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
Smith Corona Corporation
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(Exact name of registrant as specified in its charter)
Delaware 51-0286862
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(State of incorporation I.R.S. Employer
or organization) Identification No.)
P.O. Box 2090, 839 Route 13 South, Cortland, New York 13045-0990
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
None
If this Form relates to the If this Form relates to the
registration of a class of registration of a class of
debt securities and is debt securities and is to
effective upon filing become effective
pursuant to General simultaneously with the
Instruction A(c)(1), please effectiveness of a concurrent
check the following box |_| registration statement under
the Securities Act of 1933
pursuant to General
Instruction A(c)(2), please
check the following box |_|
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value per share
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(Title of class)
Warrants to purchase Common Stock
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(Title of class)
Rights to purchase Preferred Stock, Series A
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(Title of class)
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Item 1. Description of Registrant's Securities to be Registered.
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A. Description of NewSCC Securities
Pursuant to the Debtors' Third Amended Second Joint Plan of
Reorganization under Chapter 11 of the United States Bankruptcy Code, as amended
(the "Plan"), as of the Effective Date (as hereinafter defined), Smith Corona
Corporation ("SCC" or, after the Effective Date, "NewSCC") will issue shares of
common stock, $.001 par value per share ("NewSCC Common Stock"), and warrants to
purchase NewSCC Common Stock (the "NewSCC Warrants"), each such NewSCC Warrant
representing the right to purchase one share of NewSCC Common Stock. The
following summarizes the material provisions of the NewSCC Common Stock, the
NewSCC Warrants, the Restated Certificate of Incorporation and the By-Laws of
NewSCC which will be adopted pursuant to the Plan, and the Rights Agreement
between NewSCC and the Rights Agent to be designated thereunder (the "Rights
Agreement"), to be entered into pursuant to the Plan. These statements do not
purport to be complete and are qualified in their entirety by reference to the
full text of, and are subject to the detailed provisions of, the Warrant
Agreement between NewSCC and the Warrant Agent to be designated thereunder
(including the form of Warrant) (the "NewSCC Warrant Agreement"), the Rights
Agreement and the Restated Certificate of Incorporation and By-Laws of NewSCC,
each of which is filed herewith as an exhibit. "Effective Date" means the last
to occur of (i) such date as SCC and certain of its subsidiaries which are
parties to the Plan (collectively, the "Debtors") (with the consent of the
Official Committee of Unsecured Creditors) shall, by a written instrument or
instruments filed from time to time with the unit of the United States District
Court for the District of Delaware having jurisdiction over the cases under
Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in
which the Debtors are the debtors (the "Bankruptcy Court"), have most recently
designated as the Effective Date, and (ii) the business day on which all of the
conditions precedent to the effectiveness of the Plan shall have been satisfied.
1. Description of NewSCC Common Stock
The NewSCC Common Stock will be issued to holders of allowed
claims in Class 8 of the Plan ("Allowed General Unsecured Claims"). In addition,
following the Effective Date, NewSCC shall (a) implement an employee stock
incentive or other similar plan, which shall provide for the issuance of up to
ten percent (10%) of the total shares of NewSCC Common Stock (or options to
acquire such shares) which are issued pursuant to the Plan, determined on a
fully-diluted basis, not including the effect of the exercise of any of the
NewSCC Warrants, and (b) be authorized to award to any person employed by NewSCC
following the date the Bankruptcy Court confirms the Plan (the "Confirmation
Date") in the position of Chief Executive Officer, Chief Financial Officer
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or Senior Vice President/Marketing, NewSCC Common Stock or options to purchase
NewSCC Common Stock up to an aggregate amount of five percent (5%) of the total
shares of NewSCC Common Stock which are issued pursuant to the Plan, determined
on a fully-diluted basis, not including the effect of the exercise of any of the
NewSCC Warrants. Rights to the shares granted under (a) and (b) above shall not
vest prior to the second anniversary of the Effective Date with the exception
that, prior to the second anniversary of the Effective Date, rights to such
shares shall vest upon a change of control of NewSCC. A change in control shall
mean (i) a stock purchase by any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) who then
owns or by virtue of such purchase becomes the beneficial owner of, directly or
indirectly, voting securities of NewSCC representing 51% or more of the combined
voting power of NewSCC's then outstanding voting securities or (ii) any change
in the composition of NewSCC's Board of Directors in any one year which involves
a majority of such directors and which is not recommended by the Board.
On the Effective Date, NewSCC's Certificate of Incorporation
and By-Laws will be amended and restated. The Restated Certificate of
Incorporation will authorize (i) 100,000,000 shares of NewSCC Common Stock and
(ii) 10,000,000 shares of preferred stock. Giving effect to the Plan, including
the distributions and other transactions contemplated by the Plan, an estimated
4,000,000 shares of NewSCC Common Stock will be issued pursuant to the Plan (not
including NewSCC Common Stock that may be issued upon the exercise of NewSCC
Warrants and not including any NewSCC Common Stock which may be issued as a
result of successful prosecutions of actions to avoid a transfer of property or
to recover property pursuant to ss.ss. 542, 543, 544, 545, 546, 547, 548, 549 or
550 of the Bankruptcy Code). The Restated Certificate of Incorporation will
provide, to the extent required by section 1123 of the Bankruptcy Code, that
NewSCC will not issue non-voting equity securities.
The terms and conditions of the NewSCC Common Stock will be
governed by the laws of the State of Delaware as well as by the Restated
Certificate of Incorporation and By-Laws. See "--Corporate Governance" below.
a. Dividends
Holders of NewSCC Common Stock will be entitled to participate
equally in such dividends as may be declared by the Board of Directors out of
funds legally available therefor. It is not anticipated, however, that NewSCC
will pay any dividends on NewSCC Common Stock in the foreseeable future. It is
expected that NewSCC's financing arrangements which will be in effect after the
Effective Date will prohibit payment of dividends with respect to the NewSCC
Common Stock, other than the distribution of Rights (as hereinafter defined)
pursuant to the Rights Agreement.
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b. Restriction on Transfer of Shares
The terms of the Restated Certificate of Incorporation of
NewSCC will include certain stock transfer restrictions intended to preserve the
net operating loss ("NOL") carryforwards of SCC and its subsidiaries and certain
other tax attributes; provided, however, if NewSCC either does not qualify for
the exception provided in section 382(l)(5) (the "Bankruptcy Exception") of the
Internal Revenue Code of 1986, as amended (the "Tax Code"), or chooses to make
an election under section 382(1)(5)(H) of the Tax Code (or the applicable
provision then in effect) not to have the provisions of the Bankruptcy Exception
apply to the ownership change occurring pursuant to the Plan, such stock
transfer restrictions shall be deemed to lapse and shall have no further force
or effect as of the earlier of the date NewSCC is aware that it is not eligible
for the Bankruptcy Exception and the date of such election under section
382(1)(5)(H) of the Tax Code (the "Restriction Lapse Date"). As set forth in the
Restated Certificate of Incorporation of NewSCC, such terms shall provide that
for the period from the Effective Date until the earlier of (A) two (2) years
after the end of the fiscal year of the Debtors that includes the Effective
Date, or (B), if applicable, the Restriction Lapse Date, (i) any attempted sale,
transfer, assignment, conveyance, grant, pledge, gift or other disposition of
any share or shares of stock of NewSCC (within the meaning of section 382 of the
Tax Code) or any option or right to purchase such stock, as defined in the
Treasury regulations (the "Treasury Regulations") promulgated and proposed under
section 382 of the Tax Code, to any person or entity (or group of persons or
entities acting in concert), or any attempted exercise of the aforementioned
option or right to purchase such stock by any person or entity (or group of
persons or entities acting in concert), who either directly or indirectly owns
or would be treated as owning, or whose shares are or would be attributed to any
person or entity who directly or indirectly owns or would be treated as owning,
in either case prior to the purported transfer or exercise and after giving
effect to the applicable attribution rules of the Tax Code and applicable
Treasury Regulations, 5-percent or more of the value of the outstanding capital
stock of NewSCC or otherwise treated as a 5-percent (5%) shareholder (within the
meaning of section 382 of the Tax Code), regardless of the percent or the value
of the stock owned, shall be void ab initio insofar as it purports to transfer
ownership or rights in respect of such stock to the purported transferee and
(ii) any attempted sale, transfer, assignment, conveyance, grant, gift, pledge
or other disposition of any share of stock of NewSCC (within the meaning of
section 382 of the Tax Code) or any option or right to purchase such stock, as
defined in the Treasury Regulations under section 382 of the Tax Code, to any
person or entity (or group of persons or entities acting in concert) or any
attempted exercise of the aforementioned option or right to purchase such stock
by any person or entity (or group of persons or entities acting in concert) not
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described in clause (i) who directly or indirectly would own, or whose shares
would be attributed to any person or entity who directly or indirectly would
own, in each case as a result of the purported transfer or exercise and after
giving effect to the applicable attribution rules of the Tax Code and applicable
Treasury Regulations, 5-percent or more of the value of any of the stock of
NewSCC (or otherwise treated as a 5- percent shareholder within the meaning of
section 382 of the Tax Code), shall, as to that number of shares causing such
person or entity to be a 5-percent shareholder, be void ab initio insofar as it
purports to transfer ownership or rights in respect of such stock to the
purported transferee. However, neither of these restrictions shall prevent a
valid transfer or exercise if (A) the transferor or exercisor, as the case may
be, obtains the written approval of the Board of Directors of NewSCC and
provides NewSCC with an opinion of counsel satisfactory to NewSCC that,
assuming, as of the date of such opinion, the full exercise of all warrants
issued by and any options granted pursuant to any stock option plan of NewSCC,
the transfer or exercise shall not result in the application of any tax law
limitation on the use of NewSCC's NOL carryforwards or other tax attributes or
(B) a tender offer, within the meaning of the Securities Exchange Act of 1934,
as amended, and pursuant to the rules and regulations thereof, is made by a bona
fide third party purchaser to purchase at least sixty-six and two-thirds percent
(66 2/3%) of the issued and outstanding NewSCC Common Stock and the offeror (i)
agrees to effect, within ninety (90) days of the consummation of the tender
offer, a back-end merger in which all non-tendering stockholders would receive
the same consideration as paid in the tender offer, and (ii) has received the
tender of sufficient shares to effect such merger.
In the absence of special approval by the Board of Directors
of NewSCC, a purported transfer or exercise of shares in excess of the shares
that can be transferred or exercised pursuant to this restriction (the
"Prohibited Shares") to the purported acquiror (the "Purported Acquiror") is not
effective to transfer ownership of such Prohibited Shares. On demand by NewSCC,
which demand must be made within thirty (30) days of the time NewSCC learns of
the transfer or exercise of the Prohibited Shares, a Purported Acquiror must
transfer any certificate or other evidence of ownership of the Prohibited Shares
within the Purported Acquiror's possession or control, together with any
dividends or other distributions ("Distributions") that were received by the
Purported Acquiror from NewSCC with respect to the Prohibited Shares, to an
agent designated by NewSCC (the "Agent"). The Agent will sell the Prohibited
Shares in an arm's length transaction (over a stock exchange, if possible), and
the Purported Acquiror will receive an amount of sales proceeds not in excess of
the price paid or consideration surrendered by the Purported Acquiror for the
Prohibited Shares (or the fair market value of the Prohibited Shares at the time
of an attempted transfer to the Purported Acquiror by gift, inheritance, or a
similar transfer). If the Purported Acquiror has sold the Prohibited Shares
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prior to receiving NewSCC's demand to surrender the Prohibited Shares to the
Agent, the Purported Acquiror shall be deemed to have sold the Prohibited Shares
as an agent for the initial transferor, or, in the case where the Prohibited
Shares are acquired pursuant to the exercise of an option or right to purchase
stock of NewSCC, for NewSCC, and shall be required to transfer to the Agent all
proceeds of such sale and any Distributions.
In the case of an attempted exercise of an option or a right
to purchase stock of NewSCC, the Agent will pay to NewSCC any sales proceeds in
excess of those due to the Purported Acquiror, together with any distributions
received by the Agent. In all other cases, if the initial transferor can be
identified, the Agent will pay to it any sales proceeds in excess of those due
to the Purported Acquiror, together with any Distributions received by the
Agent. If the initial transferor cannot be identified within ninety (90) days of
receipt of such sales proceeds, if any, the Agent may pay any such amounts to a
charity of its choosing. In no event shall amounts paid to the Agent inure to
the benefit of NewSCC (except as set forth in the first sentence of this
paragraph) or the Agent, but such amounts may be used to cover expenses of the
Agent in attempting to identify the initial transferor.
If the Purported Acquiror fails to surrender the Prohibited
Shares within the next thirty (30) business days from the demand by NewSCC, then
NewSCC may institute legal proceedings to compel the surrender. NewSCC shall be
entitled to damages, including reasonable attorneys' fees and costs, from the
Purported Acquiror, on account of such purported transfer.
Certificates evidencing the NewSCC Common Stock will bear a
legend to the effect that it is subject to the above restrictions.
2. The NewSCC Warrants
The NewSCC Warrant Agreement will be executed on the Effective
Date. The NewSCC Warrants will be issued pursuant to the NewSCC Warrant
Agreement to holders of record on August 15, 1996 of the Common Stock of SCC,
par value $.01 per share, which will be cancelled on the Effective Date (the
"SCC Common Stock"), at a ratio of one NewSCC Warrant for each twenty (20)
shares of SCC Common Stock then held by such holder. There are approximately
30,250,000 shares of SCC Common Stock issued and outstanding. Each NewSCC
Warrant will represent the right to purchase one share of NewSCC Common Stock.
The NewSCC Warrants and the underlying shares of NewSCC Common Stock (the
"NewSCC Warrant Shares") shall be subject to the same stock transfer
restrictions applicable to the NewSCC Common Stock (as well as, in the case of
the NewSCC Warrants, restrictions on their exercise). See "Description of NewSCC
Common Stock--Restriction on Transfer of Shares" above. The exercise price of
the NewSCC Warrants has been determined on a preliminary basis as of the
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Confirmation Date at $8.50 and has been set generally at a per share value that
would, if the NewSCC Common Stock were sold for such value, and after giving
effect to the distribution of the Unsecured Class Cash (as such term is defined
in the Plan) then estimated to be or to become available for distribution to
holders of Allowed General Unsecured Claims (based on an estimate at such date
of the aggregate amount of allowed claims and reserved claims), allow such
holders to realize the amount of such claims together with accrued interest
thereon from, with respect to holders of claims against SCC, July 5, 1995, with
respect to holders of claims against SCM Office Supplies, Inc., SCC LI Corp. and
Hulse Manufacturing Company, August 18, 1995, and with respect to holders of
claims against SCM (United Kingdom) Limited, SCM Inter-American Corporation and
Smith Corona Overseas Holdings, Inc., October 31, 1996, to the Effective Date
and an allocable amount for costs and expenses incurred in connection with
transaction costs relating to the sale or other disposition of NewSCC Common
Stock. The exercise price of the NewSCC Warrants so estimated on a preliminary
basis will be subject to reduction by the Board of Directors of NewSCC in its
sole discretion prior to the date on which the NewSCC Warrants will first become
exercisable based on the Board's estimate at such time of the total amounts of
Unsecured Class Cash and of Class 8 Claims that may be allowed claims or
reserved claims.
The number and kind of securities purchasable upon the
exercise of NewSCC Warrants and the exercise price therefor will be subject to
adjustment in certain events as set forth in the NewSCC Warrant Agreement,
including the issuance of capital stock of NewSCC as a dividend or distribution
on the NewSCC Common Stock; subdivisions, reclassifications and combinations of
the NewSCC Common Stock; the issuance to all holders of NewSCC Common Stock of
certain rights, options or warrants entitling them to subscribe for or purchase
NewSCC Common Stock at less than the then current market price of the NewSCC
Common Stock (as determined in accordance with the NewSCC Warrant Agreement);
the distribution to holders of NewSCC Common Stock of evidences of indebtedness
or assets of NewSCC or any entity a majority of the voting equity of which is
owned, directly or indirectly, by NewSCC (a "Subsidiary") (excluding cash
dividends or cash distributions from consolidated earnings or surplus legally
available for such dividends or distributions); and the distribution to holders
of NewSCC Common Stock of shares of capital stock of any Subsidiary (although no
adjustment in such shares or exercise price will be required in connection with
the issuance of the NewSCC Common Stock, options, rights, warrants or other
securities pursuant to the Plan or the Rights Agreement). Additionally, no
adjustment will be required if in connection with any of the events otherwise
giving rise to an adjustment the holders of the NewSCC Warrants receive such
rights, securities or assets as such holders would have been entitled had the
NewSCC Warrants been exercised immediately prior to such event, and no
adjustment will be required unless such adjustment would require a change in the
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aggregate number of shares NewSCC Common Stock issuable upon the hypothetical
exercise of a NewSCC Warrant of at least 1% (but any adjustment requiring a
change of less than 1% will be carried forward and taken into account in any
subsequent adjustment).
The NewSCC Warrants will be exercisable at any time between
9:00 a.m. Eastern Time on the date that is six (6) months after the Effective
Date and 5:00 p.m. Eastern Time on the date that is two (2) years after the
Effective Date (the "Exercise Period"). Each NewSCC Warrant not exercised prior
to the expiration of the Exercise Period will become void, and all rights
thereunder and in respect thereof under the NewSCC Warrant Agreement will cease
on the expiration of the Exercise Period.
B. Corporate Governance
1. Certificate of Incorporation and By-Laws
The Restated Certificate of Incorporation and By-Laws will
contain certain provisions relating to corporate governance. Under the Restated
Certificate of Incorporation, the holders of NewSCC Common Stock will be
entitled to one vote for each share held of record on all matters submitted to a
vote of the stockholders, including the election of directors.
Pursuant to the Restated Certificate of Incorporation, the
Board of Directors shall be divided into three (3) classes, as nearly equal in
number as possible, with the directors in each of the three classes serving
until the 1997, 1998 and 1999 annual meetings of stockholders, respectively. At
each annual meeting beginning with the 1997 annual meeting, successors to the
class of directors whose term shall expire at that annual meeting shall be
elected for a term expiring at the third succeeding annual meeting of
stockholders after their election. If the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible. In no case
shall a decrease in the number of directors shorten the term of any incumbent
director. Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock shall have the right to elect directors at
an annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be governed
by the terms of the Restated Certificate of Incorporation applicable thereto, or
the resolution or resolutions of the Board of Directors relating to the issuance
of such shares of preferred stock, and such directors so elected shall not be
divided into classes pursuant to such provision unless expressly provided by
such terms or such resolution or resolutions.
Directors may be removed only by the holders of at least a
majority of the outstanding NewSCC Common Stock and only for cause at a meeting
of stockholders called for such purpose.
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Stockholder action can be taken only at an annual or special
meeting of stockholders, and not by written consent in lieu of a meeting.
Pursuant to NewSCC's By-Laws, special meetings of stockholders may be called
only by a majority of the Board of Directors, and the business to be conducted
at any such special meeting is limited to that specified in the notice of
meeting.
The affirmative vote of the holders of shares entitled to cast
at least two-thirds of the votes represented by the shares of all classes of
stock of NewSCC entitled to vote generally in elections of directors, considered
for such purpose as one class, shall be required to amend, alter, change or
repeal, or adopt any provision inconsistent with, the provisions of the Restated
Certificate of Incorporation described above in this subsection 1.
The number of directors of NewSCC will be fixed within a
specified range (between three (3) and fifteen (15)) by a majority of the entire
Board of Directors and the directors of NewSCC in office from time to time will
fill any vacancy or newly-created directorship on the Board. Any director
elected to fill a vacancy shall have the same term as that of his or her
predecessor, or, if such vacancy is a result of an increase in the number of
directors, as that of the other directors of the class of which he or she shall
be a member.
The By-Laws of NewSCC may be amended or repealed at any
regular meeting of the stockholders or directors, or at any special meeting
thereof if notice of such amendment or repeal is contained in the notice of such
special meeting, provided that the provisions thereof regarding special meetings
of stockholders and the requirement that stockholders take action only at a
meeting, the number and election of directors, and amendments to the By-Laws may
be amended only by (i) the directors of NewSCC or (ii) the affirmative vote of
the holders of shares entitled to cast at least two-thirds of the votes
represented by the shares of all classes of stock of NewSCC entitled to vote
generally in elections of directors, considered for such purpose as one class.
In the event of a liquidation, dissolution or winding-up of
NewSCC, holders of NewSCC Common Stock will be entitled to participate equally
in the assets remaining after payment of liabilities and the liquidation
preference of any preferred stock of NewSCC. Holders of NewSCC Common Stock will
have no preemptive rights. Holders of NewSCC Common Stock will have no rights to
convert their NewSCC Common Stock into any other securities and will have no
redemption provisions or sinking fund provisions with respect to such shares.
Holders of the NewSCC Common Stock will not be subject to liability for further
calls and assessments by NewSCC.
