SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
INTEGON CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 13 3559471
- --------------------------------------- ----------------------------------
(State of incorporation or organization) (I.R.S. Employer Identification No.)
500 West Fifth Street
Winston-Salem, North Carolina 27152
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(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Stock Purchase Rights
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(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
None
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Item 1. Description of Registrant's Securities to be Registered
On January 22, 1997, the Board of Directors of Integon Corporation
(the "Company") declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value
$0.01 per share, of the Company (the "Common Stock"). The dividend is
payable on February 11, 1997 (the "Record Date") to the stockholders of
record on that date. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A
Junior Participating Preferred Stock, par value $0.01 per share, of the
Company (the "Preferred Stock") at a price of $70.00 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set
forth in a Rights Agreement, dated as of January 22, 1997, between the
Company and First Chicago Trust Company of New York, as Rights Agent
(the "Rights Agent"), as the same may be amended from time to time (the
"Rights Agreement").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons
(an "Acquiring Person"), with certain exceptions set forth below, has
acquired beneficial ownership of 20% or more of the outstanding shares
of Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as
any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make,
a tender offer or exchange offer the consummation of which would result
in the beneficial ownership by a person or group of 20% or more of the
outstanding shares of Common Stock (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificate. An Acquiring Person does
not include (A) the Company, any subsidiary of the Company, any
employee benefit plan of the Company or of any subsidiary of the
Company, or any entity or trustee holding Common Stock for or pursuant
to the terms of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of the Company or
of any subsidiary of the Company, (B) any person that would be deemed
an "Acquiring Person" upon the adoption of the Rights Agreement, unless
and until such person acquires beneficial ownership of any additional
shares of Common Stock after the date of the Rights Agreement, or (C)
any person whose beneficial ownership of 20% or more of the outstanding
shares of Common Stock results from an acquisition of shares of Common
Stock by the Company that, by reducing the number of shares
outstanding, increases the proportionate number of shares of Common
Stock beneficially owned by such person to 20% or more of the shares of
Common Stock then outstanding, unless such person thereafter become the
beneficial owner of any additional shares of Common Stock and upon the
consummation of such acquisition such person beneficially owns 20% or
more of the shares of Common Stock then outstanding. In addition, if
the Board determines that a person or group of affiliated or associated
persons who otherwise would be an Acquiring Person became so
inadvertently, and such person promptly divests sufficient shares so
that the 20% ownership eases, such person will not be deemed an
Acquiring Person.
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The Rights Agreement provides that, until the Distribution Date
(or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Stock. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common
Stock certificates issued after the Record Date upon transfer or new
issuances of Common Stock will contain a legend incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of
any certificates for shares of Common Stock outstanding as of the
Record Date, even without such notation or a copy of this Summary of
Rights, will also constitute the transfer of the Rights associated with
the shares of Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders
of record of the Common Stock as of the close of business on the
Distribution Date, and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on January 22, 2007 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described
below.
The Purchase Price payable, and the number of shares 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) upon the grant to
holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities
convertible into Preferred Stock with a conversion price, less than the
then 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 periodic cash dividends or
dividends payable in Preferred Stock) or of subscription rights or
warrants (other than those referred to above).
The number of outstanding Rights and the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of
each Right are also subject to adjustment in the event of a stock split
of the Common Stock or a dividend on the Common Stock payable in shares
of Common Stock or subdivisions, consolidations or combinations of the
Common Stock occurring, in any such case, prior to the Distribution
Date.
Shares of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Unless otherwise provided in connection with
the creation of a subsequent series of preferred stock, the Preferred
Stock will be subordinate to any other series of the Company's
preferred stock. Each share of Preferred Stock will be entitled, when,
as and if declared, to a minimum quarterly dividend payment of $10.00
per share but will be entitled to an aggregate dividend of 1000 times
the dividend declared per share of Common Stock. In the event of the
liquidation of the Company, the holders of the Preferred Stock will be
entitled to receive a minimum liquidation payment of $1000.00 per share
(plus any accrued but unpaid dividends)
C-409084.12354.01018
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but will be entitled to an aggregate payment of 1000 times the payment
made per share of Common Stock. Each share of Preferred Stock will have
1000 votes, voting together with the Common Stock. In the event of any
merger, consolidation or other transaction in which shares of Common
Stock are converted or exchanged, each share of Preferred Stock will be
entitled to receive 1000 times the amount received per share of Common
Stock. The rights of Preferred Stock as to dividends, liquidation and
voting are protected by customary antidilution provisions. Because of
the nature of the Preferred Stock's dividend, liquidation and voting
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.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than
Rights beneficially owned by the Acquiring Person (which will thereupon
become void), will thereafter have the right to receive, upon exercise
of a Right at the then current Purchase Price, that number of shares of
Common Stock (or other securities or property) having a market value of
two times the Purchase Price. The Board may also cause the automatic
exchange of each Right (other than those held by the Acquiring Person)
for one share of Common Stock (or, at the Board's option, one
one-thousandth of a share of Preferred Stock) after any person or group
of affiliated or associated persons becomes an Acquiring Person but
prior to the Acquiring Person becoming the beneficial owner of 50% of
the Common Stock.
If there is an insufficient number of authorized but unissued
shares of Common Stock (or Preferred Stock) to permit the full exchange
of Rights, then debt or equity or other assets of Integon or a
subsidiary may be issued in lieu of Common Stock (or Preferred Stock)
and the Purchase Price may be adjusted.
In the event that, after a person or group of affiliated or
associated persons has become an Acquiring Person, the Company is
acquired in a merger or other business combination transaction or 50%
or more of its consolidated assets or earning power are sold, proper
provision will be made so that each holder of a Right (other than
Rights beneficially owned by an Acquiring Person, which will have
become void) will thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price, that number of
shares of common stock of the person with whom the Company has engaged
in the foregoing transaction (or its parent), which number of shares at
the time of such transaction will have a market value of two times the
Purchase Price.
At any time after any person or group of affiliated or associated
persons becomes an Acquiring Person and prior to the acquisition by
such person or group of 50% or more of the outstanding shares of Common
Stock, the Board of Directors of the Company may cause the Company to
exchange the Rights (other than Rights owned by such person or group,
which will have become void), in whole or in part, at an exchange ratio
of one share of Common Stock (or one one-thousandth of a share of
Preferred Stock, or shares of a class or series of the Company's
preferred stock having equivalent rights, preferences and privileges)
per Right, subject to adjustment.
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No fractional shares of Preferred Stock will be issued (other than
fractions that are integral multiples of one one-thousandth of a share
of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in
cash will be made based on the market price of the Preferred Stock on
the last trading day prior to the date of exercise.
