. For the purposes of
this paragraph (e), the current market value of a whole share of Capital Stock
shall be the closing price of a share of Capital Stock (as determined pursuant
to the second sentence of Section 11(d) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 23A.
Section 24. NOTICE OF CERTAIN EVENTS. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Capital Stock or to make any other distribution to the holders of its
Capital Stock (other than a regular quarterly dividend out of earnings on
retained earnings of the Company at a rate not in excess of 125% of the rate of
the last regular quarterly cash dividend theretofore paid), or (ii) to offer to
the holders of Capital Stock options, rights or warrants to subscribe for or to
purchase any additional Capital Stock or shares of stock of any class or any
other securities, rights or options, or (iii) to effect any reclassification of
the Capital Stock (other than a reclassification involving only the subdivision
of outstanding shares of Capital Stock), or (iv) to effect any merger,
consolidation or other combination into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets,
cash flow or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, or (v) to effect the liquidation, 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 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, merger, consolidation, combination, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of Capital Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered
by clause (i) or (ii) above at least twenty days prior to the record date for
determining holders of Capital Stock for purposes of such action, and in the
case of any such other action, at least twenty days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Capital Stock, whichever shall be the earlier. The failure to give
notice 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.
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(b) In case any of the events set forth in Section 11(a)(ii) or Section
13(a) of this Agreement shall occur, then, in any such case, (i) the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate, to the extent feasible and in accordance with Section 25 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13(a) hereof, and (ii) all references in Section 24(a) hereof to
Capital Stock shall be deemed thereafter to refer also to Capital Stock or
other securities issuable in respect of the Rights.
Section 25. NOTICES. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Quaker State Corporation
Xerox Center
222 West Las Colinas Boulevard
Suite 1750
Irving, Texas 75039
Attention: Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
Mellon Securities Trust Company
85 Challenger Road
Overpeck Center
Ridgefield Park, New Jersey 07660
Attention: Manager, Reorg. Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Capital Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such Right holder (or, if prior
to the Distribution Date, to such holder of Capital Stock) at the address of
such holder as shown on the registry books of the Company.
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Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Stock Acquisition
Time and subject to the penultimate sentence of this Section 26, the Company
may, by resolution of its Board of Directors, and the Rights Agent shall, if
the Company so directs, supplement or amend any provision of this Agreement in
any respect whatsoever (including, without limitation, any extension of the
period in which the Rights may be redeemed) without the approval of any holders
of certificates representing shares of Capital Stock of the Company. From and
after the Stock Acquisition Time and subject to the penultimate sentence of
this Section 26, without the approval of any holders of certificates
representing shares of Capital Stock of the Company or of Right Certificates,
the Company may, by resolution of its Board of Directors (which resolution
shall be effective only with the concurrence of a majority of the Continuing
Directors, and only if the Continuing Directors constitute a majority of the
number of directors then in office), and the Rights Agent shall, if the Company
so directs, supplement or amend this Agreement in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder or (iv) to change or supplement
or make any other provisions in any manner which the Company may deem necessary
or desirable, which shall not adversely affect the interests of, or diminish
substantially or eliminate the benefits intended to be afforded by the Rights
to, the holders of Right Certificates (other than an Acquiring Person or an
Affiliate or Associate of any such Person); provided, however, that this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be
redeemed or to modify the ability (or inability) of the Board of Directors of
the Company to redeem the Rights, in either case at such time as the Rights are
not then redeemable or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of or the
benefits to the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of any such Person). Upon the delivery of a certificate
from an appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26, the
Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or
amendment shall be made which changes the Redemption Price, the Final
Expiration Date, the Purchase Price or the number of shares of Capital Stock
for which a Right is exercisable. Prior to the Stock Acquisition Time, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Capital Stock.
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.
42
<PAGE> 45
Section 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC. For
all purposes of this Agreement, any calculation of the number of shares of
Capital Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Capital
Stock of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of the Company
(with, where specifically provided for herein, the concurrence of the
Continuing Directors or the Outside Directors) shall have the exclusive power,
authority and discretion to administer this Agreement and to exercise all
rights and powers specifically granted to such Board of Directors (with, where
specifically provided for herein, the concurrence of the Continuing Directors
or the Outside Directors), or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, but not limited to, a determination to redeem or not
redeem the Rights, to amend the Agreement or to find or to announce publicly
that any Person has become an Acquiring Person). All such actions,
calculations, interpretations and determinations (including, for purposes of
clauses (i) and (iii) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of the Continuing Directors
or the Outside Directors), the Outside Directors or the Company (i) shall be
within the discretion of the Board of Directors or the Outside Directors, (ii)
shall be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Right Certificates and all other parties, and (iii) shall not
subject the Board of Directors of the Company, the Continuing Directors or the
Outside Directors to any liability to the holders of the Rights and Right
Certificates.