NewSCC's Restated Certificate of Incorporation will authorize
NewSCC to issue 100,000,000 shares of NewSCC Common Stock and 10,000,000 shares
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of preferred stock. The Restated Certificate of Incorporation will authorize the
issuance by NewSCC by action of NewSCC's Board of Directors of preferred stock
in series having such voting powers, preferences, rights, limitations or
restrictions of all shares of a series, including, without limitation, dividend
rates, preemptive rights, voting rights, redemption and sinking fund provisions,
liquidation preferences and the number of shares constituting each such series,
without any further vote or action by the stockholders. In connection with the
issuance of Rights pursuant to the Rights Agreement, the Board of Directors of
NewSCC will authorize a series of preferred stock to be reserved for issuance
upon any exercise of the Rights in accordance with the terms of the Rights
Agreement.
The issuance of additional shares of NewSCC Common Stock or
shares of preferred stock could have the effect of delaying, deferring or
preventing a change in control or change in management of NewSCC. The issuance
of preferred stock also could decrease the amount of earnings and assets
available for distribution to holders of NewSCC Common Stock or adversely affect
the rights and powers, including voting rights, of the holders of NewSCC Common
Stock.
The provisions of the Restated Certificate of Incorporation
and By-Laws described herein may, under certain circumstances, make more
difficult or discourage a takeover of NewSCC and the removal of incumbent
management. The classification of directors will have the effect of making it
more difficult for stockholders to change the composition of the Board. At least
two annual meetings of stockholders, instead of one, will generally be required
to effect a change in a majority of the Board. Such a delay may help ensure that
NewSCC's directors, if confronted by a holder attempting to force a proxy
contest, a tender or exchange offer, or an extraordinary corporate transaction,
would have sufficient time to review the proposal as well as any available
alternatives to the proposal and to act in what they believe to be the best
interest of the stockholders. The classification provisions will apply to every
election of directors, however, regardless of whether a change in the
composition of the Board would be beneficial to NewSCC and its stockholders and
whether or not a majority of NewSCC's stockholders believe that such a change
would be desirable.
The Rights Agreement will be entered into as of the Effective
Date pursuant to the terms of the Plan. See "--Summary of the Rights Agreement."
The provisions of the Restated Certificate of Incorporation
and By-Laws discussed above are designed to assist NewSCC in carrying out its
long-term strategy for enhancement of stockholder value and to encourage persons
interested in business combinations to negotiate with NewSCC. NewSCC has no
present intention to adopt other antitakeover measures, although it is
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possible that circumstances could arise which could cause NewSCC to do so.
Each of the Restated Certificate of Incorporation and the
By-Laws of NewSCC shall be in the form filed herewith as an exhibit.
2. Summary of the Rights Agreement
The Plan provides that, on the Effective Date, the Board of
Directors of NewSCC will declare a dividend distribution of one right (a
"Right") to purchase one unit (a "Unit") consisting initially of one
one-thousandth of a share of Preferred Stock, Series A, par value $.001 per
share (the "Preferred Stock"), of NewSCC, at a purchase price per Unit to be
determined by the Board of Directors of NewSCC on the Effective Date and
consisting of a multiple of the then current market price of the NewSCC Common
Stock, subject to adjustment (the "Purchase Price"), for each outstanding share
of NewSCC Common Stock, payable to stockholders of record at the close of
business on the Effective Date and payable with respect to NewSCC Common Stock
issued thereafter until the Distribution Date (as defined below) or as may be
otherwise provided in the Rights Agreement. Except as set forth below, each
Right, when it becomes exercisable, entitles the registered holder to purchase
from NewSCC one Unit at the Purchase Price. The description and terms of the
Rights will be set forth in the Rights Agreement.
Initially, the Rights will be attached to all certificates
representing shares of NewSCC Common Stock, and no separate certificates
evidencing the Rights ("Rights Certificates") will be distributed. The Rights
will separate from the NewSCC Common Stock and a "Distribution Date" will occur
upon the earlier of (i) ten days (or such later date as the Board of Directors
shall determine) following public disclosure that a person or group of
affiliated or associated persons has become an "Acquiring Person" (as defined
below) or (ii) ten business days (or such later date as the Board shall
determine) following the commencement of a tender offer or exchange offer that
would result in a person or group becoming an "Acquiring Person." Except as set
forth below, an "Acquiring Person" is a person or group of affiliated or
associated persons who has acquired beneficial ownership of 15% or more of the
outstanding shares of NewSCC Common Stock. The term "Acquiring Person" excludes
(i) NewSCC, (ii) any subsidiary of NewSCC, (iii) any employee benefit plan of
NewSCC or any subsidiary of NewSCC or (iv) any person or entity organized,
appointed or established by NewSCC for or pursuant to the terms of any such
plan.
MHC Inc. ("MHC"), an affiliate of SCC, may, by virtue of its
acquisition of NewSCC Warrants pursuant to the Plan, be deemed, for purposes of
the Rights Agreement, a beneficial owner of more than 15% of the NewSCC Common
Stock to be outstanding after giving effect to the issuance of NewSCC Common
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Stock to holders of Allowed General Unsecured Claims as of the Effective Date
and of NewSCC Warrants to it. The Pension Benefit Guaranty Corporation ("PBGC")
may, by virtue of its acquisition of NewSCC Common Stock pursuant to the Plan,
be deemed, for purposes of the Rights Agreement, a beneficial owner of more than
15% of the NewSCC Common Stock to be outstanding after giving effect to the
issuance of NewSCC Common Stock to holders (including PBGC) of Allowed General
Unsecured Claims under the Plan. The Rights Agreement provides that each of MHC
and PBGC would become an Acquiring Person only if its level of beneficial
ownership exceeds its percentage of beneficial ownership as of the Effective
Date plus 1%, subject to reduction in such percentage to take into account
NewSCC Common Stock issued after the Effective Date.
Until the Distribution Date, (i) the Rights will be evidenced
by the NewSCC Common Stock certificates and will be transferred with and only
with such NewSCC Common Stock certificates, (ii) NewSCC Common Stock
certificates will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for NewSCC
Common Stock outstanding will also constitute the transfer of the Rights
associated with the NewSCC Common Stock represented by such certificate.
Pursuant to the Rights Agreement, NewSCC reserves the right to require prior to
the occurrence of a Triggering Event (as defined below) that, upon any exercise
of Rights, a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued.
As soon as practicable after the occurrence of the
Distribution Date, Rights Certificates will be mailed to holders of record of
the NewSCC Common Stock as of the close of business on the Distribution Date
and, thereafter, the separate Rights Certificates alone will represent the
Rights. Except as may be otherwise provided in the Rights Agreement, only shares
of NewSCC Common Stock issued prior to the Distribution Date will be issued with
Rights.
The Rights are not exercisable until the Distribution Date and
until the Rights are no longer redeemable. The Rights will expire at the close
of business on the tenth annual anniversary of the Effective Date, unless
extended or earlier redeemed by NewSCC as described below.
In the event that a person becomes an Acquiring Person, each
holder of a Right will have the right to receive, upon exercise of the Right
after the Distribution Date and subject to the provisions of the Rights
Agreement, NewSCC Common Stock (or, in certain circumstances, cash, property or
other securities of NewSCC) having a value equal to two times the exercise price
of the Right. Notwithstanding the foregoing, following the occurrence of the
event set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially owned by any
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<PAGE>
Acquiring Person will be null and void and nontransferable and any holder of any
such right (including any purported transferee or subsequent holder) will be
unable to exercise or transfer any such right.
In the event that, at any time following the date on which
there has been public disclosure that, or of facts indicating that, a person has
become an Acquiring Person (the "Stock Acquisition Date"), (i) NewSCC is
acquired in a merger or other business combination transaction in which NewSCC
is not the surviving corporation, or (ii) 50% or more of NewSCC's assets or
earning power is sold, mortgaged or transferred, each holder of a Right (except
Rights which previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two times the exercise price of the Right. The events
set forth in this paragraph and in the preceding paragraph are referred to as
the "Triggering Events."
The Purchase Price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock
are granted certain rights or warrants to subscribe for Preferred Stock or
convertible securities at less than the current market price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise.
Because of the nature of the Preferred Stock's dividend and
liquidation rights, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of NewSCC Common Stock. Shares of Preferred Stock purchasable
upon exercise of the Rights will not be redeemable. Each share of Preferred
Stock will be entitled to a quarterly dividend payment of 1,000 times the
dividend declared per share of NewSCC Common Stock. In the event of liquidation,
each share of Preferred Stock will be entitled to a $1 preference, and
thereafter the holders of the shares of Preferred Stock will be entitled to an
aggregate payment of 1,000 times the aggregate payment made per share of NewSCC
Common Stock. Each share of Preferred Stock will have 1,000 votes, voting
together with the shares of NewSCC Common Stock. These rights are protected by
customary antidilution provisions.
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<PAGE>
At any time until ten days following the Stock Acquisition
Date, NewSCC may redeem the Rights in whole, but not in part, at a price (the
"Redemption Price") of $.001 per Right (payable in cash, NewSCC Common Stock or
other consideration deemed appropriate by the Board of Directors) by resolution
of the Board of Directors (provided that following a Stock Acquisition Date such
resolution is approved by a majority of the Continuing Directors and only if the
Continuing Directors constitute a majority of the directors then in office). A
"Continuing Director" is a member of the Board of Directors who is not an
Acquiring Person, an affiliate or associate of an Acquiring Person or a
representative or nominee of an Acquiring Person. Immediately upon such action
of the Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of NewSCC, 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 NewSCC, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for NewSCC Common Stock (or other consideration) 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 resolution of the Board of Directors of NewSCC (provided that
following a Stock Acquisition Date such resolution is approved by a majority of
the Continuing Directors and only if the Continuing Directors constitute a
majority of the directors then in office) prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may be amended by
resolution of the Board of Directors of NewSCC (provided that following a Stock
Acquisition Date such resolution is approved by a majority of the Continuing
Directors and only if the Continuing Directors constitute a majority of the
directors then in office) in order to cure any ambiguity, to make changes which
do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person or its affiliates or associates), 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 Rights will have certain anti-takeover effects. The Rights
will cause substantial dilution to a person or group that attempts to acquire
NewSCC without conditioning the offer on a substantial number of Rights being
acquired. The Rights should not interfere with any merger or other business
combination approved by each of the Board of Directors and the Continuing
Directors since the Board of Directors may (with the concurrence of a majority
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<PAGE>
of the Continuing Directors and only if the Continuing Directors constitute a
majority of the directors then in office), at its option, at any time until ten
days (or such later date as may be determined by action of the Board of
Directors with the concurrence of a majority of the Continuing Directors and
only if the Continuing Directors constitute a majority of the directors then in
office) following the Stock Acquisition Date redeem all but not less than all
the then outstanding Rights at the Redemption Price.
The foregoing summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, the proposed form of which is filed herewith as an exhibit.
3. Delaware Anti-Takeover Statute
NewSCC, as a Delaware corporation, will elect in its Restated
Certificate of Incorporation to be subject to section 203 of the Delaware
General Corporation Law ("DGCL"). In general, section 203 prohibits an
"interested stockholder" from engaging in a "business combination" for three
years following the time that such stockholder became an interested stockholder,
unless (i) the business combination, or the transaction which resulted in such
stockholder becoming an interested stockholder, was approved by the board of
directors of the corporation before the other party to the business combination
or the party to such transaction became an interested stockholder, (ii) upon
consummation of the transaction that made it an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the commencement of the transaction (excluding voting stock owned
by directors who are also officers or held in employee stock plans in which the
employees do not have a confidential right to tender stock held by the plan) or
(iii) the business combination was approved by the board of directors of the
corporation and ratified by holders of 66 2/3% of the voting stock which the
interested stockholder did not own. The three-year prohibition also does not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of certain extraordinary transactions
involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors.
The term "business combination" is defined generally to
include mergers or consolidations between a Delaware corporation and an
"interested stockholder," transactions with an "interested stockholder"
involving the assets or stock of the corporation or its majority-owned
subsidiaries and transactions which increase an interested stockholder's
percentage of stock. The term "interested stockholder" is defined generally,
subject to a number of exceptions, as any stockholder who becomes the
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<PAGE>
beneficial owner of 15% or more of a Delaware corporation's voting stock.
C. Registrar and Transfer Agent
The registrar and transfer agent for the NewSCC Common Stock
will be Marine Midland Bank and SCC expects that such party will also serve as
registrar and warrant agent for the NewSCC Warrants and as rights agent for the
Rights pursuant to the terms of the Rights Agreement. Such registrar and
transfer agent for the NewSCC Common Stock is neither a holder of any
indebtedness of the Debtors nor an affiliate of any such holder.
Item 2. Exhibits.
The following exhibits are filed herewith (or incorporated by reference
as indicated below):
1. Debtors' Third Amended Second Joint Plan of Reorganization
under Chapter 11 of the United States Bankruptcy Code
(incorporated by reference to Exhibit 2.1 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended June 30,
1996 (File No. 1-10281) (see Exhibit A included therein)).
2. Motion to Approve Technical Amendments to the Debtors'
Third Amended Second Joint Plan of Reorganization, as
approved by the United States Bankruptcy Court for the
District of Delaware.
3. Form of Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 2.1 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996 (File No. 1-10281) (see Schedule 12.7 of
Exhibit A included therein)).
4. Form of By-laws of the Registrant (incorporated by reference
to Exhibit 2.1 to the Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1996 (File No. 1-10281)
(see Schedule 12.7 of Exhibit A included therein)).
5. Form of Rights Agreement between the Registrant and
Marine Midland Bank, the Rights Agent to be designated
thereunder.
6. Form of Warrant Agreement between the Registrant and
Marine Midland Bank, the Warrant Agent to be designated
thereunder (including the form of Warrant).
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<PAGE>
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, thereunto duly authorized.
SMITH CORONA CORPORATION
By: s/ John A. Piontkowski
---------------------------------
John A. Piontkowski
Senior Vice President and
Chief Financial Officer
Date: January 30, 1997
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<PAGE>
EXHIBIT 2
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
:
In Re: :
:
SMITH CORONA CORPORATION, : Chapter 11
SCM OFFICE SUPPLIES, INC., : Case No. 95-788 (HSB)
SCC LI CORP., HULSE :
MANUFACTURING COMPANY, SMITH :
CORONA OVERSEAS HOLDINGS, :
INC., SCM (UNITED KINGDOM) :
LIMITED, and SCM :
INTER-AMERICAN CORPORATION, :
: JOINTLY ADMINISTERED
Debtors :
:
MOTION TO APPROVE TECHNICAL AMENDMENTS TO THE DEBTORS' THIRD
AMENDED SECOND JOINT PLAN OF REORGANIZATION
-------------------------------------------
TO THE HONORABLE HELEN S. BALICK,
UNITED STATES BANKRUPTCY JUDGE:
Smith Corona Corporation, SCM Office Supplies, Inc., SCC LI
Corp., Hulse Manufacturing Company, Smith Corona Overseas Holdings, Inc., SCM
(United Kingdom) Limited and SCM Inter-American Corporation (collectively, the
"Debtors") hereby file this Motion to Approve Technical Amendments to the
Debtors' Third Amended Second Joint Plan of Reorganization (the "Amendments").
In support of this Motion, the Debtors respectfully represent as follows:
<PAGE>
I. JURISDICTION
1. This Court has jurisdiction pursuant to 28 U.S.C. ss.
1334. This Motion is a core proceeding under 28 U.S.C. ss. 157(b)(2)(A), (L) and
(O). The relief requested in this Motion is authorized pursuant to section 1127
of the Bankruptcy Code, and Rule 3019 of the Federal Rules of Bankruptcy
Procedure.
II. BACKGROUND
2. On July 5, 1996 (the "Petition Date"), Smith Corona
Corporation filed its voluntary petition for relief under chapter 11 of title 11
of the United States Code (the "Bankruptcy Code").1 Since the Petition Date, the
Debtors have been authorized to operate and manage their assets as debtors in
possession pursuant to ss.ss. 1107(a) and 1108 of the Bankruptcy Code.
3. On September 6, 1996, the Debtors filed their Third
Amended Second Joint Plan of Reorganization Proposed (the "Plan"), which was
accompanied by the Debtors' Third Amended Second Disclosure Statement Pursuant
to Section 1125 of the United States Bankruptcy Code (the "Disclosure
Statement"). By orders dated July 16, 1996, August 13, 1996, August 26, 1996 and
September 11, 1996, this Court approved the Disclosure Statement pursuant to
section 1125 of the Bankruptcy Code.
- --------
1 SCC LI Corp., SCM Office Supplies, Inc., and Hulse Manufacturing
Company each filed their voluntary petitions for relief on August 18,
1995. SCM (United Kingdom) Limited, SCM Inter-American Corporation, and
Smith Corona Overseas Holdings, Inc. each filed their voluntary
petitions for relief on October 31, 1996. By Orders of this Court these
cases are all being jointly administered.
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<PAGE>
III. RELIEF REQUESTED
4. The Debtors have filed the Amendments in order to respond
to and settle potential objections to confirmation of the Plan, to correct
certain oversights and to aid in execution of the Plan. Pursuant to section
1127(c), subject to compliance with the adequacy-of-disclosure requirements of
section 1125 of the Bankruptcy Code, a proponent of a plan may modify the plan
at any time prior to its confirmation. The preparation of a new disclosure
statement each time a plan modification is proposed is not required. To the
contrary, section 1127(c) only "requires the proponent of a [p]lan modification
to comply with [s]ection 1125 if new acceptances are solicited." Equity
Management II Corp. v. Carroll Canyon Assocs. (In re Carroll Canyon Assocs.), 73
B.R. 236, 239 (S.D. Miss. 1987); see also In re American Solar King, 90 B.R.
808, 823 (Bankr. W.D. Tex. 1988) ("Further disclosure occurs only when and to
the extent that the debtor intends to solicit votes from previously dissenting
creditors or when the modification materially and adversely impacts parties who
previously voted for the plan.")
5. Further, modifications to a plan may be made pursuant to
Rule 3019 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules")
when the proposed modification does not adversely affect the treatment of any
claimant under the plan. Although the term "adverse change" in the context of
Bankruptcy Rule 3019 is not defined, it is obvious that proposed modifications
are not adverse where "[n]one of the changes negatively affects the repayment of
creditors, the length of the plan, or the protected property interests of
parties in interest." In re Mount Vernon Plaza Community Urban Redevelopment
Corp. I, 79 B.R. 305, 306 (Bankr. S.D. Ohio 1987).
6. The proposed modifications described in the Amendments
will not cause the Plan, as modified, to fail to comply with the requirements of
sections 1122 and 1123 of the Bankruptcy Code. The proposed modifications do
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<PAGE>
not adversely change the treatment of any of the creditors. Although the Plan
changes the stock conversion ratio for creditors from 6 to 1 to 10 to 1, this is
not a material adverse change because general unsecured creditors will still be
receiving 85% of the NewSCC Common Stock and the value of their recovery will
not be altered. The conversion ratio for holders of SCC Common Stock is also
being changed from 10 to 1 to 20 to 1, but the stockholders are not creditors of
the Debtors, they are an impaired class deemed to have rejected the Plan, their
votes have not been solicited, and the Plan is being crammed down on them by the
Debtors. The Debtors were never obligated to give the warrants to the
stockholders, and the warrants are a mechanism to ensure that the General
Unsecured Creditors are not overcompensated. Similarly, the change of the
conversion ratios will not affect the operation of the NewSCC Warrants, in that
they will only be exercisable at a price which ensures that the creditors
receiving NewSCC Common Stock will have received consideration in value equal to
their claims (plus an interest factor) but will not be overcompensated by their
distributions under the Plan.
7. In addition, the changes to Section 12.4 merely clarify
the Debtors' intent to preserve all Retiree Benefits at their current levels
until January 1, 1998, and to permit NewSCC to offer certain changes to the
benefits given to current employees as is done in the ordinary course of
business on a regular basis.
8. For the convenience of the Court and parties in interest,
the Amendments are marked to show changes from the Plan as filed on September 6,
1996; deletions are shown as struck through, and additions are
double-underscored.
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<PAGE>
IV. SPECIFIC MODIFICATIONS
--------------------------
9. The caption shall be amended to read as follows:
:
In Re: :
:
SMITH CORONA CORPORATION, : Chapter 11
SCM OFFICE SUPPLIES, INC., : Case No. 95-788 (HSB)
SCC LI CORP., HULSE
MANUFACTURING COMPANY, SMITH :
CORONA OVERSEAS HOLDINGS, :
INC., SCM (UNITED KINGDOM) :
LIMITED, and SCM :
INTER-AMERICAN CORPORATION, :
: JOINTLY ADMINISTERED
Debtors:
:
10. The first paragraph of the Debtors' Third Amended Second
Joint Plan of Reorganization shall be amended to read in its entirety as
follows:
SMITH CORONA CORPORATION, SCM OFFICE SUPPLIES, INC., SCC LI CORP.,
HULSE MANUFACTURING COMPANY, SMITH CORONA OVERSEAS HOLDINGS, INC., SCM
(UNITED KINGDOM) LIMITED and SCM INTER-AMERICAN CORPORATION, the
Debtors and Debtors-in-Possession in the
above-captioned, jointly-administered Chapter 11 Case, hereby propose
the following Third Amended Second Joint Plan of Reorganization
pursuant to section 1121(a), title 11, United States Code.