At any time prior to the earlier of (i) the tenth day after the
time that a person or group of affiliated or associated persons has
become an Acquiring Person (subject to extension by the Board of
Directors, with the approval of a majority of the two-third majority of
the Board) and (ii) the Final Expiration Date, the Board of Directors
may cause the Company to redeem the Rights in whole, but not in part,
at a price of $.01 per Right (the "Redemption Price"). The redemption
of the Rights may be made effective at such time, on such basis and
with such conditions as the Board of Directors in its sole discretion
may establish, and, after a person or group of affiliated or associated
persons becomes an Acquiring Person, certain circumstances shall
require the concurrence of a two-thirds majority of the Board of
Directors. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the Company may,
except with respect to the Redemption Price, amend the Rights in any
manner, including an amendment to lower certain thresholds described
above to not less than the greater of (i) the sum of 0.001% and the
largest percentage of the outstanding shares of Common Stock then known
to the Company to be beneficially owned by any person or group of
affiliated or associated persons and (ii) 10%. After the Rights are no
longer redeemable, the Company may, except with respect to the
Redemption Price, amend the Rights in any manner that does not
adversely affect the interests of holders of the Rights. Amendments to
the Rights Agreement after a person or group of affiliated or
associated persons becomes an Acquiring Person require the approval of
a two-thirds majority of the Board of Directors.
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.
As of January 22, 1997, there were 15,736,121 shares of Common
Stock issued and outstanding, 2,480,000 shares reserved for issuance
pursuant to employee benefit plans and 3,772,966 shares reserved for
issuance upon conversion of the Company's $3.875 Convertible Preferred
Stock. As long as the Rights are attached to the Common Stock, the
Company will issue one Right with each new share of Common Stock so
that all such shares will have Rights attached.
The Rights Agreement is filed herewith as Exhibit 4, and is
incorporated herein by reference. 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, as the same may be
amended from time to time.
C-409084.12354.01018
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Item 2. Exhibits
Exhibit No. Description
---------- -----------
4 Rights Agreement, dated as of January 22, 1997
between the Company and First Chicago Trust
Company of New York, as Rights Agent, including
the form of Articles of Amendment with respect to
the Series A Junior Participating Preferred Stock,
included as Exhibit A to the Rights Agreement, and
the forms of Rights Certificate and of Election to
Exercise, included as Exhibit B to the Rights
Agreement.
C-409084.12354.01018
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized.
INTEGON CORPORATION
By: /s/ John B. Yorke
-----------------------
John B. Yorke
Vice President, Corporate General Counsel
and Secretary
Date: January 31, 1997
C-409084.12354.01018
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
4 Rights Agreement, dated as of
January 22, 1997, between Integon
Corporation (the "Company") and
First Chicago Trust Company of New
York, as Rights Agent, including the
form of Articles of Amendment with
respect to the Series A Junior
Participating Preferred Stock of the
Company, included as Exhibit A to
the Rights Agreement, and the forms
of Rights Certificate and of Election
to Exercise, included as Exhibit B to
the Rights Agreement.
C-409084.12354.01018
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RIGHTS AGREEMENT
dated as of
January 22, 1997
between
INTEGON CORPORATION
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
as Rights Agent
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TABLE OF CONTENTS
Page
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Section 1. Certain Definitions 2
Section 2. Appointment of Rights Agent 8
Section 3. Issue of Right Certificates 8
Section 4. Form of Right Certificates 11
Section 5. Countersignature and Registration 13
Section 6. Transfer, Split Up, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates 14
Section 7. Exercise of Rights, Purchase Price; Expiration
Date of Rights 15
Section 8. Cancellation and Destruction of Right Certificates 19
Section 9. Availability of Shares of Preferred Stock 20
Section 10. Preferred Stock Record Date 22
Section 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights 23
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares 38
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earnings Power 39
Section 14. Fractional Rights and Fractional Shares 44
Section 15. Rights of Action 46
Section 16. Agreement of Right Holders 47
Section 17. Right Certificate Holder Not Deemed a Stockholder 48
Section 18. Concerning the Rights Agent 48
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TABLE OF CONTENTS (Continued) Page
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Section 19. Merger or Consolidation or Change of Name
of Rights Agent 49
Section 20. Duties of Rights Agent 50
Section 21. Change of Rights Agent 54
Section 22. Issuance of New Right Certificates 56
Section 23. Redemption 57
Section 24. Exchange 58
Section 25. Notice of Certain Events 61
Section 26. Notices 62
Section 27. Supplements and Amendments 63
Section 28. Successors 64
Section 29. Benefits of this Agreement 64
Section 30. Determinations and Actions by the Board of Directors 65
Section 31. Severability 66
Section 32. Governing Law 66
Section 33. Counterparts 66
Section 34. Descriptive Headings 66
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Exhibit 4
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of January 22, 1997 (this "Agreement"), between
Integon Corporation, a Delaware corporation (the "Company"), and First Chicago
Trust Company of New York, a New York trust company (the "Rights Agent").
The Board of Directors of the Company (the "Board of Directors") has
authorized and declared a dividend of one preferred share purchase right (a
"Right") for each share of Common Stock (as hereinafter defined) of the Company
outstanding at the Close of Business (as hereinafter defined) on February 11,
1997 (the "Record Date"), each Right initially representing the right to
purchase one one-thousandth of a share (subject to adjustment as provided
herein) of Preferred Stock (as hereinafter defined) of the Company, upon the
terms and subject to the conditions herein set forth, and has further authorized
and directed the issuance of one Right (subject to adjustment as provided
herein) with respect to each share of Common Stock that shall become outstanding
between the Record Date and the earlier of the Distribution Date and the
Expiration Date (as such terms are hereinafter defined) and, to the extent
provided in Section 22 hereof, with respect to each share of Common Stock that
shall become outstanding after the Distribution Date and prior to the Expiration
Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
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Section 1. Certain Definitions. For purposes of this Agreement, in addition
to the terms defined in the recitals hereof and elsewhere herein, the following
terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as hereinafter defined) that,
together with all Affiliates and Associates (as such terms are hereinafter
defined) of such Person, shall be the Beneficial Owner (as hereinafter defined)
of 20% or more of the shares of Common Stock then outstanding, but shall not
include an Exempt Person (as such term is hereinafter defined); provided,
however, that if the Board of Directors determines in good faith that a Person
who would otherwise be an "Acquiring Person" has become such inadvertently, and
if such Person as promptly as practicable divests itself of Beneficial Ownership
of a sufficient number of shares of Common Stock so that such Person would no
longer be an "Acquiring Person," then such Person shall not be deemed to be or
to have become an "Acquiring Person" for any purposes of this Agreement.
Notwithstanding the foregoing, (i) if a Person would be deemed an "Acquiring
Person" upon the adoption of this Agreement, such Person shall not be deemed an
"Acquiring Person" for any purposes of this Agreement unless and until such
Person acquires Beneficial Ownership of any additional shares of Common Stock
after the date of this Agreement other than pursuant to any employee or
directors benefit plan of the Company or any Subsidiary of the Company or upon
the reinvestment of any dividends pursuant to any dividend reinvestment plan of
the Company, and (ii) no Person shall become an "Acquiring Person" as the result
of an acquisition of shares of Common Stock by the Company that, by reducing the
number of shares outstanding, increases the proportionate number of shares of
Common Stock beneficially owned by such Person to 20% or more of the shares of
Common Stock then
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outstanding; provided, however, that if a Person shall become the Beneficial
Owner of 20% or more of the shares of Common Stock then outstanding by reason of
such share acquisitions by the Company and shall thereafter become the
Beneficial Owner of any additional shares of Common Stock (other than pursuant
to any employee or directors benefit plan of the Company or any Subsidiary of
the Company or upon the reinvestment of any dividends pursuant to any dividend
reinvestment plan of the Company), then such Person shall be deemed to be an
"Acquiring Person" unless upon the consummation of the acquisition of such
additional shares of Common Stock such Person does not beneficially own 20% or
more of the shares of Common Stock then outstanding.