Section 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the
Distribution Date, registered holders of the Capital Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, registered holders of the Capital Stock).
43
<PAGE> 46
Section 30. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated,
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company (with the concurrence of a majority of the Continuing
Directors) determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or effect of
this Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board of
Directors. Without limiting the foregoing, if any provision of this Agreement
requiring that a determination be made by the Board of Directors with the
concurrence of a majority of the Continuing Directors or Outside Directors or
by the Outside Directors is held by a court of competent jurisdiction or other
authority to be invalid, void, or unenforceable, such determination shall then
be made by the Board of Directors in accordance with applicable law and the
Company's certificate of incorporation and by-laws.
Section 31. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
44
<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
QUAKER STATE CORPORATION
By /s/ CONRAD A. CONRAD
-------------------------
Conrad A. Conrad
Vice Chairman and Chief
Financial Officer
MELLON SECURITIES TRUST COMPANY
By /s/ JAMES D. ARAMANDA
-------------------------
James D. Aramanda
President and Chief Executive
Officer
45
<PAGE> 48
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER SEPTEMBER 28, 2005 OR EARLIER IF THE BOARD OF DIRECTORS
ORDERS THE REDEMPTION OR EXCHANGE OF THE RIGHTS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE, AND SHALL BE VOID
SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE
QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER,
OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE
OBTAINABLE. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF SUCH AGREEMENT.]1
Rights Certificate
QUAKER STATE 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 September 28, 1995 (the "Rights Agreement"), between
Quaker State Corporation, a Delaware corporation (the "Company"), and Mellon
Securities Trust Company, a New York trust company (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (New York, New York
time) on September 28, 2005, at the principal office of the Rights Agent, or
its successors as Rights Agent, one fully paid nonassessable share of Capital
Stock, par value $1.00 per share of the Company (the "Capital Stock"), at a
purchase price of $50 per share of Capital Stock (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase and the Certificate contained therein duly executed. The number of
Rights evidenced by this Right Certificate (and the number of shares of Capital
Stock which may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share of Capital Stock set forth above, are the number and
Purchase Price as of October 18, 1995, based on the shares of Capital Stock as
constituted at such date.
__________________
1. The portion of the legend in brackets shall be inserted only
if applicable and shall replace the preceding sentence.
<PAGE> 49
From and after the first occurrence of a Section 11(a)(ii) Event (as defined
in the Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), (ii) a transferee
of any such Acquiring Person (or of any Associate or Affiliate thereof) who
becomes a transferee after such Acquiring Person (or any Associate or Affiliate
thereof) becomes such or (iii) under certain circumstances specified in the
Rights Agreement, a transferee of such Acquiring Person (or of any Associate or
Affiliate thereof) who becomes a transferee prior to or concurrently with such
Acquiring Person becoming such, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11(a)(ii) Event.
The Rights evidenced by this Right Certificate shall not be exercisable, and
shall be void so long as held, by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Capital Stock or the number and kind of other securities which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain
events, including Section 11(a)(ii) Events and Section 13 Events (as defined in
the Rights Agreement).
2
<PAGE> 50
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, as it may be amended from time to time,
which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Right Certificates, which limitations of rights include
the temporary suspension of the exercisability of such Rights under the
specific circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the principal executive offices of the Company and the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Capital Stock as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
3
<PAGE> 51
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Right Certificate may be redeemed by the Company at a redemption price of
$.01 per Right at any time prior to the earlier of (i) the Stock Acquisition
Time (as defined in the Rights Agreement) and (ii) the close of business on the
Expiration Date (as defined in the Rights Agreement). Subject to the
provisions of the Rights Agreement, the rights evidenced by this Right
Certificate may be exchanged in whole or part for shares of Capital Stock (or
any other substantially similar equity security of the Company).
No fractional shares of Capital Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company in any respect whatsoever up until the Stock
Acquisition Time and thereafter in certain respects which do not adversely
affect the interests of holders of Right Certificates (other than an Acquiring
Person or the Affiliates or Associates thereof).
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Capital Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
4
<PAGE> 52
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of __________, ____.