11. Section 1.25 shall be amended to read in its entirety as
follows:
1.25. Debtors: SCC, OSI, SCCLI, Hulse, Smith Corona Overseas Holdings, Inc., SCM
(United Kingdom) Limited and SCM Inter-American Corporation, including any such
Debtor in its capacity as a debtor-in- possession pursuant to sections 1107 and
1108 of the Bankruptcy Code.
12. Section 1.39 shall be amended to read in its entirety as
follows: 1.39. Hulse: Hulse Manufacturing Company, a New York
corporation.
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<PAGE>
13. Section 1.50 shall be amended to read in its entirety as
follows:
1.39. Non-Debtor Subsidiaries: All direct and indirect subsidiaries of SCC,
other than OSI, SCCLI, Hulse, Smith Corona Overseas Holdings, Inc., SCM (United
Kingdom) Limited and SCM Inter-American Corporation, as listed on Schedule 1.50
hereto.
14. Section 1.57 shall be amended to read in its entirety as
follows:
1.39. Petition Date: (a) With respect to SCC, July 5, 1995, (b) with respect to
OSI, SCCLI and Hulse, August 18, 1995, and (c) with respect to Smith Corona
Overseas Holdings, Inc., SCM (United Kingdom) Limited and
SCM Inter-American Corporation, October 31, 1996.
15. Section 5.11 shall be amended to read in its entirety as
follows:
5.11. Class 8 - Allowed General Unsecured Claims. Allowed
General Unsecured Claims are impaired by this Joint Plan. In full
satisfaction of each Allowed General Unsecured Claim, each holder of
such Claim shall receive (a) its Pro Rata Share of the Unsecured Class
Cash, and (b) one (1) share of NewSCC Common Stock for each $10.00 in
amount of such holder's Allowed General Unsecured Claim (which shares
in the aggregate shall constitute 85% of the total shares of NewSCC
Common Stock which are issued pursuant to this Joint Plan, determined
on a fully-diluted basis, not including the effect of the exercise of
any of the NewSCC Warrants), each at such times or times as provided in
Article 10 hereof.
16. Section 5.13 shall be amended to read in its entirety as
follows:
5.13. Class 10 - SCC Common Stock. Holders of SCC Common
Stock are impaired by this Joint Plan. Each Registered Holder shall
receive one (1) NewSCC Warrant for each twenty (20) shares of SCC
Common Stock. All shares of SCC Common Stock will be canceled,
annulled, and extinguished on the Effective Date.
17. Section 6.1(a) shall be amended to read in its entirety as
follows:
(a) Authorization. The certificate of incorporation of NewSCC
shall authorize the issuance of 100,000,000 shares of NewSCC
Common Stock.
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<PAGE>
18. The last sentence of Section 6.3 shall be amended to read
in its entirety as follows:
Rights to such shares shall not vest prior to the second anniversary of
the Effective Date, with the exception that, prior to the second
anniversary of the Effective Date, rights to such shares shall vest
upon a change of control of NewSCC. A change in control shall mean (i)
a stock purchase by any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities and Exchange Act of 1934, as
amended) who then owns or by virtue of such purchase becomes the
beneficial owner of, directly or indirectly, voting securities of
NewSCC representing 51% or more of the combined voting power of
NewSCC's then outstanding voting securities or (ii) any change in the
composition of NewSCC's Board of Directors in any one year which
involves a majority of such directors and which is not recommended by
the Board.
19. Section 10.2(b) shall be amended to read in its entirety
as follows:
(b) On the Effective Date, NewSCC shall issue and deliver to
the Distribution
Agent one (1) share of NewSCC Common Stock for each $10.00 in amount of
Allowed General Unsecured Claims at such time to be held in trust for
distribution to holders of Allowed General Unsecured Claims as provided
in Article 5 of this Joint Plan. The Distribution Agent shall agree in
writing to accept such trust subject to the terms of this Joint Plan.
As promptly as practicable after the Effective Date, the Distribution
Agent will distribute to each holder of an Allowed General Unsecured
Claim as of the Effective Date one (1) share of NewSCC Common Stock for
each $10.00 in amount of such holder's Allowed General Unsecured Claim.
Upon any Disputed Claim becoming an Allowed General Unsecured Claim,
or, as more fully set forth in Section 11.4 hereof, upon a judgment
being rendered against any Person in any Avoidance Action (if the
effect of such judgment gives such Person an Allowed General Unsecured
Claim), NewSCC shall issue and deliver to the Distribution Agent one
(1) share of NewSCC Common Stock for each $10.00 in amount of such
Allowed General Unsecured Claim, and as promptly as practicable
thereafter, the Distribution Agent will distribute to such holder of an
Allowed General Unsecured Claim one (1) share of NewSCC Common Stock
for each $10.00 in amount of such holder's Allowed General Unsecured
Claim. Upon resolution of any Disputed Convenience Class Claim, any
Cash reserved on account of such Disputed Claim and not paid to the
holder of such Disputed Claim on account of such Claim shall be
transferred by NewSCC to the Distribution Agent to be part of the
Unsecured Class Cash.
20. Section 12.4 shall be amended to replacing the second
proviso therein with the following::
provided further, however, that NewSCC agrees not to amend or
modify the terms of any such plan
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<PAGE>
or program relating to Retiree Benefits on such terms as may exist on
the Effective Date prior to January 1, 1998, except as may be required
by applicable law.
21. The signature page shall be amended to include three
signature blocks, one each for Smith Corona Overseas Holdings, Inc., SCM (United
Kingdom) Limited and SCM Inter-American Corporation, and such Debtors shall be
deemed to have executed such signature blocks. The three signature blocks shall
be in the same format as the signature lines already included on the signature
page.
22. The last sentence of Section 3 of the Warrant Agreement,
Schedule 1.49 to the Plan, shall be amended to read as follows:
Upon registration of transfer, the Company shall issue and the Warrant
Agent shall countersign and deliver a new Warrant Certificate or
Certificates to the persons entitled thereto.
23. The following language shall be inserted at the end of
Section 14 of the Warrant Agreement, creating section 14.14 which reads as
follows:
14.14 No Financial Liability. No provision of this Agreement
shall require the Warrant 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.
24. The following three companies shall be removed from
Schedule 1.50:
Smith Corona Overseas Holdings Inc.
SCM (United Kingdom) Ltd.
SCM Inter-American Corporation
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<PAGE>
25. Schedule 1.69, Rights Agreement between Smith Corona
Corporation and the Rights Agent, shall be amended to read in its entirety as
set forth Schedule A of this motion. The amended Schedule 1.69 will clarify the
treatment of certain parties who may become Beneficial Owners of 15% or more of
the shares of Common Stock of NewSCC pursuant to the distributions made under
the Plan.2
26. Schedule 7.1(c), Cure Amount for 35. Com Source shall be
amended to read in its entirety as follows:
2722.83
27. Schedule 7.1(c), Cure Amount for 88. IBM License shall be
amended to read in its entirety as follows:
$89,178.08
28. The first sentence of Schedule 12.7, Article 4(1) shall be
amended to read in its entirety as follows:
SECTION 1: Authorized Shares. The total number of shares of
all classes of stock which the Corporation shall have authority to
issue is one hundred ten million (110,000,000) shares, $.001 par value,
divided into two classes of which one hundred million (100,000,000)
shall be common stock (hereinafter the "Common Stock"), and ten million
(10,000,000) shall be preferred stock.
- --------
2 With respect to the amendments to the Rights Agreement, attached as
Schedule A, deletions are indicated by the presence of a carat, and
additions are in bold type and underscored.
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<PAGE>
V. Conclusion
-------------
WHEREFORE, the Debtors respectfully request that this Court
grant the relief requested in this Motion and such other and further relief as
is just and proper.
DATED: January 17, 1997
Wilmington, Delaware
YOUNG, CONAWAY, STARGATT
& TAYLOR
s/ Joel A. Waite
James L. Patton, Jr. (No. 2202)
Laura Davis Jones (No. 2436)
Robert S. Brady (No. 2847)
Joel A. Waite (No. 2925)
P.O. Box 391
11th Floor, Rodney Square North
Wilmington, Delaware 19801
(312) 571-6600
Counsel to the Debtors and
Debtors-in-Possession
Special Counsel:
WINTHROP, STIMSON, PUTNAM
& ROBERTS
Richard L. Epling
Robin L. Spear
One Battery Park Plaza
New York, NY 10004
(212) 858-1000
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<PAGE>
SCHEDULE A
INTENTIONALLY OMITTED
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<PAGE>
EXHIBIT 5
------------------------------------------------
Rights Agreement
Smith Corona Corporation
and
Marine Midland Bank
Rights Agent
Dated as of February __, 1997
------------------------------------------------
<PAGE>
Table of Contents
Page
Section 1. Certain Definitions..........................................
Section 2. Appointment of Rights Agent..................................
Section 3. Issue of Rights Certificates.................................
Section 4. Form of Rights Certificates..................................
Section 5. Countersignature and Registration............................
Section 6. Transfer, Split Up, Combination and
Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen
Rights Certificates..........................................
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights....................................
Section 8. Cancellation and Destruction of
Rights Certificates..........................................
Section 9. Reservation and Availability of
Capital Stock................................................
Section 10. Preferred Stock Record Date..................................
Section 11. Adjustment of Purchase Price, Number
and Kind of Shares or Number of
Rights.......................................................
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares....................................
Section 13. Consolidation, Merger or Sale or
Transfer of Assets or Earning Power..........................
Section 14. Fractional Rights and Fractional
Shares.......................................................
Section 15. Rights of Action.............................................
Section 16. Agreement of Rights Holders..................................
Section 17. Rights Certificate Holder Not Deemed
a Stockholder................................................
Section 18. Concerning the Rights Agent..................................
Section 19. Merger or Consolidation or Change of
Name of Rights Agent.........................................
Section 20. Duties of Rights Agent.......................................
Section 21. Change of Rights Agent.......................................
Section 22. Issuance of New Rights Certificates..........................
Section 23. Redemption and Termination...................................
Section 24. Notice of Certain Events.....................................
Section 25. Notices......................................................
Section 26. Supplements and Amendments...................................
Section 27. Successors...................................................
Section 28. Determinations and Actions by the
Board of Directors, etc......................................
Section 29. Benefits of this Agreement...................................
Section 30. Severability.................................................
Section 31. Governing Law................................................
Section 32. Counterparts.................................................
Section 33. Descriptive Headings.........................................
Attachments:
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Exhibit A -- Form of Certificate of Designation, Preferences and
Rights
Exhibit B -- Form of Rights Certificate
Exhibit C -- Summary of Rights
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February __, 1997, between SMITH CORONA
CORPORATION, a Delaware corporation, and MARINE MIDLAND BANK, a New York banking
corporation (the "Rights Agent").
W I T N E S S E T H:
WHEREAS, on July 5, 1995, Smith Corona Corporation, a Delaware
corporation, filed a voluntary petition for relief under Chapter 11 of Title 11
of the United States Code, 11 U.S.C. ss.101 et seq. (the "Bankruptcy Code"),
with the United States Bankruptcy Court for the District of Delaware (the
"Bankruptcy Court"); and
WHEREAS, pursuant to Debtors' Third Amended Second Joint Plan of
Reorganization under Chapter 11 of the United States Bankruptcy Code, dated
________________, 1997 (the "Plan"), with respect to Smith Corona Corporation
and certain of its subsidiaries, and Order No. _____, dated February __, 1997,
of the Bankruptcy Court (the "Confirmation Order"), Smith Corona Corporation
has, on the date hereof, emerged from such proceeding under Chapter 11; and
WHEREAS, Smith Corona Corporation, as reorganized pursuant to the Plan,
is referred to herein as the "Company"; and
WHEREAS, on the date hereof (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company has authorized and declared a dividend
distribution of one Right for each share of Common Stock of the Company
outstanding at the close of business on the date hereof (the "Record Date"), and
has authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof) for each share of
Common Stock of the Company issued between the Record Date (whether originally
issued or delivered from the Company's treasury) and the Distribution Date, each
Right initially representing the right to purchase one unit (a "Unit") with each
such unit consisting initially of one one-thousandth of a share of Preferred
Stock, Series A, of the Company having the rights, powers and preferences set
forth in the form of Certificate of Designation, Preferences and Rights of
Preferred Stock, Series A, attached hereto as Exhibit A, upon the terms and
subject to the conditions hereinafter set forth ("Rights"); and
WHEREAS, such authorization of such dividend distribution, and of such
issuance of Rights, has been approved by the Bankruptcy Court pursuant to the
Confirmation Order;
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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 Common Stock then outstanding, or, in the case
of a Designated Holder and its Affiliates and Associates, shall be the
Beneficial Owner of shares of Common Stock then outstanding in a number that
equals or exceeds the Limitation Amount applicable to such Holder, but shall not
in any event include (i) the Company, (ii) any Subsidiary of the Company, (iii)
any employee benefit plan of the Company or of any Subsidiary of the Company, or
(iv) any Person or entity organized, appointed or established by the Company for
or pursuant to the terms of any such plan (each of (i) through (iv), an
"Exempted Person"). Notwithstanding the foregoing, (i) no Person shall become an
"Acquiring Person" as a result of an acquisition of Common Stock by the Company
which, by reducing the number of such shares then outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% (or, in
the case of a Designated Holder and its Affiliates and Associates, the
percentage of the then outstanding Common Stock represented by the Limitation
Amount applicable to such Designated Holder) or more of the outstanding Common
Stock, except that if such Person, after such share purchases by the Company,
becomes the Beneficial Owner of any additional shares of Common Stock, such
Person shall be deemed to be an "Acquiring Person;" and (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, and such
Person divests as promptly as practicable a sufficient number of shares of
Common Stock or other securities so that such Person would no longer be an
Acquiring Person then such Person shall not be deemed to be an "Acquiring
Person." The term "outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then issued and outstanding which such Person would be deemed to
beneficially own hereunder.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Adjustment Shares" shall have the meaning set forth in
Section 11(a)(ii) of this Agreement.
(d) "Affiliate" shall have the meaning set forth in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
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(e) "Associate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
(f) "Bankruptcy Code" shall have the meaning set forth in
the first "Whereas" clause of this Agreement.
(g) "Bankruptcy Court" shall have the meaning set forth in
the first "Whereas" clause of this Agreement.
(h) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase
or exchange, or (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) or Section 22 hereof ("Original Rights") or
pursuant to Section 11(i) hereof in connection with an adjustment made
with respect to any Original Rights;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to vote or dispose of
or has "beneficial ownership" of (as determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not
in writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own," any security under
this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable provisions of the General Rules
and Regulations under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
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(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 the proviso to subparagraph (ii) of
this paragraph (h)) or disposing of any voting securities of the
Company;
provided, however, that nothing in this paragraph (h) 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. Notwithstanding
anything in this definition of Beneficial Owner to the contrary, a Person who is
a Continuing Director or officer of the Company or who is an Affiliate or
Associate of a Continuing Director or officer of the Company (each, an "Excluded
Person") shall not be deemed to "beneficially own" shares of Common Stock held
by another Excluded Person solely by reason of any agreement, arrangement or
understanding, written or otherwise, entered into in opposition to a transaction
that, at the time such agreement, arrangement or understanding was entered into,
has not been approved or recommended by the Board of Directors to the
stockholders of the Company (which approval or recommendation, if adopted
following a Stock Acquisition Date, includes 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).
(i) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York or the state in
which the principal office of the Rights Agent is located are authorized or
obligated by law or executive order to close.
(j) "close of business" on any given date shall mean 5:00 P.M., New
York City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.
(k) "Common Stock" shall mean the common stock, par value $.001 per
share, of the Company; provided, that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.
(l) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) of this Agreement.
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(m) "Confirmation Order" shall have the meaning set forth
in the second "Whereas" clause of this Agreement.
(n) "Company" shall have the meaning set forth in the third
"Whereas" clause of this Agreement.
(o) "Continuing Director" shall mean a member of the Board of Directors
of the Company who is not an Acquiring Person, an Affiliate or Associate of an
Acquiring Person or a representative or nominee of an Acquiring Person.
(p) "Current Market Price" shall have the meaning set forth
in Section 11(d)(i) of this Agreement.
(q) "Designated Holder" shall mean each of the MHC Holder
and the PBGC Holder.
(r) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) of this Agreement.
(s) "Distribution Date" shall have the meaning set forth in
Section 3(a) of this Agreement.
(t) "equivalent preferred stock" shall have the meaning set
forth in Section 11(b) of this Agreement.
(u) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(v) "Excluded Person" shall have the meaning set forth in
Section 1(h) of this Agreement.
(w) "Exempted Person" shall have meaning set forth in
Section 1(a) of this Agreement.
(x) "Expiration Date" shall have the meaning set forth in
Section 7(a) of this Agreement.
(y) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) of this Agreement.
(z) "Limitation Amount" shall mean, at any time with respect to any
Designated Holder, the number of shares of Common Stock of the Company that
represents the percentage obtained by dividing (i) the sum of (A) the number of
shares of Common Stock of the Company beneficially owned by such Designated
Holder, together with its Affiliates and Associates, as of the Record Date and
(B) the number of shares of Common Stock of the Company that represents 1% of
the number of shares of such Common Stock then outstanding by (ii) the number of
shares of Common Stock of the Company then outstanding, as such percentage shall
be reduced (but not below 15%) to take into account the number of shares of
Common Stock issued by the Company after the Record Date and prior to the time
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of determination hereunder. As used in this paragraph (z), the term
"outstanding" has the meaning assigned thereto in Section 1(a) of this
Agreement.
(aa) "MHC Holder" shall mean MHC Inc. ("MHC"), which is a Beneficial
Owner of Common Stock of the Company as of the Record Date, and any Person or
Persons (all such Persons being considered as one Person for purposes of Section
1(a) of this Agreement) that (i) become Beneficial Owners of any Common Stock so
owned by MHC or any of its Affiliates or Associates as of the Record Date as a
result of a change in the Beneficial Ownership of MHC or (ii) acquire Beneficial
Ownership of any of such Common Stock from MHC or any Affiliate or Associate
thereof (or from any other Person who shall have acquired Common Stock as
contemplated by this clause (ii)), provided that no Person or Persons shall be
deemed the MHC Holder as a result of any transaction contemplated by clause (i)
or (ii) above if a majority of the Continuing Directors shall have determined
that such transaction is part of a plan, arrangement or understanding that may
have as a primary purpose or effect an unintended use of the exceptions
otherwise provided for MHC by this Section 1(aa) and Section 1(a) of this
Agreement and that treatment of such Person or Persons as the MHC Holder may be
inconsistent with the purpose of this Agreement.
(bb) "Original Rights" shall have the meaning set forth in Section
1(h)(i) of this Agreement.
(cc) "PBGC Holder" shall mean the Pension Benefit Guaranty Corporation
("PBGC") and shall include any Person designated by PBGC to make decisions with
respect to Common Stock acquired by PBGC pursuant to the Plan, including
decisions with respect to disposition or voting of such Common Stock, and any
Person or Persons (all such Persons being considered as one Person for purposes
of Section 1(a) of this Agreement) that acquire from PBGC or any of its
Affiliates or Associates (or from any other Person who shall have acquired
Common Stock as contemplated by this sentence) Beneficial Ownership of any
Common Stock so owned by PBGC or any Affiliate or Associate thereof as of the
Record Date, provided that no such acquiring Person or Persons shall be deemed
the PBGC Holder as a result of any transaction contemplated by the foregoing
provisions of this sentence if a majority of the Continuing Directors shall have
determined that such transaction is part of a plan, arrangement or understanding
that may have as a primary purpose or effect an unintended use of the exceptions
otherwise provided for PBGC by this Section 1(cc) and Section 1(a) of this
Agreement and that treatment of such Person or Persons as the PBGC Holder may be
inconsistent with the purposes of this Agreement.
(dd) "Person" shall mean any individual, firm, corporation,
partnership or other entity.
(ee) "Preferred Stock" shall mean shares of Preferred Stock, Series
A, of the Company, and, to the extent that there are not a sufficient number
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of shares of such Preferred Stock authorized to permit the full exercise of the
Rights, any other series of Preferred Stock of the Company designated for such
purpose containing terms substantially similar to the terms of the Preferred
Stock, Series A.
(ff) "Principal Party" shall have the meaning set forth in
Section 13(b) of this Agreement.
(gg) "Purchase Price" shall have the meaning set forth in
Section 4(a) of this Agreement.
(hh) "Record Date" shall have the meaning set forth in the
fourth "Whereas" clause of this Agreement.
(ii) "Redemption Price" shall have the meaning set forth in
Section 23 of this Agreement.
(jj) "Rights" shall have the meaning set forth in the fourth
"Whereas" clause of this Agreement.
(kk) "Rights Agent" shall have the meaning set forth in the
introductory paragraph of this Agreement.
(ll) "Rights Certificates" shall have the meaning set forth
in Section 3(a) of this Agreement.
(mm) "Rights Dividend Declaration Date" shall have the meaning
set forth in the fourth "Whereas" clause of this Agreement.