(b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, shall he deemed to
have "Beneficial Ownership" of and shall be deemed to "beneficially own" any
securities:
(i) that such Person or any of such Person's Affiliates or Associates
"beneficially owns," directly or indirectly, within the meaning of Rule 13d-3 of
the General Rules and Regulations under the Exchange Act as in effect on the
date of this Agreement;
(ii) that such Person or any of such Person's Affiliates or Associates has,
directly or indirectly, (A) 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) (other than
customary
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agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities), 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, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange;
or (B) the right to vote or dispose of pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security by reason of any such agreement, arrangement or understanding to vote
such security if such agreement, arrangement or understanding (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable by such Person on Schedule 13D under the Exchange Act
(or any comparable or successor report); or
(iii) that are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such Person or any of
such Person's Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding, voting
(except to the extent
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contemplated by the proviso to Section 1(c)(ii)(B)) or disposing of any
securities of the Company;
provided, however, that a Person shall not be deemed the "Beneficial Owner"
of, or to have "Beneficial Ownership" of or to "beneficially own," (x) any
security in the course of engaging in business as an underwriter of securities,
solely by reason of having acquired such security through such Person's
participation in good faith in a firm commitment underwriting of securities of
the Company, until the expiration of 40 days after the date of acquisition, or
(y) solely by reason of such Person's status or authority as an officer,
director or employee of an Exempt Person, any security "beneficially owned"
(including, without limitation, in a fiduciary capacity) by an Exempt Person or
by any other such officer, director or employee of an Exempt Person.
Notwithstanding any provision contained herein to the contrary, the phrase "then
outstanding," when used with reference to a Person's Beneficial Ownership of
securities of the Company at any particular time, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding that such Person would be
deemed to beneficially own hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of North Carolina are authorized
or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 p.m.,
Winston-Salem, North Carolina time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 p.m., Winston-Salem, North
Carolina time, on the next succeeding Business Day.
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(f) "Common Stock" when used with reference to the Company shall mean the
Common Stock, presently par value $0.01 per share, of the Company. "Common
Stock" when used with reference to any Person other than the Company shall mean
the capital stock (or, in the case of an unincorporated entity, the equivalent
equity interest) with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person, the Person or Persons that
ultimately control such first-mentioned Person.
(g) "Distribution Date" shall have the meaning set forth in Section 3(a)
hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
(j) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary (as
such term is hereinafter defined) of the Company, (iii) any employee benefit
plan of the Company or of any Subsidiary of the Company, or (iv) any entity or
trustee holding Common Stock for or pursuant to the terms of any such plan or
for the purpose of funding any such plan or funding other employee benefits for
employees of the Company or of any Subsidiary of the Company.
(k) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(l) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(m) "NASDAQ" shall have the meaning set forth in Section 9(b) hereof.
(n) "NASDAQ Stock Market" shall mean the stock market operated by the
National Association of Securities Dealers, Inc.
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(o) "Person" shall mean any individual, firm, corporation, partnership,
trust or other entity, and shall include any successor (by merger or otherwise)
to such entity.
(p) "Preferred Stock" shall mean the Series A Junior Participating
Preferred Stock, par value $0.01 per share, of the Company, having the rights
and preferences set forth in the Form of Certificate of Designations attached to
this Agreement as Exhibit A.
(q) "Principal Party" shall have the meaning set forth in Section 13(b)
hereof.
(r) "Purchase Price" shall have the meaning set forth in Section 4(a)
hereof.
(s) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
(t) "Right Certificates" shall have the meaning set forth in Section 3(a)
hereof.
(u) "Securities Act" shall mean the Securities Act of 1933, as amended.
(v) "Section 11(a)(ii) Event" shall have the meaning set forth in Section
11(a)(ii)hereof.
(w) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(x) "Subsidiary" shall mean, with reference to any Person, any corporation
or other entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors or other
persons performing similar functions are beneficially owned, directly or
indirectly, by such Person, and any corporation or other entity that is
otherwise controlled by such Person.
(y) "Trading Day" shall have the meaning set forth in Section 11(d) hereof.
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Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of Common Stock) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issue of Right Certificates.
(a) Until the Close of Business on the earlier of (i) the tenth day after
the Stock Acquisition Date or (ii) the tenth Business Day (or such later date as
may be determined by action of the Board of Directors prior to such time as any
Person becomes an Acquiring Person) after the date of the commencement by any
Person (other than an Exempt Person) of, or of the first public announcement of
the intention of any Person (other than an Exempt Person) to commence, a tender
or exchange offer the consummation of which would result in any such Person
becoming the Beneficial Owner of shares of Common Stock aggregating 20% or more
of the Common Stock then outstanding (including any such date that is after the
date of this Agreement and prior to the issuance of the Rights; the earlier of
such dates being herein referred to as the "Distribution Date"), (x) the Rights
shall be evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Stock registered in the names of the holders thereof
(which certificates for Common Stock shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (y) the Rights shall
be transferable only in connection with the transfer of the underlying Common
Stock. As soon as practicable after the Distribution Date, the Company will
prepare and
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execute, the Rights Agent will countersign, and the Rights Agent will send or
cause to be sent by first-class, insured, postage-prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
Right Certificates, in substantially the form of Exhibit B hereto (the "Right
Certificates"), evidencing one Right (subject to adjustment as provided herein)
for each share of Common Stock so held. As of and after the Distribution Date,
the Rights shall be evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Shares of Series A Junior
Participating Preferred Stock, in substantially the form of Exhibit C hereto
(the "Summary of Rights"), by first-class, postage-prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company. With respect to
certificates for Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights shall be evidenced by such certificates registered
in the names of the holders thereof, and the registered holders of such Common
Stock certificates shall also be the registered holders of the associated
Rights. Until the Distribution Date (or, if earlier, the Expiration Date), the
surrender for transfer of any certificate representing Common Stock outstanding
on the Record Date, with or without a copy of the Summary of Rights, shall also
constitute the transfer of the Rights associated with the Common Stock
represented thereby.
(c) Unless the Board of Directors by resolution adopted at or before the
time of issuance (including pursuant to the exercise of rights under the
Company's employee benefit
PAGE 9
<PAGE>
plans) of any shares of Common Stock specifies to the contrary, Rights shall be
issued in respect of all shares of Common Stock that are issued after the Record
Date but prior to the earlier of the Distribution Date and the Expiration Date.