ATTEST: QUAKER STATE CORPORATION
_________________________ By_________________________
Secretary Title:
Countersigned:
Mellon Securities Trust Company
By_______________________
Authorized Signatory
5
<PAGE> 53
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ________________________________________________________
hereby sells, assigns and transfers unto _________________________________
___________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the within Right Certificate on the books of the
within named Company, with full power of substitution.
Dated:_____________, ____
__________________________
Signature
Signatures Guaranteed:
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
___________________________
Signature
6
<PAGE> 54
NOTICE
------
The signature to the foregoing Assignment must correspond to the name as
written upon the face of this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
7
<PAGE> 55
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate.)
To Quaker State Corporation:
The undersigned hereby irrevocably elects to exercise _______________ Rights
represented by this Right Certificate to purchase the shares of Capital Stock
issuable upon the exercise of such Rights and requests that certificates for
such shares be issued in the name of:
Please insert social security or other identifying number
____________________________________________________________________________
(Please print name and address)
____________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
____________________________________________________________________________
(Please print name and address)
____________________________________________________________________________
Dated:__________________, ____
8
<PAGE> 56
[Form of Election to Purchase -- continued]
__________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Right Certificate.)
Signature Guaranteed:
____________________________________________________________________________
(To be completed if applicable)
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
__________________________
Signature
______________________________________________________________________________
NOTICE
------
In the event the certification set forth above in the Forms of
Assignment and Election is not completed, the Company will deem the beneficial
owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and, in the case of an Assignment, will affix a legend to that effect on any
Right Certificates issued in exchange for this Rights Certificate.
9
<PAGE> 57
EXHIBIT B
QUAKER STATE CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
CAPITAL STOCK
On September 28, 1995, the Board of Directors of Quaker State Corporation
(the "Company") declared a dividend distribution of one Capital Stock Purchase
Right (a "Right") for each outstanding share of Capital Stock, par value $1.00
per share, of the Company (the "Capital Stock"). The following is a summary of
the terms of the Rights.
Each Right entitles the registered holder to purchase from the Company one
share of Capital Stock at a price of $50 per share of Capital Stock, subject to
adjustment (the "Purchase Price"). The description and terms of the Rights are
set forth in a Rights Agreement, dated as of September 28, 1995 (the "Rights
Agreement"), between the Company and Mellon Securities Trust Company, as Rights
Agent (the "Rights Agent").
Initially, the Rights will be attached to all Capital Stock certificates
representing shares then outstanding, and no separate certificates representing
the Rights ("Right Certificates") will be distributed. The Rights will
separate from the Capital Stock and a "Distribution Date" will occur upon the
earlier to occur of (i) ten business days following the time (the "Stock
Acquisition Time") of a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") acquired, or obtained
the right to acquire, beneficial ownership of 15% or more of the outstanding
Capital Stock of the Company and (ii) ten business days (or, if determined by
the Board of Directors (with the concurrence of a majority of the Continuing
Directors (as hereinafter defined)), a specified or unspecified later date)
following the commencement or announcement of an intention to make a tender
offer or exchange offer which, if successful, would cause the bidder to own 15%
of more of the outstanding Capital Stock.
The Rights Agreement provides that, until the Distribution Date, (i) the
Rights will be transferred with and only with the Capital Stock, (ii) new
Capital Stock certificates issued after October 18, 1995, upon transfer or new
issuance of the Capital Stock, will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any of the
Capital Stock certificates outstanding will also constitute the transfer of the
Rights associated with the shares of Capital Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
Right Certificates will be mailed to holders of record of the Capital Stock as
of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights. Except as otherwise determined by
the Board of Directors, only shares of Capital Stock issued prior to the
Distribution Date will be issued with Rights.
<PAGE> 58
The Rights are not exercisable until the Distribution Date. The Rights will
expire on September 28, 2005, unless earlier redeemed or exchanged by the
Company as described below.
In the event that, after the Stock Acquisition Time, the Company is acquired
in a merger or other business combination transaction (except certain
transactions with a person who became an Acquiring Person as a result of a
tender offer described in the next succeeding paragraph) or 50% or more of its
assets, cash flow or earning power is sold, proper provision shall be made so
that each holder of a Right shall thereafter have the right to receive, upon
the exercise thereof at the then current exercise price of the Right, that
number of shares of common stock of the acquiring company which at the time of
such transaction would have a market value (as defined in the Rights Agreement)
of two times the Purchase Price of the Right. In the event that, after the
Stock Acquisition Time, the Company were the surviving corporation of a merger
and its Capital Stock were changed or exchanged, proper provision shall be made
so that each holder of a Right will thereafter have the right to receive upon
exercise that number of shares of Capital Stock of the Company having a market
value of two times the exercise price of the Right.