(nn) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii) of this Agreement.
(oo) "Section 11(a)(ii) Trigger Date" shall have the meaning set
forth in Section 11(a)(iii) of this Agreement.
(pp) "Section 13 Event" shall mean any event described in clause
(x), (y) or (z) of Section 13(a) of this Agreement.
(qq) "Spread" shall have the meaning set forth in Section
11(a)(iii) of this Agreement.
(rr) "Stock Acquisition Date" shall mean the earlier of the date of
(i) the public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such or (ii) the public disclosure of facts by the Company or an
Acquiring Person indicating that an Acquiring Person has become an Acquiring
Person.
(ss) "Subsidiary" shall mean, with reference to any Person,
any corporation (or other entity) of which an amount of voting securities (or
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other interests) sufficient to elect at least a majority of the directors (or
equivalent) of such corporation (or other entity) is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such Person.
(tt) "Substitution Period" shall have the meaning set forth
in Section 11(a)(iii) of this Agreement.
(uu) "Summary of Rights" shall have the meaning set forth in
Section 3(b) of this Agreement.
(vv) "Trading Day" shall have the meaning set forth in
Section 11(d)(i) of this Agreement.
(ww) "Transaction" shall mean any merger, consolidation or sale of
assets or earning power described in Section 13(a) hereof or any acquisition of
Common Stock of the Company which, without regard to any required approval of
the Company, would result in a Person becoming an Acquiring Person.
(xx) "Triggering Event" shall mean any Section 11(a)(ii)
Event or any Section 13 Event.
(yy) "Unit" shall have the meaning set forth in the fourth
"Whereas" clause of this Agreement.
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 upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such co-Rights Agent.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the tenth day (or
such later date as the Board of Directors of the Company shall determine) after
the Stock Acquisition Date, (ii) the close of business on the tenth Business Day
(or such later date as such Board shall determine) after the date that a tender
or exchange offer by any Person is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if upon consummation thereof, such Person would become an Acquiring Person
or (iii) the Expiration Date (the earlier of (i) and (ii) being herein referred
to as the "Distribution Date"), (x) the Rights will be evidenced by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for Common Stock shall be deemed also to be
certificates for Rights) and not by separate certificates, and (y) the Rights
will be transferable only in connection with the transfer of the underlying
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shares of Common Stock (including a transfer to the Company). The Board of
Directors of the Company may defer the date set forth in clause (i) or (ii) of
the preceding sentence to a specified later date or to an unspecified later
date, each to be determined (with the concurrence of a majority of the
Continuing Directors following a Stock Acquisition Date and only if the
Continuing Directors constitute a majority of the number of directors then in
office) by action of the Board of Directors of the Company. As soon as
practicable after the Distribution Date, the Rights Agent will, at the Company's
expense, send by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the close of business on the Distribution Date,
at the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit B hereto (the "Rights
Certificates"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a) hereof) so that Rights Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) As promptly as practicable, the Company will send a copy of a
Summary of Rights to Purchase Preferred 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 the Common Stock as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company.
(c) Rights shall be issued in respect of all shares of Common Stock
which are issued (whether originally issued or from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date. Certificates representing such shares of Common Stock shall
also be deemed to be certificates for Rights and shall bear the following
legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between Smith
Corona Corporation (the "Company") and Marine Midland Bank (the "Rights
Agent") dated as of February __, 1997 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a copy
of which is on file at the principal offices of the Company. 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.
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The Company will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge,
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement), whether currently held by or on behalf of such Person or by
any subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Expiration Date, registered holders of
Common Stock shall also be the registered holders of the associated Rights, and
the transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase and
of assignment to be printed on the reverse thereof) shall each be substantially
in the form set forth in Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. The Rights Certificates shall be in a
machine printable format. Subject to the provisions of Section 11 and Section 22
hereof, the Rights Certificates, whenever distributed, shall be dated as of the
Record Date, shall show the date of countersignature and on their face shall
entitle the holders thereof to purchase such number of one one-thousandths of a
share of Preferred Stock as shall be set forth therein at the price set forth
therein (such exercise price per one one-thousandth of a share, the "Purchase
Price"), but the amount and the type of securities purchasable upon the exercise
of each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section
22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person
or any Affiliate or Associate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Affiliate or Associate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Affiliate or Associate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
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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 such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which a majority of the Continuing Directors has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect avoidance of Section 7(e) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Rights Certificate referred to
in this sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
The Company shall instruct the Rights Agent in writing of the Rights
which should be so legended and shall supply the Rights Agent with such legended
Rights Certificates.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company
by its Chairman of the Board, Chief Executive Officer, President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned by
an authorized signatory of the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by an
authorized signatory of the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office or offices designated as the appropriate
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place for surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e) and Section
14 hereof, at any time after the close of business on the Distribution Date, and
at or prior to the close of business on the Expiration Date, any Rights
Certificate or Certificates may be transferred, split up, combined or exchanged
for another Rights Certificate or Certificates, entitling the registered holder
to purchase a like number of one one-thousandths of a share of Preferred Stock
(or, following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the office or offices of the Rights Agent designated for such purpose.
Neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment by the holder of a Rights Certificate of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
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surrender to the Rights Agent and cancellation of the Rights Certificate, if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii) and Section 23(a)
hereof) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the office or offices of the Rights Agent designated for such purpose, along
with a signature guarantee and such other and further documentation as the
Rights Agent may reasonably request, together with payment of the aggregate
Purchase Price with respect to the total number of one one-thousandths of a
share of Preferred Stock (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then exercisable, at or prior to
the earlier of (i) the close of business on February __, 2007 (the "Final
Expiration Date"), or (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof (the earlier of (i) and (ii) being herein referred to as
the "Expiration Date").
(b) The Purchase Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $___ and
shall be subject to adjustment from time to time as provided in Sections 11 and
13(a) hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per one one-thousandth of a share of Preferred Stock (or other securities,
cash or other assets, as the case may be) to be purchased as set forth below and
an amount equal to any applicable transfer tax, the Rights Agent shall, subject
to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-thousandths of a share of Preferred Stock to be purchased and
the Company hereby irrevocably authorizes its transfer agent to comply with all
such requests, or (B) if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
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depositary receipts representing such number of one one-thousandths of a share
of Preferred Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iv) after receipt thereof, deliver
such cash, if any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be reduced
pursuant to Section 11(a)(ii) or Section 13(a) hereof) shall be made in cash or
by certified check or bank draft payable to the order of the Company. In the
event that the Company is obligated to issue other securities (including Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred
Stock would be issued.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as may be
designated by such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Affiliate or Associate) 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 a majority of the
Continuing Directors has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
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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 Rights Certificates or other Person as a result of its failure to
make any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued shares of Preferred Stock
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued shares of Common Stock and/or other securities or out of its authorized
and issued shares held in its treasury), the number of shares of Preferred Stock
(and, following the occurrence of a Triggering Event, Common Stock and/or other
securities) that, as provided in this Agreement, including Section 11(a)(iii)
hereof, will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) issuable
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and deliverable upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) 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, a registration statement under 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, or (B) the date of the expiration of the Rights. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed 90 days after the date set forth in clause (i) of the
first sentence of this Section 9(c), the exercisability of the Rights in order
to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement, and shall give simultaneous written notice to the Rights Agent
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared
effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all one one-thousandths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment of the
Purchase Price), be duly and validly authorized and issued, and fully paid and
non-assessable.
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(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of the 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
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for a number of one one-thousandths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
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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 Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of shares of Preferred Stock
or capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares
of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time
when the Preferred Stock transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification.
If an event occurs which would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person, alone or together with its
Affiliates and Associates, shall, at any time after the Rights Dividend
Declaration Date, become an Acquiring Person, 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 at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of a number of one
one-thousandths of a share of Preferred Stock, such number of shares of
Common Stock of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, 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 (determined pursuant to Section 11(d)(i)
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hereof) per share of Common Stock on the date of such first occurrence
(such number of shares being referred to as the "Adjustment Shares").
(iii) In the event that the number of shares of Common 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 the foregoing subparagraph (ii)
of this Section 11(a), 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 value of the Adjustment Shares issuable upon the exercise
of a Right (the "Current Value"), and (B) with respect to each Right
(subject to Section 7(e) hereof), make adequate provision to substitute
for the Adjustment Shares, upon the exercise of a Right and payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock, such as the Preferred Stock, which the Board has
deemed to have essentially the same value or economic rights as shares
of Common Stock (such shares of preferred stock being referred to as
"Common Stock Equivalents")), (4) debt securities of the Company, (5)
other assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has been
determined by the Board based upon the advice of a nationally
recognized investment banking firm selected by the Board; provided,
however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within 30 days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and (y)
the date on which the Company's right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as the
"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 Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. For purposes of the
preceding sentence, the term "Spread" shall mean the excess of (i) the
Current Value over (ii) the Purchase Price. If the Board determines in
good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of
the Rights, the 30-day period set forth above may be extended to the
extent necessary, but not more than 90 days after the Section 11(a)(ii)
Trigger Date, in order that the Company may seek shareholder approval
for the authorization of such additional shares (such 30-day period, as
it may be extended, is herein called the "Substitution Period"). To
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the extent that action is to be taken pursuant to the first and/or
third sentences of this Section 11(a)(iii), the Company (1) shall
provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and (2) may suspend the
exercisability of the Rights until the expiration of the Substitution
Period in order to seek such shareholder approval for such
authorization of additional shares and/or to decide the appropriate
form of distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension, the
Company shall issue a public announcement, with simultaneous written
notice to the Rights Agent 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 each Adjustment Share shall be
the Current Market Price (as determined pursuant to Section 11(d)(i)
hereof) per share of the Common Stock on the Section 11(a)(ii) Trigger
Date and the per share or per unit value of any Common Stock Equivalent
shall be deemed to equal the Current Market Price per share of the
Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Preferred Stock (or shares having the same rights, privileges
and preferences as the shares of Preferred Stock ("equivalent preferred stock"))
or securities convertible into Preferred Stock or equivalent preferred stock at
a price per share of Preferred Stock or per share of equivalent preferred stock
(or having a conversion price per share, if a security convertible into
Preferred Stock or equivalent preferred stock) less than the Current Market
Price per share of Preferred Stock on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
equivalent preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
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by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Shares of Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed, and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a distribution to
all holders of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
corporation), of evidences of indebtedness, cash (other than a regular cash
dividend out of the earnings or retained earnings of the Company), assets (other
than a dividend payable in Preferred Stock, but including any dividend payable
in stock other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price (as determined pursuant to
Section 11(d)(i) hereof) per share of Preferred Stock on such record date, less
the fair market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
such Current Market Price per share of Preferred Stock. Such adjustments shall
be made successively whenever such a record date is fixed, and in the event that
such distribution is not so made, the Purchase Price shall be adjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d)(i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the
"Current Market Price" per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the 30 consecutive Trading Days (as hereinafter
defined) immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the Current
Market Price per share of Common Stock on any date shall be deemed to
be the average of the daily closing prices per share of such Common
Stock for the ten consecutive Trading Days immediately following such
date; provided, however, that in the event that the Current Market
Price per share of the Common Stock is determined during a period
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following the announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock payable in shares
of such Common Stock or securities convertible into shares of such
Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock, and the
ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, shall not have
occurred prior to the commencement of the requisite 30 Trading Day or
ten Trading Day period, as set forth above, then, and in each such
case, the Current Market Price shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be
the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares of
Common Stock are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation
System or such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock selected
by the Board. If on any such date no market maker is making a market in
the Common Stock, the fair value of such shares on such date as
determined in good faith by the Board shall be used. The term "Trading
Day" shall mean a day on which the principal national securities
exchange on which the shares of Common Stock are listed or admitted to
trading is open for the transaction of business or, if the shares of
Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common Stock is not
publicly held or not so listed or traded, Current Market Price per
share shall mean the fair value per share as determined in good faith
by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the Current
Market Price per share of Preferred Stock shall be determined in the
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same manner as set forth above for the Common Stock in clause (i) of
this Section 11(d) (other than the last sentence thereof). If the
Current Market Price per share of Preferred Stock cannot be determined
in the manner provided above or if the Preferred Stock is not publicly
held or listed or traded in a manner described in clause (i) of this
Section 11(d), the Current Market Price per share of Preferred Stock
shall be conclusively deemed to be an amount equal to 1,000 (as such
number may be appropriately adjusted for such events as stock splits,
stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the Current
Market Price per share of the Common Stock. If neither the Common Stock
nor the Preferred Stock is publicly held or so listed or traded,
Current Market Price per share of the Preferred Stock shall mean the
fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be conclusive for all
purposes. For all purposes of this Agreement, the Current Market Price
of a Unit shall be equal to the Current Market Price of one share of
Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments 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 hundred-thousandth of a share of Common Stock or other
share or one-ten-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment, or (ii)
the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Right and the Purchase Price thereof shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
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purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a share of Preferred Stock (calculated to the nearest one-ten-millionth)
obtained by (i) multiplying (x) the number of one one-thousandths of a share
covered by a Right immediately prior to this adjustment, by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of one one-thousandths of a share of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-thousandths of a
share of Preferred Stock for which a Right was exercisable immediately prior to
such adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the nearest
one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten days later than the date of
the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein (and may
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bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-thousandth of a
share and the number of one one-thousandths of a share which were expressed in
the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then stated value, if any, of the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and non-assessable such number of one one-thousandths of a
share of Preferred 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 issuance to the holder of any Right exercised after such record date
the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) or securities upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the Current Market Price thereof, (iii) issuance
wholly for cash of shares of Preferred Stock or securities which by their terms
are convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends, or (v) issuance of rights, options or warrants referred to in this
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Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its 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 which 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 shareholders 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
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to the Distribution Date (i) declare a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock, or (iii) combine the
outstanding shares of Common Stock into a smaller number of shares, the number
of Rights associated with each share of Common Stock then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of
Common Stock immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
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shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, the adjusted Purchase Price and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent, and
with each transfer agent for the Preferred Stock and the Common Stock, a copy of
such certificate, and (c) mail a brief summary thereof to each holder of a
Rights Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 25
hereof. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date, 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 continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell, mortgage or otherwise transfer (or one
or more of its Subsidiaries shall sell, mortgage or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any 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 may
be contemplated by Section 13(d) hereof), proper provision shall be made so
that: (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and freely
tradeable shares of Common Stock of the Principal Party, not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall
be equal to the result obtained by (1) multiplying the then current Purchase
Price by the number of one one-thousandths of a share of Preferred Stock for
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which a Right is 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 such one
one-thousandths of a share 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 (2) 50% of the Current Market Price (determined pursuant to
Section 11(d)(i) hereof) per share of the Common Stock of such Principal Party
on the date of consummation of such Section 13 Event; (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
Common Stock) in connection with the consummation of any such transaction as may
be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) hereof shall be of no effect following the first
occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, 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), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, "Principal Party" shall refer to such other Person; and
(2) in case such Person is a Subsidiary, directly or indirectly, of more than
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one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a 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).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For 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
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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 the National
Association of Securities Dealers, Inc. Automated Quotation System 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 Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandth of a share of Preferred Stock,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one one-thousandth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
one one-thousandth of a share of Preferred Stock shall be one one-thousandth of
the closing price of a share of Preferred Stock (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
Current Market Value of one share of Common Stock. For purposes of this Section
14(c), the Current Market Value of one share of Common Stock shall be the
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closing price of one share of Common Stock (as determined pursuant to Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
(d) 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, excepting the rights of action given to the Rights Agent, are vested
in the respective registered holders of the Rights Certificates (and, prior to
the Distribution Date, the registered holders of the Common Stock); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Rights Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
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other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to 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 obligations; provided, however, that the Company must use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-thousandths of a share of Preferred 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 Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 24 hereof), or to receive dividends or subscription rights,
or otherwise, until the Right or Rights evidenced by such Rights Certificate
shall have been exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent such compensation as
shall be agreed to in writing between the Company and the Rights Agent for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and
other 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 gross 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, without limitation, the costs and expenses of defending
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against any claim of liability in the premises. The provisions of this Section
18(a) shall survive the expiration of the Rights and the termination of this
Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed by the proper
Person or Persons and where necessary, verified or acknowledged, or otherwise
upon the advice of counsel as set forth in Section 20 hereof.
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 shareholder services business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent
shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Rights Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
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Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Agreement, and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent, upon the following terms and conditions, by all of which the Company and
the holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its selection
(who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "Current Market Price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate signed by the
Chairman of the Board, Chief Executive Officer, the President, any Vice
President or the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
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 Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(e) hereof); nor shall it be
responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
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such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, Chief Executive Officer, the President, any Vice
President or the Secretary 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 or for any delay in acting while waiting
for those instructions.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct; provided, however, that reasonable care was exercised in
the selection 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.
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(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(l) The Company agrees to give the Rights Agent prompt written notice
of any event or ownership which would prohibit the exercise or transfer of the
Rights Certificate.
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. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the Company shall become
the Rights Agent until a successor Rights Agent has been appointed, and the
Rights Agent or any registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a 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 shareholder services
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates.
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Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, subject to Section 4 hereof, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement.
Section 23. Redemption and Termination.
(a) The Company may, by a resolution of its Board of Directors (which
resolution shall, if adopted following the Stock Acquisition Date, 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), at its option, at any time prior to the earlier of (i) the close of
business on the tenth day following the Stock Acquisition Date (or, if the Stock
Acquisition Date shall have occurred prior to the Record Date, the close of
business on the tenth day following the Record Date) or (ii) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at
a redemption price of $.001 per Right, as such amount may be 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"). Notwithstanding anything contained in
this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Section 11(a)(ii) Event until such time as the Company's
right of redemption hereunder has expired. The Company may, at its option, pay
the Redemption Price in cash, shares of Common Stock (based on the Current
Market Price of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to all such holders at each holder's last address as it appears upon
the registry books of the Rights Agent or, prior to the Distribution Date, on
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the registry books of the transfer agent for the Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other securities, rights
or options, or (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock), or (iv) to effect any consolidation or merger into
or with any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one transaction or a series of related transactions, of
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or 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), 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 Rights Certificate and to the Rights Agent, to the extent feasible
and 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,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
shares of Preferred Stock, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least 20 days prior to the record date for determining holders of the shares
of Preferred Stock for purposes of such action, and in the case of any such
other action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of the shares of
Preferred Stock whichever shall be the earlier.
(b) In the event that a Section 11(a)(ii) Event shall occur, then (i)
the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate and to the Rights Agent, to the extent feasible and in
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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) hereof, and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock
and/or, if appropriate, other securities.
Section 25. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Smith Corona Corporation
65 Locust Avenue
New Canaan, Connecticut 06840
Attention: President
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Marine Midland Bank
140 Broadway, 12th Floor
New York, New York 10005-1180
Attention: Corporate Trust Services
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company may by
resolution of its Board of Directors (which resolution, if adopted following the
Stock Acquisition Date, 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 any provision of this
Agreement without the approval of any holders of certificates representing
shares of Common Stock. From and after the Distribution Date and subject to the
penultimate sentence of this Section 26, the Company may by resolution of its
Board of Directors (which resolution, if adopted following the Stock Acquisition
Date, shall be effective only with the concurrence of a majority of the
Continuing Directors and only if the Continuing Directors constitute a
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majority of the number of directors then in office), and the Rights Agent shall
if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder, (iv) to provide exceptions under
Section 1(a) of this Agreement in respect of any Person (in addition to MHC and
PBGC) who may acquire securities pursuant to the Plan such that such Person
becomes a Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding or (v) to change or supplement the provisions hereunder in any
manner which the Company may deem necessary or desirable and which, in the case
of this clause (v), shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring 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 at such time as
the Rights are not then redeemable, or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights. 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
any other provision hereof, the Rights Agent's consent must be obtained
regarding any amendment or supplement pursuant to this Section 26 which alters
the Rights Agent's rights or duties. 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 one one-thousandths of a share of Preferred Stock for which a
Right is exercisable. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common 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.
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
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company (with, where
specifically provided for herein, the concurrence of a majority of the
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Continuing Directors and only if the Continuing Directors constitute a majority
of the number of directors then in office) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors (with, where specifically provided for herein, 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) in good faith
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties and (y) not subject the Board of
Directors or the Continuing Directors to any liability to the holders of the
Rights.
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 Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 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 determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the close of business on the
tenth day following the date of such determination by the Board of Directors.
Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
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construed in accordance with the laws of such State applicable to contracts made
and to be 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
Attest SMITH CORONA CORPORATION
By: _______________________ By: ________________________
Name: Name:
Title: Title:
Attest MARINE MIDLAND BANK
as Rights Agent
By: ______________________ By: _________________________
Name: Name:
Title: Title:
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EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND
RIGHTS OF PREFERRED STOCK, SERIES A
of
SMITH CORONA CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
I, ________________, Secretary of Smith Corona Corporation, a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of this Corporation, the
Board of Directors, on ___________, 1997, adopted the following resolution
creating a series of _____ shares of Preferred Stock designated as Preferred
Stock, Series A:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of this Corporation in accordance with the provisions of its
Restated Certificate of Incorporation, a series of Preferred Stock of the
Corporation be and it hereby is created, and that the designation and amount
thereof and the voting powers, preferences and relative, participating, optional
and other special rights of the shares of such series, and the qualifications,
limitations and restrictions thereof, are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Preferred Stock, Series A" and the number of shares
constituting such series shall be _____.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Preferred Stock, Series A with respect to dividends, the holders of
shares of Preferred Stock, Series A shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of January, April,
July and October in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Preferred Stock, Series A, in an amount per share (rounded to the nearest cent),
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subject to the provision for adjustment hereinafter set forth, equal to 1000
times the aggregate per share amount of all cash dividends, and 1000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock, par value $.001 per share, of the
Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Preferred
Stock, Series A. In the event the Corporation shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Preferred Stock, Series A were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution
on the Preferred Stock, Series A as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Preferred Stock, Series A from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Preferred Stock,
Series A, unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Preferred Stock,
Series A entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of
Preferred Stock, Series A in an amount less than the total amount of such
dividends at the time accrued and payable on such shares shall be allocated pro
rata on a share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of holders of
shares of Preferred Stock, Series A entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than thirty
(30) days prior to the date fixed for the payment thereof.
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Section 3. Voting Rights. The holders of shares of Preferred
Stock, Series A shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Preferred Stock, Series A shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the number of votes per share
to which holders of shares of Preferred Stock, Series A were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Preferred Stock, Series A and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Preferred Stock,
Series A shall be in arrears in an amount equal to six (6) quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning of a period
(herein called a "default period") which shall extend until such time when all
accrued and unpaid dividends for all previous quarterly dividend periods and for
the current quarterly dividend period on all shares of Preferred Stock, Series A
then outstanding shall have been declared and paid or set apart for payment.
During each default period, all holders of Preferred Stock (including holders of
the Preferred Stock, Series A) with dividends in arrears in an amount equal to
six (6) quarterly dividends thereon, voting as a class, irrespective of series,
shall have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the
holders of Preferred Stock, Series A may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting right nor the right of the
holders of any other series of Preferred Stock, if any, to increase, in certain
cases, the authorized number of Directors shall be exercised unless the holders
of ten percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
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shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Preferred Stock, Series A.
(iii) Unless the holders of Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or stockholders
owning in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice President or the Secretary of
the Corporation. Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to this paragraph
(C)(iii) shall be given to each holder of record of Preferred Stock by mailing a
copy of such notice to him at his last address as the same appears on the books
of the Corporation. Such meeting shall be called for a time not earlier than
twenty (20) days and not later than sixty (60) days after such order or request
or in default of the calling of such meeting within sixty (60) days after such
order or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than ten percent
(10%) of the total number of shares of Preferred Stock outstanding.
Notwithstanding the provisions of this paragraph (C)(iii), no such special
meeting shall be called during the period within sixty (60) days immediately
preceding the date fixed for the next annual meeting of the stockholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect two (2) Directors voting as a
class, after the exercise of which right (x) the Directors so elected by the
holders of Preferred Stock shall continue in office until their successors shall
have been elected by such holders or until the expiration of the default period,
and (y) any vacancy in the Board of Directors may (except as provided in
paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the
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remaining Directors thretofore elected by the holders of the class of stock
which elected the Director whose office shall have become vacant. References in
this paragraph (C) to Directors elected by the holders of a particular class of
stock shall include Directors elected by such Directors to fill vacancies as
provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the certificate of incorporation or by-laws
irrespective of any increase made pursuant to the provisions of paragraph
(C)(ii) of this Section 3 (such number being subject, however, to change
thereafter in any manner provided by law or in the certificate of incorporation
or by-laws). Any vacancies in the Board of Directors effected by the provisions
of clauses (y) and (z) in the preceding sentence may be filled by a majority of
the remaining Directors.
(D) Except as set forth herein, holders of Preferred Stock,
Series A shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Preferred Stock, Series A as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Preferred Stock, Series A
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Preferred Stock, Series A;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Preferred Stock, Series A, except dividends paid ratably on the
Preferred Stock, Series A and all such parity stock on which dividends
are payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
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Preferred Stock, Series A, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Preferred Stock, Series A; or
(iv) purchase or otherwise acquire for consideration
any shares of Preferred Stock, Series A, or any shares of stock ranking
on a parity with the Preferred Stock, Series A, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Preferred Stock,
Series A purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Preferred Stock, Series A unless, prior thereto, the holders
of shares of Preferred Stock, Series A shall have received $1.00 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment. Thereafter, the holders of
the Preferred Stock, Series A shall be entitled to receive an aggregate amount
per share, subject to the provision for adjustment hereinafter set forth, equal
to 1,000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock. Following the payment of the foregoing, holders of
Preferred Stock, Series A and holders of shares of Common Stock shall receive
their ratable and proportionate share of the remaining assets to be distributed.
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<PAGE>
(B) In the event, however, that there are not sufficient
assets available to permit payment in full of the liquidation preference of the
Preferred Stock, Series A and the liquidation preferences of all other series of
preferred stock, if any, which rank on a parity with the Preferred Stock, Series
A, then such remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation preferences.
(C) In the event the Corporation shall at any time (i) declare
any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock (by reclassification or otherwise), or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the aggregate amount to which holders of shares of the Preferred
Stock, Series A were entitled pursuant to this Section 6 immediately prior to
such event shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case the shares
of Preferred Stock, Series A shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock (by reclassification or otherwise), or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Preferred Stock, Series A shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. No Redemption. The shares of Preferred Stock,
Series A shall not be redeemable.
Section 9. Ranking. The Preferred Stock, Series A shall rank
junior to all other series of the Corporation's Preferred Stock as to the
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payment of dividents and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Restated Certificate of
Incorporation of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preferences or special rights
of the Preferred Stock, Series A so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding shares
of Preferred Stock, Series A voting separately as a class.
Section 11. Fractional Shares. Preferred Stock, Series A may
be issued in fractions of a share which shall entitle the holder, in proportion
to such holder's fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Preferred Stock, Series A.
IN WITNESS WHEREOF, we have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
this _______ day of _____________, 1997.
______________________________
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EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. R- ----Rights
NOT EXERCISABLE AFTER FEBRUARY __, 2007 OR EARLIER IF REDEEMED BY THE COMPANY.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]1*
RIGHTS CERTIFICATE
SMITH CORONA 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 February __, 1997 (the "Rights Agreement"), between Smith
Corona Corporation, a Delaware corporation (the "Company"), and Marine Midland
Bank, a New York banking corporation (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 at any time prior to 5:00 P.M. (New York City time) on
February __, 2007 at the office or offices of the Rights Agent designated for
such purpose, or its successor as Rights Agent, one one-thousandth of a fully
paid, nonassessable share of Preferred Stock, Series A (the "Preferred Stock")
of the Company, at a purchase price of $___ per one one-thousandth of a share
(the "Purchase Price"), upon
- --------
1* The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
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<PAGE>
presentation and surrender of this Rights Certificate with the Form of Election
to Purchase and related Certification duly executed. The number of Rights
evidenced by this Rights Certificate (and the number of one one-thousandths of a
share of Preferred Stock which may be purchased upon exercise thereof) set forth
above, and the Purchase Price per share set forth above, are the number and
Purchase Price as of _________, 1997, based on the Preferred Stock as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number and kind of shares of Preferred Stock or other securities
which may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
Upon the occurrence of a Section 11(a)(ii) Event (as such term
is defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Affiliate or
Associate or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, 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.
This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights Certificate or
Rights Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of one one-thousandths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
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<PAGE>
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $.001 per Right. No fractional shares of Preferred Stock
will be issued upon the exercise of any Right or Rights evidenced hereby (other
than fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company 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 Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
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<PAGE>
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of __________
SMITH CORONA CORPORATION
By----------------------------------
Name:
Title:
Countersigned:
MARINE MIDLAND BANK
as Rights Agent
By----------------------------
Authorized Representative
Date of Countersignature:
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<PAGE>
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint______________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
Signature
Signature Guaranteed:
Signature must be guaranteed by a commercial bank or trust company,
broker, dealer, or other eligible institution which is a member in good standing
of a medallion guaranty program approved by the Securities Transfer Association,
Inc.
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<PAGE>
Form of Reverse Side of Rights Certificate (continued)
Certification
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [_] is [_] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:___________________
Signature
Signature Guaranteed:
Signature must be guaranteed by a commercial bank or trust company,
broker, dealer, or other eligible institution which is a member in good standing
of a medallion guaranty program approved by the Securities Transfer Association,
Inc.
NOTICE
The signature to the foregoing Assignment and Certification
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Certificate) and such
Assignment will not be honored.
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<PAGE>
Form of Reverse Side of Rights Certificate (continued)
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate.)
To: Smith Corona Corporation
The undersigned hereby irrevocably elects to exercise
_____________ Rights represented by this Rights Certificate to purchase the
shares of Preferred Stock issuable upon the exercise of the Rights (or such
other securities of the Company or of any other person which may be issuable
upon the exercise of the 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 Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated:_________________
Signature
Signature Guaranteed:
Signature must be guaranteed by a commercial bank or trust company,
broker, dealer or other eligible institution which is a member in good standing
of a medallion guaranty program approved by the Securities Transfer Association,
Inc.
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<PAGE>
Form of Reverse Side of Rights Certificate (continued)
Certification
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [_] are
[_] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [_] did [_] did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated:___________________
Signature
Signature Guaranteed:
Signature must be guaranteed by a commercial bank or trust company,
broker, dealer or other eligible institution which is a member in good standing
of a medallion guaranty program approved by the Securities Transfer Association,
Inc.
NOTICE
The signature to the foregoing Election to Purchase and
Certification must correspond to the name as written upon the face of this
Rights Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Certificate) and such Election to
Purchase will not be honored.
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<PAGE>
EXHIBIT C
SUMMARY OF RIGHTS
On _____________, 1997, the Board of Directors of Smith Corona
Corporation (the "Company") declared a dividend distribution of one Right for
each outstanding share of the Company's Common Stock, par value $.001 per share
(the "Common Stock"), payable to stockholders of record at the close of business
on such date (the "Record Date") and payable with respect to Common Stock issued
thereafter until the Distribution Date (as defined below) or as may be otherwise
provided in the Rights Agreement. Except as set forth below, each Right, when it
becomes exercisable, entitles the registered holder to purchase from the Company
a unit consisting initially of one one-thousandth of a share (a "Unit") of
Preferred Stock, Series A, par value $.001 per share (the "Preferred Stock"), of
the Company, at a Purchase Price of $________ per Unit, subject to adjustment
(the "Purchase Price"). The description and terms of the Rights are set forth in
a Rights Agreement (the "Rights Agreement"), dated as of February __, 1997,
between the Company and Marine Midland Bank, as Rights Agent.
Initially, the Rights will be attached to all certificates representing
shares of Common Stock, and no separate certificates evidencing the Rights
("Rights Certificates") will be distributed. The Rights will separate from the
Common Stock and a "Distribution Date" will occur upon the earlier of (i) ten
days (or such later date as the Board of Directors shall determine) following
public disclosure that a person or group of affiliated or associated persons has
become an "Acquiring Person" (as defined below) or (ii) ten business days (or
such later date as the Board shall determine) following the commencement of a
tender offer or exchange offer that would result in a person or group becoming
an "Acquiring Person". Except as set forth below, an "Acquiring Person" is a
person or group of affiliated or associated persons who has acquired beneficial
ownership of 15% or more of the outstanding shares of Common Stock. The term
"Acquiring Person" excludes (i) the Company, (ii) any subsidiary of the Company,
(iii) any employee benefit plan of the Company or any subsidiary of the Company
or (iv) any person or entity organized, appointed or established by the Company
for or pursuant to the terms of any such plan.
MHC Inc. may, by virtue of its acquisition of Warrants pursuant to the
Company's Third Amended Second Joint Plan of Reorganization under Chapter 11 of
the United States Bankruptcy Code (the "Plan"), be deemed, for purposes of the
Rights Agreement, a beneficial owner of Common Stock representing approximately
___% of such Common Stock to be outstanding after giving effect to the issuance
of Common Stock to holders of allowed general unsecured claims under the Plan
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<PAGE>
and of Warrants to MHC Inc. The Pension Benefit Guaranty Corporation ("PBGC")
may, by virtue of its acquisition of Common Stock pursuant to the Plan, be
deemed, for purposes of the Rights Agreement, a beneficial owner of Common Stock
representing approximately __% of the Common Stock to be outstanding after
giving effect to the issuance of Common Stock to holders (including PBGC) of
allowed general unsecured claims under the Plan. The Rights Agreement provides
that each of MHC Inc. and PBGC would become an Acquiring Person only if its
level of beneficial ownership exceeds its percentage of beneficial ownership as
of the effective date of the Plan plus 1%, subject to reduction in such
percentage to take into account Common Stock issued after such effective date.
Until the Distribution Date, (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) Common Stock certificates will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate. Pursuant to the Rights Agreement, the Company reserves the right to
require prior to the occurrence of a Triggering Event (as defined below) that,
upon any exercise of Rights, a number of Rights be exercised so that only whole
shares of Preferred Stock will be issued.
As soon as practicable after the occurrence of the Distribution Date,
Rights Certificates will be mailed to holders of record of the Common Stock as
of the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights. Except as may be otherwise
provided in the Rights Agreement, only shares of Common Stock issued prior to
the Distribution Date will be issued with Rights.
The Rights are not exercisable until the Distribution Date and until
the Rights are no longer redeemable.__The Rights will expire at the close of
business on February __, 2007, unless extended or earlier redeemed by the
Company as described below.
In the event that a person becomes an Acquiring Person, each holder of
a Right will have the right to receive, upon exercise of the Right after the
Distribution Date and subject to the provisions of the Rights Agreement, Common
Stock (or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of the event 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 will be null and void and nontransferable and any holder of any such
right (including any purported transferee or subsequent holder) will be unable
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<PAGE>
to exercise or transfer any such right. For example, at an exercise price of
$___ per Right, each Right not owned by an Acquiring Person (or by certain
related parties) following an event set forth in this paragraph would entitle
its holder to purchase $___ worth of Common Stock (or other consideration, as
noted above) for $___. Assuming that the Common Stock had a per share value of
$__ at such time, the holder of each valid Right would be entitled to purchase
___ shares of Common Stock for $___.
In the event that, at any time following the date on which there has
been public disclosure that, or of facts indicating that, a person has become an
Acquiring Person (the "Stock Acquisition Date"), (i) the Company is acquired in
a merger or other business combination transaction in which the Company is not
the surviving corporation or (ii) 50% or more of the Company's assets or earning
power is sold, mortgaged or transferred, each holder of a Right (except Rights
which previously have been voided as set forth above) shall thereafter have the
right to receive, upon exercise, common stock of the acquiring company having a
value equal to two times the exercise price of the Right. The events set forth
in this paragraph and in the preceding paragraph are referred to as the
"Triggering Events."
The Purchase Price payable, and the number of Units of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities at
less than the current market price of the Preferred Stock or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
Because of the nature of the Preferred Stock's dividend and liquidation
rights, the value of the one one-thousandth interest in a share of Preferred
Stock purchasable upon exercise of each Right should approximate the value of
one share of Common Stock. Shares of Preferred Stock purchasable upon exercise
of the Rights will not be redeemable. Each share of Preferred Stock will be
entitled to a quarterly dividend payment of 1,000 times the dividend declared
per share of Common Stock. In the event of liquidation, each share of Preferred
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Stock will be entitled to a $1 preference, and thereafter the holders of the
shares of Preferred Stock will be entitled to an aggregate payment of 1,000
times the aggregate payment made per share of Common Stock. Each share of
Preferred Stock will have 1,000 votes, voting together with the shares of Common
Stock. These rights are protected by customary antidilution provisions.
At any time until ten days following the Stock Acquisition Date, the
Company may redeem the Rights in whole, but not in part, at a price (the
"Redemption Price") of $.001 per Right (payable in cash, Common Stock or other
consideration deemed appropriate by the Board of Directors) by resolution of the
Board of Directors (provided that following a Stock Acquisition Date such
resolution is approved by a majority of the Continuing Directors and only if the
Continuing Directors constitute a majority of the directors then in office). A
"Continuing Director" is a member of the Board of Directors who is not an
Acquiring Person, an affiliate or associate of an Acquiring Person or a
representative or nominee of an Acquiring Person. Immediately upon such action
of the Board of Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) 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
resolution of the Board of Directors of the Company (provided that following a
Stock Acquisition Date such resolution is approved by a majority of the
Continuing Directors and only if the Continuing Directors constitute a majority
of the directors then in office) prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by
resolution of the Board of Directors of the Company (provided that following a
Stock Acquisition Date such resolution is approved by a majority of the
Continuing Directors and only if the Continuing Directors constitute a majority
of the directors then in office) in order to cure any ambiguity, to make changes
which do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person or its affiliates or associates), 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.
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A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to the Company's registration statement, dated
__________, 1997, on Form 8-A. A copy of the Rights Agreement is available free
of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by reference.
_________________________, 1997
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EXHIBIT 6
[FORM OF NEWSCC WARRANT AGREEMENT]
----------------------------------------------------------------------------
WARRANT AGREEMENT
between
SMITH CORONA CORPORATION
and
MARINE MIDLAND BANK,
as Warrant Agent
---------------
Dated as of [______________] [__], 1997
----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Definitions...................................................1
Section 2. Form of Warrant; Execution; Registration......................3
2.1 Form of Warrant; Execution of Warrants......................3
2.2 Registration................................................4
2.3 Countersignature of Warrants................................4
Section 3. Transfer and Exchange of Warrants.............................4
Section 4. Term of Warrants; Exercise of Warrants; Compliance with Government
Regulations; Restrictions on Transfer; Reduction of
Exercise Price...................................................5
4.1 Term of Warrants............................................5
4.2 Exercise of Warrants........................................5
4.3 Compliance with Government Regulations; Qualification
under the Securities Laws...............................6
4.4 Restrictions on Transfer....................................7
4.5 Reduction of Exercise Price.................................9
Section 5. Payment of Taxes..............................................10
Section 6. Mutilated or Missing Warrant Certificates.....................10
Section 7. Reservation of Warrant Shares.................................10
Section 8. Stock Exchange Listing........................................11
Section 9. Adjustment of Exercise Price; Number of Warrant Shares and
Shares of Capital Stock Warrants Are Exercisable Into............11
9.1 Mechanical Adjustments......................................11
(a) Adjustment for Change in Capital Stock.............11
(b) Adjustment for Rights Issue........................12
(c) Adjustment for Other Distributions.................12
(d) Current Market Price; Price Per Share..............12
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(e) When De Minimis Adjustment May Be Deferred..........14
(f) Adjustment in Exercise Price........................14
(g) When No Adjustment Required.........................14
(h) Shares of Common Stock..............................14
(i) Expiration of Rights...............................15
9.2 Voluntary Adjustment by the Company..........................15
9.3 Notice of Adjustment.........................................15
9.4 Preservation of Purchase Rights upon Merger or Consolidation.15
9.5 No Adjustment for Dividends..................................16
9.6 Statement on Warrants........................................16
Section 10. Fractional Interests..........................................16
Section 11. No Rights as Stockholders; Notices to Holders.................16
Section 12. Payments in U.................................................17
Section 13. Merger or Consolidation or Change of Name of Warrant Agent....18
Section 14. Appointment of Warrant Agent..................................18
14.1 Concerning the Warrant Agent................................18
14.2 Correctness of Statements...................................18
14.3 Breach of Covenants.........................................18
14.4 Performance of Duties.......................................19
14.5 Reliance on Counsel.........................................19
14.6 Proof of Actions Taken......................................19
14.7 Compensation................................................19
14.8 Legal Proceedings...........................................19
14.9 Other Transactions in Securities of Company.................20
14.10 Liability of Warrant Agent.................................20
14.11 Reliance on Documents......................................20
14.12 Validity of Agreement......................................20
14.13 Instructions from Company..................................20
Section 15. Change of Warrant Agent.......................................20
Section 16. Notices.......................................................21
Section 17. Cancellation of Warrants......................................21
Section 18. Supplements and Amendments....................................22
Section 19. Successors....................................................22
Section 20. Applicable Law................................................22
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Section 21. Benefits of this Agreement....................................22
Section 22. Counterparts..................................................22
Section 23. Captions......................................................22
EXHIBIT A
FORM OF WARRANT CERTIFICATE
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WARRANT AGREEMENT, dated as of [__________] [_____], 1997, by
and between SMITH CORONA CORPORATION, a Delaware corporation (the "Company"),
and MARINE MIDLAND BANK, as Warrant Agent (together with any successors and
assigns, the "Warrant Agent").