Certificates issued for such shares of Common Stock (including, without
limitation, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) shall have impressed on, printed on, written on
or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Integon
Corporation and First Chicago Trust Company of New York, dated as
of January 22, 1997, as the same may be amended from time to time
(the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at
the principal executive offices of Integon Corporation Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Integon Corporation will
mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request
therefor. Under certain circumstances, as set forth in the Rights
Agreement, Rights beneficially owned by or transferred to any
Person who is or becomes an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement) and certain transferees thereof may become null and
void and may no longer be transferable.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate, except as otherwise provided
herein, shall also constitute the transfer of the Rights associated with the
Common Stock represented thereby. In the event that the Company purchases or
otherwise acquires any shares of Common Stock after the Record Date but prior to
the Distribution Date, any Rights associated with such shares of Common Stock
shall be deemed
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cancelled and retired so that the Company shall not be entitled to exercise any
Rights associated with shares of Common Stock that are no longer outstanding.
Notwithstanding this paragraph (c), the omission of a legend shall not affect
the enforceability of any part of this Agreement or the rights of any holder of
the Rights.
Section 4. Form of Right Certificates. (a) The Right Certificates (and the forms
of election to purchase shares and of assignment to be printed on the reverse
thereof) shall be substantially in the form set forth in Exhibit B hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed or the NASDAQ Stock Market, or to conform to
usage. Subject to the provisions of Sections 11, 13 and 22 hereof, the Right
Certificates 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 per one one-thousandth of a share of Preferred Stock set forth therein
(the "Purchase Price"), but the amount and type of securities purchasable upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3 or Section 22 hereof
or upon transfer, exchange, replacement or adjustment that represents Rights
beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a
PAGE 11
<PAGE>
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee before or at the same time the Acquiring Person becomes 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 (whether or not in writing)
regarding the transferred Rights or (B) a transfer that the Board of Directors
has determined is part of a plan, arrangement or understanding that has as a
primary purpose or effect the avoidance of the provisions of Section 7(e)
hereof, and any Right Certificate issued upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:
The Rights represented by this Right 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
Right Certificate and the Rights represented hereby may become
null and void under the circumstances specified in Section 7(e) of
the Rights Agreement.
The provisions of Section 7(e) hereof shall be operative whether or not the
foregoing legend is contained on any such Right Certificate.
Section 5. Countersignature and Registration. (a) The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, Chief
Executive Officer, President or Treasurer or any of its Vice Presidents, either
manually or by facsimile signature, shall have affixed thereto the Company's
seal or a facsimile thereof, and shall be attested by the Secretary or any
Assistant Secretary of the Company, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by the Rights
PAGE 12
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Agent and shall not be valid for any purpose unless countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company; and
any Right Certificate may be signed on behalf of the Company by any Person who,
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this 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 an office designated for such purpose, books for registration and
transfer of the Right Certificates issued hereunder. Such books shall show the
names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
Subject to the provisions of Sections 4(b), 7(e), 14 and 24 hereof, at any time
after the Close of Business on the Distribution Date and prior to the Close of
Business on the Expiration Date, any Right Certificate or Right Certificates may
be transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-thousandths of a share of Preferred Stock (or other securities, assets
PAGE 13
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or property, as the case may be) as the Right Certificate or Right 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 Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office 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 Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate 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 Sections 4(b), 7(e), 14 and 24 hereof, countersign and
deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
PAGE 14
<PAGE>
cancellation of the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to, or upon the order of, the registered holder in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights, Purchase Price; Expiration Date of Rights.
(a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time on or after the Distribution
Date upon surrender of the Right 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 of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of one one- thousandths of a share of Preferred Stock (or other
securities, assets or property, as the case may be) as to which the Rights are
exercised, at or prior to the earliest of (i) the Close of Business on January
22, 2007 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof or (iii) the time at which such Rights
are exchanged as provided in Section 24 hereof (the earliest of the times
described in clauses (i), (ii) and (iii) above being herein referred to as the
"Expiration Date").
(b) The Purchase Price shall initially be $70.00 for each one
one-thousandth of a share of Preferred Stock purchasable upon the exercise of a
Right. The Purchase Price and the number of shares of Preferred Stock or other
securities, assets or property to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in
PAGE 15
<PAGE>
Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) of this Section 7.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase and the certificate duly executed, accompanied by payment of the
aggregate Purchase Price for the shares of Preferred Stock (or other securities,
assets or property, as the case may be) to be purchased and an amount equal to
any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, in cash or by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i)(A) requisition from any transfer agent of the
Preferred Stock (or make available, if the Rights Agent is also the transfer
agent for the Preferred Stock) certificates for the number of shares of
Preferred Stock to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the Company in
its sole discretion shall have elected to deposit the Preferred Shares issuable
upon exercise of the Rights hereunder with a depositary agent, requisition from
the depositary agent depositary receipts representing interests in such number
of shares 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
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii)
promptly after receipt of such certificates or depositary receipts, cause the
same to be delivered to or upon the order of the registered
PAGE 16
<PAGE>
holder of such Right Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt, promptly
deliver such cash to or upon the order of the registered holder of such Right
Certificate. In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.
(d) Except as otherwise provided herein, in case the registered holder of
any Right Certificate shall exercise less than all of the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to the exercisable
Rights remaining unexercised shall be issued by the Rights Agent and delivered
to, or upon the order of, the registered holder of such Right Certificate,
registered in such name or names as may be designated by such holder, subject to
the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, however,
from and after the time (the "invalidation time") when any Person first becomes
an Acquiring Person, any Rights that are beneficially owned by (x) any Acquiring
Person (or any Affiliate or Associate of any Acquiring Person), (y) a transferee
of any Acquiring Person (or any such Affiliate or Associate) who becomes a
transferee after the invalidation time or (z) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the invalidation time pursuant to either (I) a transfer from
the Acquiring Person to holders of its equity securities or to any Person with
whom it has any continuing agreement, arrangement or understanding (whether or
not in writing)
PAGE 17
<PAGE>
regarding the transferred Rights or (II) a transfer that the Board of Directors
has determined is part of a plan, arrangement or understanding that has the
purpose or effect of avoiding the provisions of this Section 7(e), and
subsequent transferees of such Persons, shall be void without any further action
and any holder of such Rights shall thereafter have no rights whatsoever with
respect to such Rights under any provision of this Agreement. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
are complied with, but shall have no liability to any holder of Right
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. From and after the invalidation time, no Right
Certificate shall be issued pursuant to Section 3 or Section 6 hereof that
represents Rights that are or have become, or upon any such transfer would
become, void pursuant to the provisions of this Section 7(e), and any Right
Certificate delivered to the Rights Agent that represents Rights that are or
have become, or upon any such transfer would become, void pursuant to the
provisions of this Section 7(e) shall be cancelled.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder of Rights upon the occurrence of any purported
transfer or exercise of Rights pursuant to Section 6 hereof or this Section 7
unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or form of election to purchase
set forth on the reverse side of the Right Certificate surrendered for such
transfer or exercise, (ii) indicated a negative response to clauses (1) and (2)
of the certificate contained in the form of assignment set forth on the reverse
side of the Right Certificate and
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<PAGE>
(iii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliate or Associate thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Shares of Preferred 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 or any shares of Preferred
Stock held in its treasury (and, after the occurrence of a Section 11(a)(ii)
Event or a Section 13 Event, out of its authorized and unissued Common Stock
and/or other securities or any shares of Common Stock and/or other securities
held in its treasury), the number of shares of Preferred Stock (and, after the
occurrence of a Section 11(a)(ii) Event or a Section 13 Event, the number of
shares of Common Stock and/or other securities) that will be sufficient to
permit the exercise in full of all outstanding Rights.