In the event that a person or group becomes an Acquiring Person (except
pursuant to a tender offer for all outstanding shares of Capital Stock
determined to be at a fair price and otherwise in the best interests of the
Company and its stockholders by a majority of the Outside Directors), proper
provision shall be made so that each holder of a Right (other than the
Acquiring Person) will thereafter have the right to receive upon exercise that
number of shares of Capital Stock (or, in certain circumstances, cash, a
reduction in the Purchase Price, other equity securities of the Company, debt
securities of the Company, other property or a combination thereof) having a
market value (as defined in the Rights Agreement) of two times the Purchase
Price of the Right. Notwithstanding any of the foregoing, following the
occurrence of any of the events set forth in this paragraph, all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person (or an affiliate, associate or
transferee thereof) will be null and void. A person will not be an Acquiring
Person if the Board of Directors of the Company determines that such person or
group became an Acquiring Person inadvertently and such person or group
promptly divests itself of a sufficient number of shares of Capital Stock so
that such person or group is no longer an Acquiring Person.
2
<PAGE> 59
The Purchase Price payable, and the number of shares of Capital Stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Capital
Stock, (ii) upon the grant to holders of Capital Stock of certain rights or
warrants to subscribe for Capital Stock or convertible securities at less than
the current market price of Capital Stock or (iii) upon the distribution to
holders of Capital Stock of evidences of indebtedness or assets (excluding
regular periodic cash dividends or dividends payable in Capital Stock) or of
subscription rights or warrants (other than those referred to above). The
number of Rights and number of shares of Capital Stock issuable upon the
exercise of each Right are also subject to adjustment in the event of a stock
split, combination or stock dividend on the Capital Stock.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Capital Stock will be issued and,
in lieu thereof, an adjustment in cash will be made based on the market price
of the Capital Stock on the last trading date prior to the date of exercise.
At any time prior to the earlier of the Stock Acquisition Time and the
Expiration Date (as defined in the Rights Agreement), the Board of Directors
may redeem the Rights in whole, but not in part, at a price of $.01 per Right
(the "Redemption Price"). Immediately upon the action of the Board of
Directors ordering redemption of the Rights (or at such time subsequent to such
action as the Board of Directors may determine), the Rights will terminate and
the only right of the holders of Rights will be to receive the $.01 Redemption
Price.
At any time after a person becomes an Acquiring Person and prior to the
acquisition by such Person of 50% or more of the outstanding shares of Capital
Stock, the Board of Directors of the Company may exchange the Rights (other
than Rights beneficially owned by such Person which have become void), in whole
or part, at an exchange ratio of one share of Capital Stock per Right (subject
to adjustment). The Company, at its option, may substitute one share of a
substantially similar equity security of the Company for each share of Capital
Stock to be exchanged.
3
<PAGE> 60
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the Company, other than rights resulting from such holder's
ownership of shares of Capital Stock, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Capital Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
Other than those provisions relating to the principal economic terms of the
Rights, any of the provisions of the Rights Agreement may be amended by the
Board of Directors prior to the Stock Acquisition Time. After such time, the
provisions of the Rights Agreement may be amended by the Board of Directors
(only with the concurrence of a majority of the Continuing Directors) in order
to cure any ambiguity, to correct or supplement defective or inconsistent
provisions, to shorten or lengthen any time period under the Rights Agreement,
to make changes which do not adversely affect the interests of the holders of
Rights (excluding the interests of any Acquiring Person) or to shorten or
lengthen any time period under the Rights Agreement; provided, however, that no
amendment to adjust the time period governing redemption shall be made at such
time as the Rights are not redeemable.
The term "Continuing Director" means (i) any member of the Board of
Directors of the Company who was a member of the Board prior to the Stock
Acquisition Time, and (ii) any person who is subsequently elected to the Board,
if such person is recommended or approved by a majority of the Continuing
Directors then on the Board of Directors, and such person is not an Acquiring
Person or an affiliate, associate, representative or nominee of an Acquiring
Person.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated ______
__, 1995. Copies of the Rights Agreement are available free of charge from the
Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
as it may be amended from time to time, which is hereby incorporated herein by
reference.
4