W I T N E S S E T H :
WHEREAS, the Company was a Debtor and Debtor-in-Possession in
the case (the "Chapter 11 Case") filed in the United States Bankruptcy Court for
the District of Delaware (the "Bankruptcy Court"), entitled "In re Smith Corona
Corporation, SCM Office Supplies, Inc., SCC LI Corp. and Hulse Manufacturing
Company, Debtors," Chapter 11 Case No. 95-788 (HSB), under the Bankruptcy Reform
Act of 1978, as amended (the "Bankruptcy Code");
WHEREAS, in connection with and as part of the transactions to
be consummated pursuant to the confirmation of the Company's Third Amended
Second Joint Plan of Reorganization (as amended, modified or supplemented from
time to time) in the Chapter 11 Case (the "Plan"), the Company has agreed to
issue Warrants for the purchase of an aggregate of 1,512,500 shares of Common
Stock of the Company (subject to adjustment as herein provided) (the
"Warrants");
WHEREAS, by Order dated [________] [___], 199[6], the
Bankruptcy Court confirmed the Plan;
WHEREAS, the Plan contemplates that the Company will enter
into this Warrant Agreement;
WHEREAS, the Company desires to issue the Warrants, each of
which entitles the holder thereof to purchase one share of its Common Stock
(each of said shares of Common Stock deliverable upon exercise of the Warrants a
"Warrant Share"); and
WHEREAS, the Company wishes the Warrant Agent to act on behalf
of the Company, and the Warrant Agent is willing to so act in connection with
the issuance, division, transfer, exchange and exercise of Warrants.
NOW, THEREFORE, in consideration of the foregoing, to
implement the terms of the Plan, and for the purpose of defining the terms and
provisions of the Warrants and the respective rights and obligations thereunder
of the Company and the registered owners of the Warrants and any security into
which they may be exchanged (the "Holders"), the Company and the Warrant Agent
hereby agree as follows:
Section 1. Definitions. The following terms, as used herein,
have the following meanings (all terms defined herein in the singular to have
the correlative meanings when used in the plural and vice versa):
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1.1 "Agreement" means this Warrant Agreement, as the same may
be amended, modified or supplemented from time to time.
1.2 "Assets" has the meaning ascribed to such term in Section
9.1(c) hereof.
1.3 "Bankruptcy Code" has the meaning ascribed to such term in
the preamble hereto.
1.4 "Bankruptcy Court" has the meaning ascribed to such term
in the preamble hereto.
1.5 "Business Day" means a day other than (a) a Saturday or
Sunday, (b) any day on which banking institutions located in the City of New
York, New York are required or authorized by law or by local proclamation to
close or (c) any day on which the New York Stock Exchange is closed.
1.6 "Commercially Reasonable Efforts" when used with respect
to any obligation to be performed or term or provision to be observed hereunder,
means such efforts as a prudent Person seeking the benefits of such performance
or action would make, use, apply or exercise to preserve, protect or advance its
rights or interests, provided, that such efforts do not require such Person to
incur a material financial cost or a substantial risk of material liability
unless such cost or liability (i) would customarily be incurred in the course of
performance or observance of the relevant obligation, term or provision, (ii) is
caused by or results from the wrongful act or negligence of the Person whose
performance or observance is required hereunder or (iii) is not excessive or
unreasonable in view of the rights or interests to be preserved, protected or
advanced. Such efforts may include, without limitation, the expenditure of such
funds and retention by such Person of such accountants, attorneys or other
experts or advisors as may be necessary or appropriate to effect the relevant
action; and the undertaking of any special audit or internal investigation that
may be necessary or appropriate to effect the relevant action.
1.7 "Common Stock" means the common stock, par value $.001, of
the Company.
1.8 "Current Market Price" has the meaning ascribed to such
term in Section 9.1(d) hereof.
1.9 "Effective Date" has the meaning ascribed to such term in
the Plan.
1.10 "Exercise Period" has the meaning ascribed to such term
in Section 4.1 hereof.
1.11 "Exercise Price" means $[ ] per share of Common Stock, as
such amount may be reduced pursuant to Section 4.5 hereof and as adjusted
pursuant to Section 9 hereof.
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1.12 "Holders" has the meaning ascribed to such term in the
preamble hereto.
1.13 "NASD" means the National Association of Securities
Dealers, Inc.
1.14 "Number of Shares" has the meaning ascribed to such term
in Section 9.1(d)(ii) hereof.
1.15 "Person" means a natural person, a corporation, a
partnership, a trust, a joint venture, any regulatory authority or any other
entity or organization.
1.16 "Plan" has the meaning ascribed to such term in the
preamble hereto.
1.17 "Price Per Share" has the meaning ascribed to such term
in Section 9.1(d)(ii) hereof.
1.18 "Proceeds" has the meaning ascribed to such term in
Section 9.1(d)(ii) hereof.
1.19 "Rights" has the meaning ascribed to such term in Section
9.1(b) hereof.
1.20 "SEC" means the United States Securities and Exchange
Commission, or any successor governmental agency or authority thereto.
1.21 "Subsidiary" means any corporation or other legal entity
a majority of the voting equity or equity interests of which are owned, directly
or indirectly, by the Company.
1.22 "Transfer Agent" has the meaning ascribed to such term in
Section 7 hereof.
1.23 "Warrants" has the meaning ascribed to such term in the
preamble hereto.
1.24 "Warrant Certificates" has the meaning ascribed to such
term in Section 2.1 hereof.
1.25 "Warrant Register" has the meaning ascribed to such term
in Section 2.2 hereof.
1.26 "Warrant Share" has the meaning ascribed to such term in
the preamble hereto.
Section 2. Form of Warrant; Execution; Registration.
2.1 Form of Warrant; Execution of Warrants. The certificates
evidencing the Warrants (the "Warrant Certificates") shall be in registered form
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only, shall be in the form set forth as Exhibit A hereto, and shall bear such
legends as the Company shall determine may be required to conform to or provide
compliance with any applicable federal or state securities law, either generally
or with respect to particular Holders. The Warrant Certificates shall be signed
on behalf of the Company by its Chairman of the Board, President or one of its
Vice Presidents. The signature of any such officer on the Warrant Certificates
may be manual or by facsimile. Any Warrant Certificate may be signed on behalf
of the Company by any person who, at the actual date of the execution of such
Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate. Each Warrant Certificate shall be dated the date it is
countersigned by the Warrant Agent pursuant to Section 2.3 hereof.
2.2 Registration. The Warrant Certificates shall be numbered
and shall be registered on the books of the Company maintained at the principal
office of the Warrant Agent initially in New York (or such other place in the
continental United States as the Warrant Agent shall from time to time notify
the Company and the Holders in writing) (the "Warrant Register") as they are
issued. The Company and the Warrant Agent shall be entitled to treat the
registered owner of any Warrant as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other person.
2.3 Countersignature of Warrants. The Warrant Certificates
shall be countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. Warrant Certificates may be countersigned,
however, by the Warrant Agent and may be delivered by the Warrant Agent
notwithstanding that the persons whose manual or facsimile signatures appear
thereon as proper officers of the Company shall have ceased to be such officers
at the time of such countersignature, issuance or delivery. The Warrant Agent
shall, upon written instructions of the Chairman of the Board, the President,
any Vice President, the Treasurer or the Secretary of the Company, countersign,
issue and deliver Warrant Certificates entitling the Holders thereof to purchase
not more than an aggregate of 1,512,500 Warrant Shares (subject to adjustment
pursuant to Section 9 hereof) and shall countersign, issue and deliver Warrant
Certificates as otherwise provided in this Agreement.
Section 3. Transfer and Exchange of Warrants. Subject to the
terms hereof, the Warrant Agent shall initially countersign, register in the
Warrant Register and deliver Warrants hereunder in accordance with the written
instructions of the Company. Subject to the terms hereof and the receipt of such
documentation as the Warrant Agent may reasonably require, the Warrant Agent
shall thereafter from time to time register the transfer of any outstanding
Warrants upon the records to be maintained by it for that purpose, upon
surrender of the Warrant Certificate or Certificates evidencing such Warrants
duly endorsed or accompanied (if so required by it) by a written instrument or
instruments of transfer in form reasonably satisfactory to the Warrant Agent,
duly executed by the registered Holder or Holders thereof or by the duly
appointed legal representative thereof or by a duly authorized attorney. Subject
to the terms of this Agreement, each Warrant Certificate may be exchanged for
another Warrant Certificate or Certificates entitling the Holder thereof to
purchase a like aggregate number of Warrant Shares as the Warrant Certificate or
Certificates surrendered then entitles such Holder to purchase. Any Holder
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desiring to exchange a Warrant Certificate or Certificates shall make such
request in writing delivered to the Warrant Agent, and shall surrender, duly
endorsed or accompanied (if so required by the Warrant Agent) by a written
instrument or instruments of transfer in form reasonably satisfactory to the
Warrant Agent, the Warrant Certificate or Certificates to be so exchanged. Upon
registration of transfer, the Company shall issue and the Warrant Agent shall
countersign and deliver by certified mail a new Warrant Certificate or
Certificates to the persons entitled thereto.
No service charge shall be made for any exchange or
registration of transfer of a Warrant Certificate or of Warrant Certificates,
but the Company may require payment of a sum sufficient to cover any stamp tax
or other tax or other governmental charge that is imposed in connection with any
such exchange or registration of transfer pursuant to Section 5 hereof.
By accepting the initial delivery, transfer or exchange of
Warrants, each Holder shall be deemed to agree to the terms of this Agreement as
it may be in effect from time to time, including any amendments or supplements
duly adopted in accordance with Section 18 hereof.
Section 4. Term of Warrants; Exercise of Warrants; Compliance
with Government Regulations; Restrictions on Transfer; Reduction of Exercise
Price.
4.1 Term of Warrants. Subject to the terms of this Agreement,
each Holder shall have the right, which may be exercised at any time during the
period commencing at 9:00 a.m., New York City time, on the date occurring six
(6) months after the Effective Date and ending at 5:00 p.m., New York City time,
on the date occurring two (2) years after the Effective Date (the "Exercise
Period"), to receive from the Company the number of Warrant Shares which the
Holder may at the time be entitled to receive upon exercise of such Warrants and
payment of the Exercise Price then in effect for such Warrant Shares, and the
Warrant Shares issued to a Holder upon exercise of its Warrants shall be duly
authorized, validly issued, fully paid, nonassessable and shall not have been
issued in violation of or subject to any preemptive rights. Each Warrant not
exercised prior to the expiration of the Exercise Period shall become void, and
all rights thereunder and all rights in respect thereof under this Agreement
shall cease as of the expiration of the Exercise Period.
4.2 Exercise of Warrants. During the Exercise Period, each
Holder may, subject to this Agreement, exercise from time to time some or all of
the Warrants evidenced by its Warrant Certificate(s) by (i) surrendering to the
Company at the principal office of the Warrant Agent such Warrant Certificate(s)
with the form of election to purchase on the reverse thereof duly filled in and
signed, which signature shall be guaranteed by a bank or trust company having an
office or correspondent in the United States or a broker or dealer which is a
member of a registered securities exchange or the NASD, and (ii) paying to the
Warrant Agent for the account of the Company the Exercise Price, for the number
of Warrant Shares in respect of which such Warrants are exercised. Warrants
shall be deemed exercised on the date such Warrant Certificate(s) are
surrendered to the Warrant Agent and tender of payment of the Exercise Price is
made. Payment of the aggregate Exercise Price shall be made in cash by wire
transfer of immediately available funds to the Warrant Agent for the account of
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the Company or by certified or official bank check or checks to the order of the
Company or by any combination thereof.
Upon the exercise of any Warrants in accordance with this
Agreement, the Company shall issue and cause to be delivered with all reasonable
dispatch, to or upon the written order of the Holder and in such name or names
as the Holder may designate, a certificate or certificates for the number of
full Warrant Shares issuable upon the exercise of such Warrants and shall take
such other actions at its sole expense as are necessary to complete the exercise
of the Warrants (including, without limitation, payment of any cash with respect
to fractional interests required under Section 10 hereof). The Warrant Agent
shall have no responsibility or liability for such issuance or the determination
of the number of Warrant Shares issuable upon such exercise. The certificate or
certificates representing such Warrant Shares shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such Warrant Shares as of the date the Warrants are
exercised hereunder. Each Warrant Share, when issued upon exercise of the
Warrants, shall be duly authorized, validly issued, fully paid and nonassessable
and will not have been issued in violation of or subject to any preemptive
rights.
In the event that less than all of the Warrants evidenced by a
Warrant Certificate are exercised, the Holder thereof shall be entitled to
receive a new Warrant Certificate or Certificates as specified by such Holder
evidencing the remaining Warrant or Warrants, and the Warrant Agent is hereby
irrevocably authorized by the Company to countersign, issue and deliver the
required new Warrant Certificate or Certificates evidencing such remaining
Warrant or Warrants pursuant to the provisions of this Section 4.2 hereof and of
Section 3 hereof. The Company, whenever required by the Warrant Agent, will
supply the Warrant Agent with Warrant Certificates duly executed on behalf of
the Company for such purpose.
Upon delivery of the Warrant Shares issuable upon exercise in
accordance herewith and of any required new Warrant Certificates, the Company
shall direct the Warrant Agent by written order to cancel the Warrant
Certificates surrendered upon exercise. Such canceled Warrant Certificates shall
then be disposed of by the Warrant Agent in a manner permitted by applicable
laws and satisfactory to the Company in accordance with its written instructions
to the Warrant Agent. The Warrant Agent shall account promptly to the Company
with respect to Warrants exercised and concurrently pay to the Company all
amounts received by the Warrant Agent upon exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the Holders
during normal business hours at its office. The Company shall at its sole
expense supply the Warrant Agent from time to time with such numbers of copies
of this Agreement as the Warrant Agent may request.
4.3 Compliance with Government Regulations; Qualification
under the Securities Laws. The Company covenants that if the shares of Common
Stock required to be reserved for purposes of exercise of Warrants require,
under any federal or state law, registration with or approval of any
governmental authority before such shares may be issued upon exercise, the
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Company will, unless the Company has received an opinion of counsel to the
effect that such registration is not then permitted by such laws, use its
Commercially Reasonable Efforts to cause such shares to be duly so registered or
approved, as the case may be; provided that in no event shall such shares of
Common Stock be issued, and the exercise of all Warrants shall be suspended, for
the period during which such registration or approval is required but not in
effect; provided, further, that the Exercise Period shall be extended one day
for each day (or portion thereof) that any such suspension is in effect. The
Company shall promptly notify the Warrant Agent of any such suspension, and the
Warrant Agent shall have no duty, responsibility or liability in respect of any
shares of Common Stock issued or delivered prior to its receipt of such notice.
The Company shall promptly notify the Warrant Agent of the termination of any
such suspension, and such notice shall set forth the number of days that the
Exercise Period shall be extended as a result of such suspension. The foregoing
provisions of this Section 4.3 shall not require that the Company effect or
obtain any such registration or approval of Warrant Shares in order to allow the
resale or transfer thereof by any Person that may be an underwriter for purposes
of Section 1145 of the Bankruptcy Code.
4.4 Restrictions on Transfer. (a) Article IV, Section 5 of the
Company's Restated Certificate of Incorporation provides that:
Until June 30, 1999, (a) any attempted sale, transfer,
assignment, conveyance, grant, pledge, gift or other disposition of any share or
shares of stock of the Company (within the meaning of Section 382 of the
Internal Revenue Code of 1986, as amended (the "Tax Code")) or any option or
right to purchase such stock, as defined in the Treasury Regulations under
Section 382 of the Tax Code, to any person or entity (or group of persons or
entities acting in concert), or any attempted exercise of the aforementioned
option or right to purchase such stock by any person or entity (or group of
persons or entities acting in concert), who either directly or indirectly owns
or would be treated as owning, or whose shares are or would be attributed to any
person or entity who directly or indirectly owns or would be treated as owning,
in either case prior to the purported transfer or exercise and after giving
effect to the applicable attribution rules of the Tax Code and applicable
Treasury Regulations, 5 percent or more of the value of the outstanding stock of
the Company or otherwise treated as a 5-percent (5%) shareholder (within the
meaning of Section 382 of the Tax Code), regardless of the percent or the value
of the stock owned, shall be void ab initio insofar as it purports to transfer
ownership or rights in respect of such stock to the purported transferee and (b)
any attempted sale, transfer, assignment, conveyance, grant, gift, pledge or
other disposition of any share of stock of the Company (within the meaning of
Section 382 of the Tax Code) or any option or right to purchase such stock, as
defined in the Treasury Regulations under Section 382 of the Tax Code, to any
person or entity (or group of persons or entities acting in concert) or any
attempted exercise of the aforementioned option or right to purchase such stock
by any person or entity (or group of persons or entities acting in concert) not
described in clause (a) who directly or indirectly would own, or whose shares
would be attributed to any person or entity who directly or indirectly would
own, in each case as a result of the purported transfer or exercise and after
giving effect to the applicable attribution rules of the Tax Code and applicable
Treasury Regulations, 5-percent (5%) or more of the value of any of the stock of
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the Company (or otherwise treated asa 5-percent (5%) shareholder within the
meaning of Section 382 of the Tax Code), shall, as to that number of shares
causing such person or entity to be a 5-percent (5%) shareholder, be void ab
initio insofar as it purports to transfer ownership or rights in respect of such
stock to the purported transferee; provided, however, if the Company either does
not qualify under Section 382(l)(5) of the Tax Code or chooses to make an
election under Section 382(l)(5)(H) of the Tax Code (or the applicable provision
then in effect) not to have the provisions of Section 382(l)(5) of the Tax Code
apply, the restrictions described above in clauses (a) and (b) shall be deemed
to lapse and shall have no further force or effect as of the earlier of the date
the Company is aware that it does not qualify under Section 382(l)(5) of the Tax
Code and the date of such election; provided further, however, that neither of
the restrictions described above in the foregoing clauses (a) or (b) shall
prevent a valid transfer or exercise if (i) the transferor or exercisor, as the
case may be, obtains the written approval of the Board of Directors of the
Company and provides the Company with an opinion of counsel satisfactory to the
Company that, assuming, as of the date of such opinion, the full exercise of all
warrants issued by, and any options granted pursuant to any stock option plan
of, the Company, the transfer or exercise shall not result in the application of
any tax law limitation on the use of the Company's loss carryforwards or other
tax attributes or (ii) a tender offer, within the meaning of the Securities
Exchange Act of 1934, as amended, and pursuant to the rules and regulations
thereof, is made by a bona fide third party purchaser to purchase at least
sixty-six and two thirds percent (66 2/3%) of the issued and outstanding common
stock of the Company and the offeror (A) agrees to effect, within ninety (90)
days of the consummation of the tender offer, a back-end merger in which all
non-tendering shareholders would receive the same consideration as paid in the
tender offer, and (B) has received the tender of sufficient shares to effect
such merger. Without limiting or restricting in any manner the effectiveness of
the foregoing provisions, the Company may rely and shall be protected in relying
on its shareholder lists and stock transfer records for all purposes relating to
such notices, voting, payment of dividend or other communication or
distributions to its shareholders.
In the absence of special approval by the Board of Directors,
a purported transfer or exercise of shares in excess of the shares that can be
transferred or exercised pursuant to this Section 5 (the "Prohibited Shares") to
the purported acquiror (the "Purported Acquiror") is not effective to transfer
ownership of such Prohibited Shares. On demand by the Company, which demand must
be made within thirty (30) days of the time the Company learns of the transfer
or exercise of the Prohibited Shares, a Purported Acquiror must transfer any
certificate or other evidence of ownership of the Prohibited Shares within the
Purported Acquiror's possession or control, together with any dividends or other
distributions ("Distributions") that were received by the Purported Acquiror
from the Company with respect to the Prohibited Shares, to an agent designated
by the Company (the "Agent"). The Agent will sell the Prohibited Shares in an
arm's length transaction (over a stock exchange, if possible), and the Purported
Acquiror will receive an amount of sales proceeds not in excess of the price
paid or consideration surrendered by the Purported Acquiror for the Prohibited
Shares (or the fair market value of the Prohibited Shares at the time of any
attempted transfer to the Purported Acquiror by gift, inheritance, or a similar
transfer). If the Purported Acquiror has sold the Prohibited Shares prior to
receiving the Company's demand to surrender the Prohibited Shares to the Agent,
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the Purported Acquiror shall be deemed to have sold the Prohibited Shares as an
Agent for the initial transferor, or, in the case where the Prohibited Shares
are acquired pursuant to the exercise of an option or right to purchase stock of
the Company, for the Company, and shall be required to transfer to the Agent any
proceeds of such sale and any Distributions.
In the case of an attempted exercise of an option or a right
to purchase stock of the Company, the Agent will pay to the Company any sales
proceeds in excess of those due to the Purported Acquiror, together with any
distributions received by the Agent. In all other cases, if the initial
transferor can be identified, the Agent will pay to it any sales proceeds in
excess of those due to the Purported Acquiror, together with any distributions
received by the Agent. If the initial transferor cannot be identified within
ninety (90) days of receipt of such sales proceeds, if any, the Agent may pay
any such amounts to a charity of its choosing. In no event shall amounts paid to
the Agent inure to the benefit of the Company (except as set forth in the first
sentence of this paragraph) or the Agent, but such amounts may be used to cover
expenses of the Agent in attempting to identify the initial transferor.