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(b) So long as the shares of Preferred Stock (and, following the occurrence
of a Section 11(a)(ii) Event or a Section 13 Event, shares of Common Stock
and/or other securities, as the case may be) issuable and deliverable upon the
exercise of Rights may be listed or admitted to trading on any national
securities exchange or on the NASDAQ Stock Market or included for quotation on
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or any other transaction reporting system, the Company shall use its
best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed or admitted to
trading on such exchange or on the NASDAQ Stock Market or included for quotation
on any such transaction reporting system, upon official notice of issuance upon
such exercise.
(c) From and after such time as the Rights become exercisable, the Company
shall use its best efforts, if then necessary to permit the issuance of shares
of Preferred Stock (and, following the occurrence of a Section 11(a)(ii) Event
or a Section 13 Event, shares of Common Stock and/or other securities, as the
case may be) upon the exercise of Rights, to register and qualify such shares of
Preferred Stock (and, following the occurrence of a Section 11(a)(ii) Event or a
Section 13 Event, shares of Common Stock and/or other securities, as the case
may be) under the Securities Act and any applicable state securities or "blue
sky" laws (to the extent exemptions therefrom are not available), cause such
registration statement and qualifications to become effective as soon as
possible after such filing and keep such registration and qualifications
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the earlier of the date as of which the Rights are no
longer exercisable for such securities and the Expiration Date. The Company
PAGE 20
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may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
under the Securities Act (if required) shall 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 shares of Preferred Stock (and, following
the occurrence of a Section 11(a)(ii) Event or a Section 13 Event, shares of
Common Stock and/or other securities, as the case may be) delivered upon
exercise of Rights shall, at the time of delivery of the certificates therefor
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and nonassessable shares.
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<PAGE>
shares of Common Stock or other securities, as the case may be) in a name other
than that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or deliver any certificates or depositary
receipts for Preferred Stock (or shares of Common Stock or other securities, as
the case may be) upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by that holder of such Right Certificate
at the time of surrender) or until it has been established to the Company's
reasonable satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for Preferred Stock (or Common Stock and/or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Stock (or Common
Stock and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the 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 on, and such certificate shall be dated, the next succeeding
Business Day on which the applicable transfer books of the Company are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
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 or to receive dividends or other
distributions or to exercise any
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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 of shares of Preferred Stock or
other securities or property purchasable upon exercise of each Right, and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the 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 of Preferred Stock
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), 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 other capital stock, as the case
may be, issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive, upon
payment of the Purchase Price then in effect, the aggregate number and kind of
shares of capital stock that, if such Right had been exercised immediately prior
to such date and at a time when the Preferred Stock or other capital stock
transfer books of the Company were open, the holder would have owned upon such
exercise and
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been entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of Preferred Stock or other capital stock of the Company issuable
upon exercise of one Right. If an event occurs that would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii), 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).
(ii) Subject to Section 24 of this Agreement, in the event that any Person,
alone or together with its Affiliates and Associates, shall become an Acquiring
Person (other than pursuant to a transaction to which the provisions of Section
13 apply), then, upon the first occurrence of such event (a "Section 11(a)(ii)
Event"), each holder of a Right, except as otherwise provided in this Section 11
and in Section 7(e) hereof, shall thereafter have the right to receive, upon
exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of one one- thousandths of a share of Preferred Stock for which a
Right is then exercisable in accordance with the terms of this Agreement, and in
lieu of Preferred Stock, such number of shares of Common Stock as shall equal
the result obtained by (x) multiplying the then current Purchase Price by the
number of one one-thousandths of a share of Preferred Stock for which a Right is
then exercisable and (y) dividing that product (which, following the first
occurrence of a Section 11(a)(ii) Event, shall be referred to as the "Purchase
Price" for each Right for all purposes of this
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Agreement) by 50% of the current per share market price of the Common Stock
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such Section 11(a)(ii) Event (such result being hereinafter referred to as the
"Adjustment Shares"). From and after the time of occurrence of a Section 13
Event, any Rights that theretofore have not been exercised pursuant to this
Section 11(a)(ii) shall thereafter be exercisable only in accordance with
Section 13 and not pursuant to this Section 11(a)(ii).
(iii) In lieu of issuing shares of Common Stock in accordance with Section
11(a)(ii) hereof, the Company may, acting by resolution of the Board of
Directors, and, in the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with Section 11(a)(ii) hereof, the
Company shall, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party: (A) determine the
excess (such excess, the "Spread") of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right in accordance with Section 11(a)(ii)
hereof (the "Current Value") over (2) the Purchase Price (as adjusted in
accordance with Section 11(a)(ii) hereof), and (B) with respect to each Right
(other than Rights that have become void pursuant to Section 7(e) hereof), make
adequate provision to substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price, (3)
shares of preferred stock or other equity securities of the Company (including,
without limitation, shares, or one-one thousandths of shares, of Preferred Stock
and other
PAGE 25
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shares, or units of shares, of preferred stock that, by virtue of having
dividend, voting and liquidation rights substantially comparable to those of the
shares of Common Stock, are deemed in good faith by the Board of Directors to
have substantially the same value as the shares of Common Stock (such shares of
preferred stock or other equity securities or units thereof are hereinafter
referred to as "Common Stock equivalents"), (4) debt securities of the Company,
(5) other assets, or (6) any combination of the foregoing having a value that,
when added to the value of the shares of Common Stock actually issued upon
exercise of such Right, shall have an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board of Directors
upon the advice of a nationally recognized investment banking firm selected in
good faith by the Board of Directors; provided, however, that if the Company
shall not make adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the date of the first occurrence of a Section
11(a)(ii) Event (the "Section 11(a)(ii) Trigger Date"), then the Company shall
be obligated to deliver, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, upon the
surrender for exercise of a Right and without requiring payment of the
applicable Purchase Price, shares of Common Stock (to the extent available), and
then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If, after the occurrence of a Section 11(a)(ii) Event, the Board
of Directors shall determine in good faith that it is likely that sufficient
additional shares of Common Stock could be authorized for issuance upon exercise
in full of the Rights,
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then, if the Board of Directors so elects, the thirty (30) day period set forth
above may be extended to the extent necessary, but not more than ninety (90)
days after the Section 11(a)(ii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such additional shares (such
thirty (30) day period, as it may be extended, being referred to herein as the
"Substitution Period"). To the extent that the Company determines that some
action need be taken pursuant to the first and/or second sentences of this
Section 11(a)(iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights and (y)
may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
this Section 11(a)(iii) and to determine the value thereof. In the event of any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the shares of Common Stock shall be the
current per share market price (as determined pursuant to Section 11(d) hereof)
on the Section 11(a)(ii) Trigger Date and the per share or fractional value of
any "Common Stock equivalent" shall be deemed to equal the current per share
market price of the Common Stock on such date. The Board of Directors may, but
shall not be required to, establish procedures to allocate the right to receive
shares of Common Stock upon the exercise of the Rights among holders of Rights
pursuant to this Section 11(a)(iii).
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(b) In the event that the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent preferred
stock at a price per share of Preferred Stock or equivalent preferred stock (or
having a conversion price per share, if a security convertible into shares of
Preferred Stock or equivalent preferred stock) less than the then current per
share market price of the Preferred Stock (determined pursuant to Section 11(d)
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record date
plus the number of shares of Preferred Stock and/or equivalent preferred stock
that the aggregate offering price of the total number of shares of Preferred
Stock and/or equivalent preferred stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be the
number of shares of Preferred Stock outstanding on such record date plus the
number of additional shares of Preferred Stock and/or equivalent preferred stock
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In
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case such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
holders of the Rights. Shares of Preferred Stock and equivalent 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, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price that would then be in effect if such record
date had not been fixed.
(c) In the event that the Company shall fix a record date for the making of
a distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
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
then current per share market price of the Preferred Stock (determined pursuant
to Section 11(d) hereof) on such record date, less the fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
holders of the Rights) of the portion of the assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants applicable to
one
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share of Preferred Stock, and the denominator of which shall be such current per
share market price (determined pursuant to Section 11(d) hereof) of the
Preferred Stock; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price that would then be in
effect if such record date had not been fixed.
(d) (i) Except as otherwise provided in subparagraph (ii) of this Section
11(d), for the purpose of any computation hereunder, the "current per share
market price" of the Common Stock, the Preferred Stock or any other security (a
"Security" for the purpose of this Section 11(d)) on any date shall be deemed to
be the average of the daily closing prices per share of such Security for the 30
consecutive Trading Days (as hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current per share market
price of any Security is determined during a period following the announcement
by the issuer of such Security of (A) a dividend or distribution on such
Security payable in shares of such Security or securities convertible into such
shares, or (B) any subdivision, combination or reclassification of such
Security, and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current market
price per
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share equivalent of such Security. 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 by the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Security is 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 Security is listed or admitted to trading (or on the NASDAQ Stock
Market, if the Security is listed or admitted to trading thereon), or, if the
Security is not listed or admitted to trading on any national securities
exchange or on the NASDAQ Stock Market, the last quoted price or, if not so
quoted, the average,of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading or the NASDAQ
Stock Market is open for the transaction of business or, if the Security is not
listed or admitted to trading on any national securities exchange or on the
NASDAQ Stock Market, a Business Day. If a Security is not publicly held or so
listed or traded, then the "current per share market price" of such Security
shall mean the fair value per share as determined in good faith by the
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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 holders of the
Rights.
(ii) For the purpose of any computation hereunder, if the Preferred Stock
is publicly held or so listed or traded, the "current per share market price" of
the Preferred Stock shall be determined in accordance with the method set forth
in Section 11(d)(i). If the Preferred Stock is not publicly held or so listed or
traded but the Common Stock is publicly held or so listed or traded, the
"current per share market price" of a share of the Preferred Stock shall be
conclusively deemed to be the current per share market price of the Common Stock
(as determined pursuant to Section 11(d) hereof) multiplied by one thousand
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof). If neither the Common Stock nor
the Preferred Stock is publicly held or so listed or traded, then the "current
per share market price" 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 binding on the holders of the Rights.
(e) 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 one ten- thousandth of a
share of Preferred Stock or other share or security, 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 that requires such adjustment or (ii) the
Expiration Date.
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(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of a 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) hereof, as
applicable, and the provisions of Sections 7, 9, 10, 13 and 14 hereof with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock (or other securities, assets or property, as the case
may be) 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) hereof, each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase
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Price, that number of one one-thousandths of a share of Preferred Stock
(calculated to the nearest one ten-thousandth of a share of Preferred Stock)
obtained by (i) multiplying (x) the number of one one-thousandths of a share
covered by a Right immediately prior to such 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 substitution for 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
such adjustment of 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 Right Certificates have been issued, shall be at least 10 days later than
the date of the public announcement. If Right Certificates have been issued,
upon each adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause
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to be distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-thousandths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-thousandths
of a share of Preferred Stock that were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the Preferred Stock or other
shares of capital stock issuable upon exercise of the Rights, the Company shall
take any corporate action that may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Preferred Stock or other such shares at such adjusted
Purchase Price.
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(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of the
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the 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 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 it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, issuance wholly for cash of Preferred Stock or securities that by their
terms are convertible into or exchangeable for Preferred Stock, dividends on
Preferred Stock payable in shares of Preferred Stock or issuance of rights,
options or warrants referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Stock shall not be taxable to such
stockholders.
(n) In the event that at any time after the date of this Rights Agreement
and prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common
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Stock payable in Common Stock or (ii) effect a subdivision, combination or
consolidation of the Common Stock (by reclassification or otherwise than by
payment of a dividend payable in Common Stock) into a greater or lesser number
of shares of Common Stock, then in such case, (A) the number of one
one-thousandths of a share of Preferred Stock purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the number of
one one-thousandths of a share of Preferred Stock so purchasable 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 shall be the total number of shares of
Common Stock outstanding immediately following the occurrence of such event and
(B) action shall be taken such that each share of Common Stock outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each share of Common Stock outstanding immediately prior to such
event had issued with respect to it. The adjustments provided for in this
Section 11(n) shall be made successively whenever a dividend is declared or paid
or such a subdivision, combination or consolidation is effected.
(o) The Company agrees that, after the Distribution Date, it will not,
except as permitted by Sections 23, 24 or 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or eliminate
the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the
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facts accounting for such adjustment, (b) promptly file with the Rights Agent,
and with each transfer agent for the Common Stock and the Preferred Stock, a
copy of such certificate, and (c) mail a brief summary thereof to each holder of
a Right Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 25
hereof. Notwithstanding the foregoing sentence, the failure of the Company to
make such certification or to give such notice shall not affect the validity,
force or effect of the requirement for such adjustment. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of any such
adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earnings
Power. (a) In the event (a "Section 13 Event") that, at any time following the
Stock Acquisition Date, directly or indirectly, (i) the Company shall
consolidate with, or merge with and into, any other Person, and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (ii) any Person shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person (or of the
Company) or cash or any other property, or (iii) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating 50% or more of the assets or earning power of the
Company and its
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Subsidiaries (taken as a whole) to any other Person or Persons, then, and in
each such case, proper provision shall be made so that: (A) 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, nonassessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one- thousandths of a share of
Preferred Stock for 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
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 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
for all purposes of this Agreement) by (2) 50% of the current per share market
price of the Common Stock of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such consolidation, merger,
sale or transfer; (B) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (C) the term
"Company" shall thereafter be deemed to refer to such Principal Party; (D) such
Principal Party shall take such steps (including, but not
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limited to, the reservation of a sufficient number of its shares of Common Stock
in accordance with Section 9 hereof) in connection with the consummation of any
such transaction as may be necessary to ensure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of its Common Stock thereafter deliverable upon the exercise of the
Rights; and (E) 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 (i) or (ii) of the
first sentence of Section 13(a) hereof: (A) the Person that is the issuer of the
securities into which the shares of Common Stock are converted in such merger or
consolidation, or, if there is more than one such issuer, the issuer the shares
of Common Stock of which have the greatest aggregate market value of shares
outstanding, or (B) if no securities are so issued, (x) the Person that is the
other party to such merger or consolidation, if such Person survives such merger
or consolidation, or, if there is more than one such Person, the Person the
shares of Common Stock of which have the greatest aggregate market value of
shares outstanding, (y) in the case of a merger, if the Person that is the other
party to such merger does not survive such merger, the Person that does survive
such merger (including the Company if it survives) or (z) in the case of a
consolidation, the Person resulting from such consolidation; and
(ii) in the case of any transaction described in clause (iii) of the first
sentence of Section 13(a) hereof, the Person that is the party receiving the
greatest
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portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons as is the issuer
of Common Stock having the greatest aggregate market value of shares
outstanding;
provided, however, that in any such case described in the foregoing clauses
(b)(i) and (b)(ii), (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 if such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person; and (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have been so registered, the
term "Principal Party" shall refer to whichever of such Persons is the issuer of
the Common Stock having the greatest aggregate market value of shares
outstanding.