If the Purported Acquiror fails to surrender the Prohibited
Shares within the next thirty (30) business days from the demand by the Company,
then the Company may institute legal proceedings to compel the surrender. The
Company shall be entitled to damages, including reasonable attorneys' fees and
costs, from the Purported Acquiror, on account of such purported transfer.
(b) Legend. Until June 30, 1999, all Warrant Certificates
shall bear a conspicuous legend on the face thereof as follows:
"THESE WARRANTS AND THE WARRANT SHARES ACQUIRED UPON EXERCISE
OF THE WARRANTS REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS
PURSUANT TO ARTICLE IV, SECTION 5 OF THE RESTATED CERTIFICATE
OF INCORPORATION OF THE COMPANY WHICH ARTICLE IS REPRINTED IN
ITS ENTIRETY ON THE REVERSE SIDE OF THIS CERTIFICATE."
4.5 Reduction of Exercise Price. The Exercise Price shall be
subject to reduction at the election of the Board of Directors of the Company,
made not earlier than thirty (30) days, and not later than twenty (20) days,
prior to the first day of the Exercise Period, if the Board of Directors shall
determine, in its sole discretion, that changes in the total amounts of
estimated Unsecured Class Cash and of General Unsecured Claims that may be
Allowed Claims or Reserved Claims (such terms being used herein as defined in
the Plan) from the amounts thereof estimated in connection with the confirmation
of the Plan make such reduction advisable, provided that the Board of Directors
shall have no obligation to make any such determination or to elect that the
Exercise Price be so reduced, and each Holder agrees, by its acceptance of a
Warrant, that it shall not have any claim against the Company or any of its
directors or officers in respect of the matters provided for in this Section
4.5. If the Exercise Price is to be reduced pursuant to the foregoing
provisions, the Company shall give notice thereof to the Warrant Agent not later
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than fifteen (15) days prior to the first day of the Exercise Period, and the
Warrant Agent shall mail to each Holder not later than ten (10) days prior to
the first day of the Exercise Period notice of such reduction, specifying the
Exercise Price as so reduced.
Section 5. Payment of Taxes. The Company will pay all
documentary stamp and other like taxes, if any, attributable to the initial
issuance and delivery of the Warrants and the initial issuance and delivery of
the Warrant Shares upon the exercise of Warrants, provided, that the Company
shall not be required to pay any tax or taxes which may be payable in respect of
any transfer of the Warrants or involved in the issuance or delivery of any
Warrant Shares in a name other than that of the Holder of the Warrants being
exercised, and the Warrant Agent shall not register any such transfer or issue
or deliver any Warrant Certificate(s) or Warrant Shares unless or until the
persons requesting the registration or issuance shall have paid to the Warrant
Agent for the account of the Company the amount of such tax, if any, or shall
have established to the reasonable satisfaction of the Company that such tax, if
any, has been paid.
Section 6. Mutilated or Missing Warrant Certificates. In the
event that any Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company shall issue, and at the direction of the Company by
written order the Warrant Agent shall countersign and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence reasonably
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction of such Warrant Certificate and an indemnity or bond, if requested
by the Company or the Warrant Agent, also reasonably satisfactory to them. An
applicant for such a substitute Warrant Certificate shall also comply with such
other reasonable procedures as the Company or the Warrant Agent may reasonably
require.
Section 7. Reservation of Warrant Shares. There have been
reserved, and the Company shall at all times keep reserved, out of its
authorized Common Stock, free of all preemptive rights, a number of shares of
Common Stock sufficient to provide for the exercise of the rights of purchase
represented by the outstanding Warrants. The transfer agent for the Common Stock
and every subsequent or other transfer agent for any shares of the Company's
capital stock issuable upon the exercise of the Warrants (each, a "Transfer
Agent") will be and are hereby irrevocably authorized and directed at all times
to reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with each
Transfer Agent. The Warrant Agent is hereby irrevocably authorized to
requisition from time to time from the Company or a Transfer Agent, as the case
may be, the certificates for Warrant Shares required to honor outstanding
Warrants upon exercise thereof in accordance with the terms of this Agreement.
The Company will supply its Transfer Agents with duly executed stock
certificates for such purposes and will itself provide or otherwise make
available any cash which may be payable as provided in Section 10 hereof. The
Company will furnish to its Transfer Agents a copy of all notices of adjustments
and certificates related thereto, transmitted to each Holder pursuant to Section
9.3 hereof. The Company will give the Warrant Agent prompt notice of any change
in any Transfer Agent or any change of address of any Transfer Agent.
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Before taking any action which would cause an adjustment
pursuant to Section 9 reducing the Exercise Price, the Company will take any and
all corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares at the
Exercise Price as so adjusted.
Section 8. Stock Exchange Listing. The Company shall use its
Commercially Reasonable Efforts (including requests for waivers) to have the
Warrant Shares listed on such stock exchange, if any, or included in such
national quotation system, if any, on which the outstanding Common Stock is
listed or included for quotation and to maintain such listing or inclusion for
so long as the outstanding Common Stock is so listed or included. Any such
listing and inclusion shall be at the Company's sole expense.
Section 9. Adjustment of Exercise Price; Number of Warrant
Shares and Shares of Capital Stock Warrants Are Exercisable Into. The number and
kind of securities purchasable upon the exercise of each Warrant, and the
Exercise Price, shall be subject to adjustment from time to time upon the
happening of certain events, as hereinafter described.
9.1 Mechanical Adjustments. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Exercise Price shall be
subject to adjustment as follows:
(a) Adjustment for Change in Capital Stock. Subject
to paragraphs (e) and (g) below, in case the Company shall (i) pay a
dividend on its outstanding shares of Common Stock in shares of Common
Stock or make a distribution of shares of Common Stock on its
outstanding shares of Common Stock, (ii) make a distribution on its
outstanding shares of Common Stock in shares of its capital stock other
than Common Stock, (iii) subdivide its outstanding shares of Common
Stock into a greater number of shares of Common Stock, (iv) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock, or (v) issue, by reclassification of its shares of Common
Stock, other securities of the Company (including any such
reclassification in connection with a consolidation or merger in which
the Company is the surviving entity), then the number of Warrant Shares
purchasable upon exercise of each Warrant immediately prior thereto
shall be adjusted so that the Holder of each Warrant shall be entitled
to receive the kind and number of Warrant Shares or other securities of
the Company which such Holder would have owned or have been entitled to
receive upon the happening of any of the events described above had
such Warrant been exercised in full immediately prior to the happening
of such event or any record date with respect thereto. If a Holder is
entitled to receive shares of two or more classes of capital stock of
the Company pursuant to the foregoing upon exercise of Warrants, the
allocation of the adjusted Exercise Price between such classes of
capital stock shall be determined reasonably and in good faith by the
Board of Directors of the Company. After such allocation, the exercise
privilege and the Exercise Price with respect to each class of capital
stock shall thereafter be subject to adjustment on terms substantially
identical to those applicable to Common Stock in this Section 9. An
adjustment made pursuant to this paragraph (a) shall become effective
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immediately after the record date for such event or, if none,
immediately after the effective date of such event. Such adjustment
shall be made successively whenever such an event occurs.
(b) Adjustment for Rights Issue. Subject to
paragraphs (e) and (g) below, in case the Company shall issue rights,
options or warrants (collectively, "Rights") to all holders of its
outstanding Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a Price Per Share which is lower at the
record date mentioned below than the then Current Market Price per
share of Common Stock, the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Warrant Shares theretofore purchasable upon
exercise of each Warrant by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding on the date of
issuance of such Rights plus the additional Number of Shares of Common
Stock offered for subscription or purchase in connection with such
Rights and the denominator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such Rights plus
the number of shares which the aggregate Proceeds received or
receivable by the Company upon exercise of such Rights would purchase
at the Current Market Price per share of Common Stock at such record
date. Such adjustment shall be made whenever Rights are issued, and
shall become effective immediately after the record date for the
determination of stockholders entitled to receive Rights.
(c) Adjustment for Other Distributions. Subject to
paragraphs (e) and (g) below, in case the Company shall distribute to
all holders of its shares of Common Stock (x) evidences of indebtedness
or assets (excluding cash dividends or distributions payable out of the
consolidated earnings or surplus legally available for such dividends
or distributions and dividends or distributions referred to in
paragraphs (a) or (b) above) of the Company or any Subsidiary, or (y)
shares of capital stock of a Subsidiary (such evidences of
indebtedness, assets and securities as set forth in clauses (x) and (y)
above, collectively, "Assets"), then in each case the number of Warrant
Shares thereafter purchasable upon the exercise of each Warrant shall
be determined by multiplying the number of Warrant Shares theretofore
purchasable upon the exercise of each Warrant by a fraction, the
numerator of which shall be the Current Market Price per share of
Common Stock on the date of such distribution and the denominator of
which shall be such Current Market Price per share of Common Stock less
the fair value as of such record date as determined reasonably and in
good faith by the Board of Directors of the Company of the portion of
the Assets applicable to one share of Common Stock. Such adjustment
shall be made whenever any such distribution is made, and shall become
effective on the date of distribution retroactive to the record date
for the determination of stockholders entitled to receive such
distribution.
(d) Current Market Price; Price Per Share. (i) For
the purpose of any computation under Section 4.2 hereof or this Section
9.1, the "Current Market Price" per share of Common Stock at any date
shall be the average of the daily closing prices for the 20 consecutive
trading days preceding the date of such computation.
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The closing price for each day shall be (x) if the Common Stock shall
be then listed or admitted to trading on the New York Stock Exchange,
the closing price on the NYSE-Consolidated Tape (or any successor
composite tape reporting transactions on the New York Stock Exchange)
or, if such a composite tape shall not be in use or shall not report
transactions in the Common Stock, or if the Common Stock shall be
listed on a stock exchange other than the New York Stock Exchange, the
last reported sales price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and asked
prices regular way for such day, in each case on the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading (which shall be the national securities exchange on
which the greatest number of shares of the Common Stock have been
traded during such 20 consecutive trading days) or (y) if the Common
Stock is not listed or admitted to trading, the average of the closing
sale prices as reported by the NASDAQ National Market System or, if the
Common Stock is not included on such system, the average of the closing
bid and asked prices of the Common Stock in the over-the-counter market
as reported by any system maintained by the NASD or any comparable
system or, if the Common Stock is not included for quotation in any
such system, the average of the closing bid and asked prices as
furnished by two members of the NASD selected reasonably and in good
faith from time to time by the Board of Directors for that purpose. In
the absence of one or more such quotations, the Current Market Price
per share of the Common Stock shall be determined reasonably and in
good faith by the Board of Directors of the Company.
(ii) For purposes of this Section 9.1, "Price Per
Share" shall be defined and determined according to the following
formula:
P = R/N
where
P = Price Per Share;
R = the "Proceeds" received or receivable by the
Company in respect of Rights which shall be the total
amount received or receivable by the Company in
consideration for the issuance and sale of such
Rights plus the aggregate amount of additional
consideration payable to the Company upon exercise
thereof; provided that the proceeds received or
receivable by the Company shall be the net cash
proceeds after deducting therefrom any compensation
paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others
performing similar services; and
N = the "Number of Shares," which in the case of
Rights is the maximum number of shares of Common
Stock initially issuable upon exercise thereof.
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(e) When De Minimis Adjustment May Be Deferred. No
adjustment in the number of Warrant Shares purchasable hereunder shall
be required unless such adjustment would require an increase or
decrease of at least one percent (1%) in the number of Warrant Shares
purchasable upon the exercise of each Warrant, provided that any
adjustments which by reason of this paragraph (e) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations shall be made to the nearest
one-thousandth of a Warrant Share and the nearest cent.
(f) Adjustment in Exercise Price. Whenever the number
of Warrant Shares purchasable upon the exercise of each Warrant is
adjusted as herein provided, the Exercise Price payable upon exercise
of each Warrant immediately prior to such adjustment shall be adjusted
by multiplying such Exercise Price by a fraction, the numerator of
which shall be the number of Warrant Shares purchasable upon the
exercise of each Warrant immediately prior to such adjustment and the
denominator of which shall be the number of Warrant Shares purchasable
immediately thereafter.
(g) When No Adjustment Required. No adjustment in the
number of Warrant Shares purchasable upon the exercise of each Warrant
need be made under this Section 9.1 in connection with the issuance of
Common Stock, options, rights, warrants or other securities pursuant to
the Plan or the Rights Agreement approved by the Bankruptcy Court.
Additionally, no adjustment need be made if the Company issues or
distributes to each Holder of Warrants the shares, rights, options,
warrants, evidences of indebtedness, assets or other securities
referred to in this Section 9.1 which each Holder of Warrants would
have been entitled to receive had the Warrants been exercised for the
number of Warrant Shares for which Warrants are then exercisable prior
to the happening of such event or the record date with respect thereto.
No adjustment in the number of Warrant Shares will be made for a change
in the par value of the shares of Common Stock.
(h) Shares of Common Stock. For all purposes of this
Agreement, the term "shares of Common Stock" shall mean (i) the class
of stock designated as the Common Stock of the Company at the date of
this Agreement or (ii) any other class of stock resulting from
successive changes or reclassification of such shares consisting solely
of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result of
an adjustment made pursuant to this Section 9.1, the Holders shall
become entitled to purchase any securities of the Company other than
shares of Common Stock, thereafter the number of such other shares so
purchasable upon exercise of each Warrant and the Exercise Price of
such shares shall be subject to adjustment from time to time in a
manner and on terms substantially identical to the provisions with
respect to the Warrant Shares contained in paragraphs (a) through (g)
above, and the provisions of this Agreement with respect to the Warrant
Shares shall apply on like terms to any such other securities.
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<PAGE>
(i) Expiration of Rights. Upon the expiration of any
Rights, if any thereof shall not have been exercised, the Exercise
Price and the number of Warrant Shares purchasable upon the exercise of
each Warrant shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it been originally
adjusted (or had the original adjustment not been required, as the case
may be) as if (A) the only shares of Common Stock so issued were the
shares of Common Stock, if any, actually issued or sold upon the
exercise of such Rights and (B) such shares of Common Stock, if any,
were issued or sold for the consideration actually received by the
Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance of all of such Rights
whether or not exercised, provided that no such readjustment shall have
the effect of increasing the Exercise Price or decreasing the number of
Warrant Shares purchasable upon the exercise of each Warrant by an
amount in excess of the amount of the adjustment initially made in
respect of the issuance of such Rights.
9.2 Voluntary Adjustment by the Company. The Company may at
its option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount deemed appropriate by the Board of Directors of the
Company.
9.3 Notice of Adjustment. Whenever the number of Warrant
Shares purchasable upon the exercise of each Warrant or the Exercise Price of
Warrant Shares is adjusted, as herein provided (except pursuant to Section 4.5
hereof), the Company shall cause the Warrant Agent promptly to mail to each
Holder, at the sole expense of the Company by first class mail, postage prepaid,
notice of such adjustment or adjustments and shall deliver to the Warrant Agent
a certificate of a firm of independent public accountants (who may be the
regular accountants employed by the Company) setting forth the number of Warrant
Shares purchasable upon the exercise of each Warrant and the Exercise Price of
Warrant Shares after such adjustment, setting forth a brief statement of the
facts requiring such adjustment and setting forth in reasonable detail the
computations by which such adjustment was made. The Warrant Agent shall be
entitled to rely on such certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the same,
from time to time, to any Holder requesting an inspection thereof during
reasonable business hours. The Warrant Agent shall not at any time be under any
duty or responsibility to any Holder to determine whether any facts exist which
may require any adjustment of the Exercise Price or the number of Warrant Shares
or other stock or property purchasable on exercise of Warrants, or with respect
to the nature or extent of any such adjustment when made, or with respect to the
method employed in making such adjustment.
9.4 Preservation of Purchase Rights upon Merger or
Consolidation. In case of any consolidation of the Company with or merger of the
Company into another entity, the Company or such successor entity shall execute
and deliver to the Warrant Agent an agreement, which shall be binding on the
Holders, that each Holder shall have the right thereafter upon payment of the
Exercise Price in effect immediately prior to such action (after giving effect
to any applicable adjustments under Section 9.1 hereof) to purchase upon
exercise of each Warrant the kind and amount of shares and other securities and
property (including cash) which such Holder would have owned or have been
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<PAGE>
entitled to receive after the happening of such consolidation or merger had such
Warrant been exercised immediately prior to such action. The Company shall at
its sole expense mail by first class mail, postage prepaid, to each Holder
notice of the execution of any such agreement. Such agreement shall provide for
adjustments, which shall be substantially identical to the adjustments provided
for in this Section 9. In addition, the Company shall not merge or consolidate
with or into any other entity unless the successor entity (if not the Company)
shall expressly assume, by supplemental agreement reasonably satisfactory in
form and substance to the Warrant Agent in its sole judgment and executed and
delivered to the Warrant Agent, the due and punctual performance and observance
of each and every covenant and condition of this Agreement to be performed and
observed by the Company. The provisions of this Section 9.4 shall similarly
apply to successive consolidations or mergers. The Warrant Agent shall be under
a good faith duty and responsibility to determine the correctness of any
provisions contained in any such agreement relating to the kind or amount of
shares of stock or other securities or property receivable upon exercise of
Warrants or with respect to the method employed and provided therein for any
adjustments and shall be entitled to rely upon the provisions contained in any
such agreement.
9.5 No Adjustment for Dividends. Except as expressly provided
in Section 9.1 hereof, no adjustment in respect of any dividend shall be made
during the term of a Warrant or upon exercise of a Warrant.
9.6 Statement on Warrants. Irrespective of any adjustments in
the Exercise Price or the number or kind of shares purchasable upon the exercise
of the Warrants, Warrants theretofore or thereafter issued may continue to
express the same Exercise Price and number and kind of Warrant Shares as are
stated in the Warrants initially issuable pursuant to this Agreement.
Section 10. Fractional Interests. Neither the Company nor the
Warrant Agent shall be required to issue fractional Warrant Shares on the
exercise of Warrants. If more than one Warrant shall be exercised at the same
time by the same Holder, the number of full Warrant Shares which shall be
issuable upon such exercise shall be computed on the basis of the aggregate
number of Warrants so exercised. If any fraction of a Warrant Share would,
except for the provisions of this Section 10, be issuable on the exercise of any
Warrant, the Company shall pay an amount in cash equal to the closing price for
one share of Common Stock on the date the Warrant Certificate is presented for
exercise (determined in accordance with the second sentence of Section 9.1(d)(i)
hereof), multiplied by such fraction.
Section 11. No Rights as Stockholders; Notices to Holders.
Nothing contained in this Agreement or in any of the Warrants shall be construed
as conferring upon the Holders or their transferees the right to vote or to
receive dividends or to consent or to receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the Company or
any other matter, or any rights whatsoever as stockholders of the Company.
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<PAGE>
In case:
(a) the Company shall authorize the issuance
to all holders of shares of Common Stock of rights, options or
warrants to subscribe for or purchase shares of Common Stock
or of any other subscription rights or warrants; or
(b) the Company shall authorize the
distribution to all holders of shares of Common Stock of
securities or assets (other than cash dividends); or
(c) of any consolidation or merger to which
the Company is a party and for which approval of any
stockholders of the Company is required, or of the conveyance
or transfer of a substantial portion of the properties and
assets of the Company for which approval of any stockholders
of the Company is required, or of any reclassification or
change of Common Stock issuable upon exercise of the Warrants
(other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange
offer by the Company for shares of Common Stock; or
(d) of the voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then the Company shall cause to be filed with the Warrant
Agent and shall cause to be given to each Holder at its
address appearing on the Warrant Register, at least twenty
(20) days prior to the applicable record date hereinafter
specified, or promptly in the case of events for which there
is no record date, by first class mail, postage prepaid, a
written notice stating (i) the date as of which the holders of
record of shares of Common Stock entitled to receive any such
rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in
any tender offer or exchange offer for shares of Common Stock,
or (iii) the date on which any such reclassification,
consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up is expected to become effective or
consummated, as well as the date as of which it is expected
that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other
property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution,
liquidation, or winding up. The failure to give the notice
required by this Section 11 or any defect therein shall not
affect the legality or validity of any distribution, right,
option, warrant, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation, winding up or
action, or the vote upon any of the foregoing.
Section 12. Payments in U.S. Currency. All payments required
to be made hereunder shall be made in lawful money of the United States of
America.
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Section 13. Merger or Consolidation or Change of Name of
Warrant Agent. Any corporation into which the Warrant Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporation trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor Warrant Agent
under the provisions of Section 15 hereof. In case at the time such successor to
the Warrant Agent shall succeed to the agency created by this Agreement, any of
the Warrant Certificates shall have been countersigned but not delivered, any
such successor to the Warrant Agent may adopt the countersignature of the
original Warrant Agent and deliver such Warrant Certificates so countersigned;
and in case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor Warrant Agent; and in all such cases such Warrant Certificates
shall be fully valid and effective as provided therein and in this Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignatures under its prior name and deliver such Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name; and in all such
cases such Warrant Certificates shall be fully valid and effective as provided
therein and in this Agreement.
Section 14. Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company hereunder and in
accordance with the terms and conditions hereof, and the Warrant Agent hereby
accepts such appointment.
14.1 Concerning the Warrant Agent. The Warrant 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, by
their acceptance of Warrant Certificates, shall be bound:
14.2 Correctness of Statements. The statements contained
herein and in the Warrant Certificates shall be taken as statements of the
Company, and the Warrant Agent assumes no responsibility for the correctness of
any of the same except such as describe the Warrant Agent or action taken by it.
The Warrant Agent assumes no responsibility with respect to the distribution of
the Warrant Certificates or Warrants except as herein otherwise provided.
14.3 Breach of Covenants. The Warrant Agent shall not be
responsible for any failure of the Company to comply with any of the covenants
contained in this Agreement or in the Warrant to be complied with by the
Company.
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14.4 Performance of Duties. The Warrant Agent may execute and
exercise any of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents and shall not
be responsible for the misconduct or negligence of any attorney or agent (which
shall not include an employee of the Warrant Agent) appointed with due care.
14.5 Reliance on Counsel. The Warrant Agent may consult at any
time with legal counsel satisfactory to it (who may be counsel for the Company),
and the Warrant Agent shall incur no liability or responsibility to the Company
or to any Holder in respect to any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or the advice of such
counsel.
14.6 Proof of Actions Taken. Whenever in the performance of
its duties under this Agreement the Warrant Agent shall deem it necessary or
desirable that any fact or matter be proved or established by the Company prior
to taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed
conclusively to be proved and established by a certificate signed by the
Chairman of the Board, the President, a Vice President, the Treasurer or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
14.7 Compensation. The Company agrees to pay the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent in the
performance of its duties under this Agreement, to reimburse the Warrant Agent
for all reasonable expenses, taxes and governmental charges and other charges of
any kind and nature reasonably incurred by the Warrant Agent in the performance
of its duties under this Agreement (including but not limited to legal fees and
expenses), and to indemnify the Warrant Agent and save it harmless against any
and all liabilities, including judgments, costs and counsel fees, for anything
done or omitted by the Warrant Agent or any of its agents in the performance of
its duties under this Agreement, except as a result of the Warrant Agent's
negligence or willful misconduct as determined in a final judgment of a court of
competent jurisdiction and authority. The Company's obligations under this
Section 14.7 and any claim arising hereunder shall survive the resignation or
removal of the Warrant Agent and the termination or discharge of the Company's
obligations under this Agreement.
14.8 Legal Proceedings. The Warrant Agent shall be under no
obligation to institute any action, suit or legal proceeding or to take any
other action likely to involve expense unless the Company or any one or more
Holders shall furnish the Warrant Agent with reasonable security and indemnity
for any costs and expenses which may be incurred or any liabilities which may
arise, but this provision shall not affect the power of the Warrant Agent to
take such action as the Warrant Agent may consider proper, whether with or
without any such security or indemnity. All rights of action of any Holder under
this Agreement or under any of the Warrants may be enforced by the Warrant Agent
without the possession of any of the Warrant Certificates or the production
thereof at any trial or other proceeding relative thereto, and any such action,
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suit or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent, and any recovery of judgment shall be for the ratable benefit
of the Holders, as their respective rights or interests may appear.
14.9 Other Transactions in Securities of Company. The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or any 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 Warrant Agent under this Agreement.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
14.10 Liability of Warrant Agent. The Warrant Agent shall act
hereunder solely as agent, and its duties shall be determined solely by the
provisions hereof. Notwithstanding any provision in this Agreement to the
contrary, the Warrant Agent shall not be liable for anything which it may do or
refrain from doing in connection with this Agreement except for its own
negligence or bad faith.
14.11 Reliance on Documents. The Warrant Agent will not incur
any liability or responsibility to the Company or to any Holder for any action
taken in reliance on any notice, resolution, waiver, consent, order,
certificate, or other paper, document or instrument reasonably believed by it to
be genuine and to have been signed, sent or presented by the proper party or
parties.
14.12 Validity of Agreement. The Warrant 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 Warrant
Agent) or in respect of the validity or execution of any Warrant Certificate
(except its countersignature thereof) or any Warrant; nor shall the Warrant
Agent by any act hereunder be deemed to make any representation or warranty as
to the authorization or reservation of any Warrant Shares (or other securities)
to be issued pursuant to this Agreement or any Warrant, or as to whether any
Warrant Shares (or other securities) will, when issued, be validly issued, fully
paid and nonassessable, or as to the Exercise Price or the number or amount of
Warrant Shares or other securities or any Assets or other property issuable upon
exercise of any Warrant.
14.13 Instructions from Company. The Warrant 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, a Vice
President, the Treasurer or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and 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 or officers.
Section 15. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this Agreement by giving to the
Company thirty (30) days' prior notice in writing. The Warrant Agent may be
removed by like notice to the Warrant Agent and the Holders from the Company,
such notice to specify the date when removal shall become effective. If the
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Warrant Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Warrant Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after such removal or notification in writing of such resignation or incapacity
by the resigning or incapacitated Warrant Agent or by any Holder (who shall with
such notice submit his Warrant Certificate or Certificates for inspection by the
Company), then any Holder may apply to any court of competent jurisdiction for
the appointment of a successor to the Warrant Agent. Any successor Warrant
Agent, whether appointed by the Company or such a court, shall be a bank or
trust company, in good standing, incorporated under the laws of the United
States of America or any state thereof and having at the time of its appointment
as Warrant Agent a combined capital and surplus of at least $100,000,000. After
appointment and acceptance of such appointment in writing, the successor Warrant
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Warrant Agent without further act or deed;
but the former Warrant Agent shall deliver and transfer to the successor Warrant
Agent any property at the time held by it hereunder, and shall execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Failure to file any notice provided for in this Section 15, however, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Warrant Agent or the appointment of the successor Warrant
Agent, as the case may be. In the event of such resignation or removal, the
successor Warrant Agent shall mail, by first class mail, postage prepaid, to
each Holder, written notice of such removal or resignation and the name and
address of such successor Warrant Agent.
Section 16. Notices. Any notice pursuant to this Agreement by
the Company or by any Holder to the Warrant Agent, or by the Warrant Agent or by
any Holder to the Company, shall be in writing and shall be delivered in person
or by facsimile transmission, or mailed first class, postage pre-paid, (a) to
the Company, at its offices at 839 Route 13 South, Cortland, New York 13045,
Attention: President, Telecopier No.: (607) 753-8769, or (b) to the Warrant
Agent, at its offices at 140 Broadway, Level A, New York, New York 10005-1180,
Attention: Marie Mattera, Telecopier No.: (212) 658-2292. Each party hereto may
from time to time change the address to which notices to it are to be delivered
or mailed hereunder by notice to the other party.
Any notice mailed pursuant to this Agreement by the Company or
the Warrant Agent to the Holders shall be in writing and shall be mailed first
class, postage prepaid, or otherwise delivered, to such Holders at their
respective addresses in the Warrant Register. The initial address of each Holder
shall be as provided by the Company to the Warrant Agent. Any Holder may change
its address by notice to the Company and the Warrant Agent given in accordance
with this Section 16.
Section 17. Cancellation of Warrants. In the event the Company
shall purchase or otherwise acquire Warrants, the same shall thereupon be
delivered to the Warrant Agent and be canceled by it and retired. The Warrant
Agent shall cancel any Warrant certificate surrendered for exchange,
substitution, transfer or exercise in whole or in part.
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<PAGE>
Section 18. Supplements and Amendments. The Company and the
Warrant Agent may from time to time supplement or amend this Agreement, the
Warrants and the Warrant Certificates without approval of any Holder, in order
to cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision herein, or to
comply with the requirements of any national securities exchange or The Nasdaq
National Market System (including but not limited to the deletion of Section
9.2), or to make any other provisions in regard to matters or questions arising
hereunder which the Company and the Warrant Agent may deem necessary or
desirable and which shall not be inconsistent with the provisions of the
Warrants and this Agreement. Any other supplement or amendment to this Agreement
may be made with the approval of the Holders of a majority of the then
outstanding Warrants; provided, however, that any such amendment or supplement
that (i) increases the Exercise Price; (ii) decreases the number of shares of
Common Stock issuable upon exercise of a Warrant; or (iii) shortens the period
during which the Warrants may be exercised, shall require the consent of each
Holder of a Warrant affected thereby.
Section 19. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Warrant Agent shall
bind and inure to the benefit of the Company or the Warrant Agent and shall bind
and inure to the benefit of their respective successors hereunder.
Section 20. Applicable Law. This Agreement and each Warrant
issued hereunder shall be governed by and construed in accordance with the laws
of the State of Delaware without giving effect to the principles of conflict of
laws thereof.
Section 21. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the Holders 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 Warrant Agent, their respective successors
and the Holders of the Warrants.
Section 22. Counterparts. This Agreement may be executed in
any number of counterparts; 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 23. Captions. The captions of the Sections and
subsections of this Agreement have been inserted for convenience only and shall
have no substantive effect.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
SMITH CORONA CORPORATION
By:----------------------------------
Name:
Title:
MARINE MIDLAND BANK
-------------------------------------
as Warrant Agent
By:----------------------------------
Name:
Title:
- 23 -
<PAGE>
EXHIBIT A
FORM OF WARRANT CERTIFICATE
THESE WARRANTS AND THE WARRANT SHARES ACQUIRED UPON EXERCISE
OF THE WARRANTS REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS PURSUANT TO
ARTICLE IV, SECTION 5 OF THE RESTATED CERTIFICATE OF INCORPORATION OF THE
COMPANY WHICH ARTICLE IS REPRINTED IN ITS ENTIRETY ON THE REVERSE SIDE OF THIS
CERTIFICATE.
No. ________________________ ________________________ Warrants
Warrant Certificate
SMITH CORONA CORPORATION
This Warrant Certificate certifies that , or registered
assigns, is the registered holder of Warrants (the "Warrants") expiring at 5:00
p.m., New York City time, on (the "Expiration Date"), to purchase Common Stock,
$.001 par value per share (the "Common Stock"), of SMITH CORONA CORPORATION, a
Delaware corporation (the "Company"). The Warrants may be exercised at any time
from 9:00 a.m., New York City time, on to 5:00 p.m., New York City time, on the
Expiration Date. Each Warrant entitles the holder upon exercise to receive from
the Company, if exercised before 5:00 p.m., New York City time, on the
Expiration Date, one fully paid and nonassessable share of Common Stock (a
"Warrant Share") at the Exercise Price (as defined in the Warrant Agreement
referred to on the reverse side hereof), payable in lawful money of the United
States of America, upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office or agency of the Warrant Agent, but only subject to
the conditions set forth herein and in the Warrant Agreement. The Exercise Price
and number of Warrant Shares issuable upon exercise of the Warrants are subject
to adjustment upon the occurrence of certain events as set forth in the Warrant
Agreement.
WARRANTS NOT EXERCISED ON OR BEFORE 5:00 P.M., NEW
YORK CITY TIME, ON , SHALL BECOME VOID.
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof, and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent, as such term is used in the Warrant
Agreement.
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<PAGE>
IN WITNESS WHEREOF, SMITH CORONA CORPORATION has caused this
Warrant Certificate to be duly executed.
SMITH CORONA CORPORATION
By:_________________________________
Title:
Dated:
____________________________________
Countersigned:
MARINE MIDLAND BANK ,
____________________________________
as Warrant Agent
By:__________________________________
Authorized Signatory
A-2
<PAGE>
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants expiring on the Expiration Date entitling
the holder on exercise to receive shares of Common Stock of the Company and are
issued or to be issued pursuant to a Warrant Agreement dated as of , 1996 (the
"Warrant Agreement"), duly executed and delivered by the Company to Marine
Midland Bank, as Warrant Agent (the "Warrant Agent"), which Warrant Agreement is
hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the holders (the words "holders" or "holder" meaning the registered holders
or registered holder) of the Warrants. A copy of the Warrant Agreement may be
obtained by the holder hereof upon written request to the Company. By accepting
initial delivery, transfer or exchange of this Warrant, the duly registered
holder shall be deemed to have agreed to the terms of the Warrant Agreement as
it may be in effect from time to time, including any amendments or supplements
duly adopted in accordance therewith.
The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of
election to purchase set forth hereon properly completed and executed, together
with payment of the Exercise Price in the manner described below at the office
of the Warrant Agent. In the event that upon any exercise of Warrants evidenced
hereby the number of Warrants exercised shall be less than the total number of
Warrants evidenced hereby, there shall be issued to the holder hereof or its
assignee a new Warrant Certificate evidencing the number of Warrants not
exercised.
Payment of the Exercise Price may be made in cash by wire
transfer to the Warrant Agent for the account of the Company or by certified or
official bank check or checks to the order of the Company or by any combination
thereof.
The Warrant Agreement provides that upon the occurrence of
certain events the number of shares of Common Stock issuable upon the exercise
of each Warrant, and the Exercise Price of each Warrant, may, subject to certain
conditions, be adjusted. No fractions of a share of Common Stock will be issued
upon the exercise of any Warrant, but the Company shall pay the cash value
thereof determined as provided in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the
Warrant Agent by the registered holder thereof in person or by legal
representative or attorney duly authorized in writing, may be exchanged, in the
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this
Warrant Certificate at the office of the Warrant Agent, a new Warrant
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Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided in
the Warrant Agreement, without charge except for any tax or other governmental
charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the
registered holder(s) hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
Until June 30, 1999, (a) any attempted sale, transfer,
assignment, conveyance, grant, pledge, gift or other disposition of any share or
shares of stock of the Company (within the meaning of Section 382 of the
Internal Revenue Code of 1986, as amended (the "Tax Code")) or any option or
right to purchase such stock, as defined in the Treasury Regulations under
Section 382 of the Tax Code, to any person or entity (or group of persons or
entities acting in concert), or any attempted exercise of the aforementioned
option or right to purchase such stock by any person or entity (or group of
persons or entities acting in concert), who either directly or indirectly owns
or would be treated as owning, or whose shares are or would be attributed to any
person or entity who directly or indirectly owns or would be treated as owning,
in either case prior to the purported transfer or exercise and after giving
effect to the applicable attribution rules of the Tax Code and applicable
Treasury Regulations, 5-percent or more of the value of the outstanding stock of
the Company or otherwise treated as a 5-percent (5%) shareholder (within the
meaning of Section 382 of the Tax Code), regardless of the percent or the value
of the stock owned, shall be void ab initio insofar as it purports to transfer
ownership or rights in respect of such stock to the purported transferee and (b)
any attempted sale, transfer, assignment, conveyance, grant, gift, pledge or
other disposition of any share of stock of the Company (within the meaning of
Section 382 of the Tax Code) or any option or right to purchase such stock, as
defined in the Treasury Regulations under Section 382 of the Tax Code, to any
person or entity (or group of persons or entities acting in concert) or any
attempted exercise of the aforementioned option or right to purchase such stock
by any person or entity (or group of persons or entities acting in concert) not
described in clause (a) who directly or indirectly would own, or whose shares
would be attributed to any person or entity who directly or indirectly would
own, in each case as a result of the purported transfer or exercise and after
giving effect to the applicable attribution rules of the Tax Code and applicable
Treasury Regulations, 5-percent (5%) or more of the value of any of the stock of
the Company (or otherwise treated as a 5-percent (5%) shareholder within the
meaning of Section 382 of the Tax Code), shall, as to that number of shares
causing such person or entity to be a 5-percent (5%) shareholder, be void ab
initio insofar as it purports to transfer ownership or rights in respect of such
stock to the purported transferee; provided, however, if the Company either does
not qualify under Section 382(l)(5) of the Tax Code or chooses to make an
election under Section 382(l)(5)(H) of the Tax Code (or the applicable provision
then in effect) not to have the provisions of Section 382(l)(5) of the Tax Code
apply, the restrictions described above in clauses (a) and (b) shall be deemed
to lapse and shall have no further force or effect as of the earlier of the
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<PAGE>
date the Company is aware that it does not qualify under Section 382(l)(5) of
the Tax Code and the date of such election; provided further, however, that
neither of the restrictions described above in the foregoing clauses (a) or (b)
shall prevent a valid transfer or exercise if (i) the transferor or exercisor,
as the case may be, obtains the written approval of the Board of Directors of
the Company and provides the Company with an opinion of counsel satisfactory to
the Company that, assuming, as of the date of such opinion, the full exercise of
all warrants issued by, and any options granted pursuant to any stock option
plan of, the Company, the transfer or exercise shall not result in the
application of any tax law limitation on the use of the Company's loss
carryforwards or other tax attributes or (ii) a tender offer, within the meaning
of the Securities Exchange Act of 1934, as amended, and pursuant to the rules
and regulations thereof, is made by a bona fide third party purchaser to
purchase at least sixty-six and two thirds percent (662/3%) of the issued and
outstanding common stock of the Company and the offeror (A) agrees to effect,
within ninety (90) days of the consummation of the tender offer, a back-end
merger in which all non-tendering shareholders would receive the same
consideration as paid in the tender offer, and (B) has received the tender of
sufficient shares to effect such merger. Without limiting or restricting in any
manner the effectiveness of the foregoing provisions, the Company may rely and
shall be protected in relying on its shareholder lists and stock transfer
records for all purposes relating to such notices, voting, payment of dividend
or other communication or distributions to its shareholders.
In the absence of special approval by the Board of Directors,
a purported transfer or exercise of shares in excess of the shares that can be
transferred or exercised pursuant to this Section 5 (the "Prohibited Shares") to
the purported acquiror (the "Purported Acquiror) is not effective to transfer
ownership of such Prohibited Shares. On demand by the Company, which demand must
be made within thirty (30) days of the time the Company learns of the transfer
or exercise of the Prohibited Shares, a Purported Acquiror must transfer any
certificate or other evidence of ownership of the Prohibited Shares within the
Purported Acquiror's possession or control, together with any dividends or other
distributions ("Distributions") that were received by the Purported Acquiror
from the Company with respect to the Prohibited Shares, to an agent designated
by the Company (the "Agent"). The Agent will sell the Prohibited Shares in an
arm's length transaction (over a stock exchange, if possible), and the Purported
Acquiror will receive an amount of sales proceeds not in excess of the price
paid or consideration surrendered by the Purported Acquiror for the Prohibited
Shares (or the fair market value of the Prohibited Shares at the time of any
attempted transfer to the Purported Acquiror by gift, inheritance, or a similar
transfer). If the Purported Acquiror has sold the Prohibited Shares prior to
receiving the Company's demand to surrender the Prohibited Shares to the Agent,
the Purported Acquiror shall be deemed to have sold the Prohibited Shares as an
Agent for the initial transferor, or, in the case where the Prohibited Shares
are acquired pursuant to the exercise of an option or right to purchase stock of
the Company, for the Company, and shall be required to transfer to the Agent any
proceeds of such sale and any Distributions.
In the case of an attempted exercise of an option or a right
to purchase stock of the Company, the Agent will pay to the Company any sales
proceeds in excess of those due to the Purported Acquiror, together with any
distributions received by the Agent. In all other cases, if the initial
transferor can be identified, the Agent will pay to it any sales proceeds in
A-5
<PAGE>
excess of those due to the Purported Acquiror, together with any distributions
received by the Agent. If the initial transferor cannot be identified within
ninety (90) days of receipt of such sales proceeds, if any, the Agent may pay
any such amounts to a charity of its choosing. In no event shall amounts paid to
the Agent inure to the benefit of the Company (except as set forth in the first
sentence of this paragraph) or the Agent, but such amounts may be used to cover
expenses of the Agent in attempting to identify the initial transferor.
If the Purported Acquiror fails to surrender the Prohibited
Shares within the next thirty (30) business days from the demand by the Company,
then the Company may institute legal proceedings to compel the surrender. The
Company shall be entitled to damages, including reasonable attorneys' fees and
costs, from the Purported Acquiror, on account of such purported transfer.
A-6
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise this
Warrant, according to the terms and conditions hereof, to the extent of
purchasing shares of Common Stock and hereby makes payment of $ in payment of
the exercise price thereof. If the number of shares shall not be all of the
shares purchasable under this Warrant, a new Warrant Certificate for the balance
remaining shall be issued in the name of the undersigned or its assignee as
indicated on the Assignment Form.
Dated: ____________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:
________________________________________________________________________________
(please typewrite or print in block letters)
Address:
________________________________________________________________________________
Signature:
________________________________________________________________________________
Note: The signature must conform in all respects to name of holder as
specified on the face of this Warrant Certificate
Signature Guaranteed:
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<PAGE>
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
Name:---------------------------------------------------------------------------
(please typewrite or print in block letters)
Address:------------------------------------------------------------------------
its right to purchase ----- shares of Common Stock represented by this Warrant
and does hereby irrevocably constitute and appoint ---------Attorney, to
transfer the same on the books of the Company, with full power of substitution
in the premises.
Dated:----------------------------------
- ----------------------------------------- Signature:----------------------
Social Security or other number of holder Note: The signature must
identifying conform in all
respects to name of holder as
specified on the face of this
Warrant Certificate
Signature Guaranteed:
A-8
<PAGE>