(c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) hereof unless the Principal Party shall
have a sufficient number of authorized shares of its Common Stock that have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in
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Sections 13(a) and (b) hereof and further providing that, as soon as practicable
after the date of such consolidation, merger, sale or transfer, the Principal
Party will:
(i) prepare and file a registration statement under the Securities Act with
respect to the Rights and the securities purchasable upon exercise of the Rights
on an appropriate form, use its best efforts to cause such registration
statement to become effective as soon as practicable after such filing, and use
its best efforts to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act) until
the Expiration Date and similarly comply with applicable state securities laws;
(ii) use its best efforts, if the Common Stock of the Principal Party shall
be listed or admitted to trading on the New York Stock Exchange, on another
national securities exchange or on the NASDAQ Stock Market, to list or admit to
trading (or continue the listing of) the Rights and the securities purchasable
upon exercise of the Rights on the New York Stock Exchange, such other
securities exchange or the NASDAQ Stock Market, or, if the Common Stock of the
Principal Party shall not be listed or admitted to trading on a national
securities exchange or on the NASDAQ Stock Market, to cause the Rights and the
securities receivable upon exercise of the Rights to be authorized for quotation
on or reported by NASDAQ or such other system then in use;
(iii) deliver to holders of the Rights historical financial statements for
the Principal Party and its Affiliates that comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and
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(iv) obtain waivers of any rights of first refusal or preemptive rights in
respect of the Common Stock of the Principal Party subject to purchase upon
exercise of outstanding Rights.
The provisions of this Section 13 shall similarly apply to successive such
mergers, consolidations, sales or 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 that have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
(d) The Company covenants and agrees that it will not, at any time after
the Stock Acquisition Date, enter into any transaction of the type described in
clauses (i) through (iii) of Section 13(a) hereof if at the time of or after
such consolidation, merger, sale, transfer or other transaction there are any
charter or bylaw provisions or any rights, warrants or other instruments or
securities outstanding or agreements in effect that would substantially diminish
or otherwise eliminate the benefits intended to be afforded by the Rights.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such 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 the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any day shall
be the last sale price,
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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 on the NASDAQ Stock Market, if the
Security is listed or admitted to trading thereon), or, if the Rights are not
listed or admitted to trading on any national securities exchange or on the
NASDAQ Stock Market, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by the Board of Directors shall be used.
(b) The Company shall not be required to issue fractions of Preferred Stock
(other than fractions that are integral multiples of one one-thousandth of a
share of Preferred Stock) upon exercise of the Rights or to distribute
certificates that evidence fractional shares of Preferred Stock (other than
fractions that are integral multiples of one one-thousandth of a share of
Preferred Stock). Interests in fractions of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be
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evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it, provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Stock represented by such depositary receipts. 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 Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one share of Preferred Stock. For the purposes of this Section 14(b),
the current market value of a share of Preferred Stock shall be the closing
price of a share of Preferred Stock (as determined pursuant to Section 11(d)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Right 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 Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, on his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or
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otherwise act in respect of, his right to exercise the Rights evidenced by such
Right Certificate in the manner provided therein 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 under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting 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 the Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
duly executed;
(c) the Company and the Rights Agent may deem and treat the Person in whose
name a Right Certificate (or, prior to the Distribution Date, a Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes
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whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to have any
such order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of Preferred Stock or any other
securities of the Company that may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
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 this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.
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Section 18. Concerning the Rights Agent. (a) The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent, its officers,
employees, agents and directors for, and to hold each of them 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 or such indemnified party in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
(b) The Rights Agent shall be protected by the Company and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for Preferred Stock or Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, 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
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consolidation to which the Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to the stock transfer or corporate trust
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 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 Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
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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
Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or
Affiliate or Associate thereof and the determination of "current per share
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 a person believed
in good faith by the Rights Agent to be the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
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(c) The Rights Agent shall be liable hereunder to the Company and any other
Person 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 Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of any provision of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(e) hereof) or any
adjustment required under the provisions of Section 11 or Section 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of a certificate, furnished pursuant to Section 12, describing
such change or adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
shares of Preferred Stock or other securities to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of Preferred
Stock or other securities will, when issued, be duly and validly authorized and
issued, fully paid and nonassessable.
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(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 any
person believed in good faith by the Rights Agent to be the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer or any Assistant Treasurer of
the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions. Any application
by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent with respect to its obligations under this Agreement
and the date on and/or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable for any action taken
by, or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application (which
date shall not be less than five Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent
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shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though 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 reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has either not been
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completed or indicates an affirmative response to clause 1 and/or 2 thereof, the
Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock and the Preferred Stock by registered or certified mail,
and, following the Distribution Date, to the holders of the Right Certificates
by first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and the Preferred Stock by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
any state thereof, in good standing, that is authorized under such
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laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and that has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. 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, following the Distribution Date,
mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such forms 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 Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Stock following the Distribution Date and
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prior to the Expiration Date, the Company shall, with respect to shares of
Common Stock so issued or sold pursuant to (i) the exercise of stock options,
(ii) under any employee plan or arrangement, (iii) upon the exercise, conversion
or exchange of securities, notes or debentures issued by the Company, or (iv) a
contractual obligation of the Company, in each case existing prior to the
Distribution Date, and may, in any other case if deemed necessary or appropriate
by the Board of Directors, issue Right Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (x) no such Right Certificates shall be issued, if, and to the extent that,
the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or to the
Person to whom such Right Certificates would be issued, and (y) no such Right
Certificates shall be issued if, and to the extent that, appropriate adjustment
shall have otherwise been made in lieu of the issuance thereof.
Section 23. Redemption. (a) The Board of Directors may, by resolution
adopted at any time prior to the earlier of (i) the Close of Business on the
tenth day following the Stock Acquisition Date (subject to extension by the
Board of Directors as provided in Section 27 hereof) and (ii) the Final
Expiration Date, elect to cause the Company to redeem all but not less than all
the then outstanding Rights at a redemption price of $.01 per Right,
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"); provided, however, that if
the Board of Directors authorizes redemption of the Rights in either of the
circumstances set forth in clauses (x) or (y) below, such authorization shall
require the concurrence of a two-thirds majority of the Board of
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Directors: (x) such authorization occurs on or after the time a Person becomes
an Acquiring Person, or (y) such authorization occurs on or after the date of a
change (resulting from a proxy or consent solicitation) in a majority of the
directors in office at the commencement of such solicitation if any Person who
is a participant in such solicitation has stated (or, if upon the commencement
of such solicitation, a majority of the Board of Directors has determined in
good faith) that such Person (or any of its Affiliates or Associates) intends to
take, or may consider taking, any action that would result in such Person
becoming an Acquiring Person or that would cause the occurrence of a Section
11(a)(ii) Event or a Section 13 Event. The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. The Company may, at its option,
pay the Redemption Price in cash, shares of Common Stock (based on the current
per share 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 ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23 (or at
such later time as the Board of Directors may establish for the effectiveness of
such redemption), and without any further action and without any notice, the
right to exercise the Rights shall terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price. The Company
shall promptly give public notice of any such redemption; provided, however,
that the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after such action of the Board of
Directors ordering the redemption of the Rights (or such later time as the Board
of Directors may establish for the
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effectiveness of such redemption), the Company shall mail a notice of redemption
to all the holders of the then outstanding Rights at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice that is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made.
Section 24. Exchange. (a) The Board of Directors may, at its option, by
resolution adopted at any time after any Person becomes an Acquiring Person,
cause the Company to exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock at
an exchange ratio of one share of Common Stock per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors shall
not be empowered to effect such exchange at any time after any Person (other
than an Exempt Person), together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of shares of Common Stock aggregating 50%
or more of the shares of Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 24 and without
any further action and without any notice, the right to exercise such Rights
shall terminate and the only right thereafter of a holder of such Rights shall
be to receive that number of shares of Common
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Stock equal to the number of Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company shall
promptly mail a notice of any such exchange to all of the holders of the Rights
so exchanged at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice that is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the shares of Common
Stock for Rights will be effected and, in the event of any partial exchange, the
number of Rights that will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights that have become void
pursuant to the provisions of Section 7(e) hereof) held by each holder of
Rights.
(c) The Company may at its option substitute, and, in the event that there
shall not be sufficient shares of Common Stock issued but not outstanding or
authorized but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall substitute to the extent of
such insufficiency, for each share of Common Stock that would otherwise be
issuable upon exchange of a Right, a number of shares of Preferred Stock or
fractions thereof (or equivalent preferred stock, as such term is defined in
Section 11(b) hereof) having an aggregate current per share market price
(determined pursuant to Section 11(d) hereof) equal to the current per share
market price of one share of Common Stock (determined pursuant to Section 11(d)
hereof) as of the effective date of such exchange.
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(d) The Company shall not, in connection with any exchange pursuant to this
Section 24, be required to issue fractions of shares of Common Stock or to
distribute certificates that evidence fractional shares of Common Stock. In lieu
of such fractional shares of Common Stock, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (d), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
(e) In the event that there shall not be sufficient shares of Common Stock
or Preferred Stock issued but not outstanding or authorized but unissued to
permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional shares of Common Stock or Preferred Stock for issuance upon exchange
of the Rights.
Section 25. Notice of Certain Events. (a) In case the Company shall, at any
time after the Distribution Date, propose (i) to pay any dividend payable in
stock of any class to the holders of the Preferred Stock or to make any other
distribution to the holders of the Preferred Stock (other than a regular
quarterly cash dividend), (ii) to offer to the holders of the 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, (iii) to effect any reclassification of the Preferred Stock (other
than a reclassification
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involving only the subdivision of outstanding Preferred Stock), (iv) to effect
any consolidation or merger into or with any other Person, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend or 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 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 10 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of the Preferred Stock, whichever shall be the earlier. The failure to
give notice required by this Section 25 or any defect therein shall not affect
the legality or validity of the action taken by the Company or the vote upon any
such action.
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such event and the consequences of such event to holders of Rights under Section
11(a)(ii) hereof, and (ii) all references in Section 25(a) to Preferred Stock
shall be deemed thereafter to refer also to Common Stock and, if appropriate,
other securities issuable in respect of the Rights.
Section 26. Notices. Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Integon Corporation
500 West Fifth Street
Winston-Salem, North Carolina 27152
Attention: General Counsel
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
525 Washington Boulevard, Suite 4660
Jersey City, NJ 07310
Attn: Tenders and Exchanges Administration
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate 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.
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Section 27. Supplements and Amendments. Except as otherwise provided in
this Section 27, for so long as the Rights are then redeemable, the Company may
in its sole and absolute discretion, and the Rights Agent shall if the Company
so directs, supplement or amend any provision of this Agreement in any respect
without the approval of any holders of the Rights. Without limiting the
foregoing, the Company may at any time for so long as the Rights are then
redeemable, amend this Agreement to lower the thresholds set forth in Sections
1(a) and 3(a) to not less than the greater of (x) the sum of .001% and the
largest percentage of the outstanding shares of Common Stock then known by the
Company to be beneficially owned by any Person (other than the Company or an
Exempt Person) and (y) 10%. At any time when the Rights are no longer
redeemable, except as otherwise provided in this Section 27, the Company may,
and the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order to
(i) cure any ambiguity, (ii) correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein,
(iii) shorten or lengthen any time period hereunder, or (iv) change or
supplement the provisions hereunder in any manner that the Company may deem
necessary or desirable; provided that no such supplement or amendment shall
adversely affect the interests of the holders of Rights as such, and no such
amendment may cause the Rights again to become redeemable or cause this
Agreement again to become amendable other than in accordance with this sentence.
Notwithstanding anything contained in this Agreement to the contrary, (1) no
supplement or amendment shall be made that decreases the Redemption Price, (2)
no supplement or amendment that changes the rights or duties of the Rights Agent
shall be made
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without the consent of the Rights Agent, and (3) no supplement or amendment
shall be made at any time after the first occurrence of an event described in
clauses (x) and (y) of the proviso set forth in Section 23(a) hereof unless such
supplement or amendment shall have been approved by a two-thirds majority of the
Board of Directors. Upon the delivery of a certificate from an appropriate
officer of the Company that states that the proposed supplement or amendment is
in compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment.
Section 28. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Right Certificates
(and, prior to the Distribution Date, the Common Stock).
Section 30. Determinations and Actions by the Board of Directors. The Board
of Directors shall have the exclusive power and authority to administer this
Agreement and to exercise the rights and powers specifically granted to the
Board of Directors 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
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administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend this Agreement). All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
are done or made by the Board of Directors in good faith (with, where
specifically provided for herein, the concurrence of a two-thirds majority of
the Board of Directors), 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 to any liability to the holders of the
Rights. For all purposes of this Agreement, any calculation of the number of
shares of Common Stock or other securities outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Common Stock or any other securities 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.
Section 31. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware or New York and for all purposes shall be governed by and construed in
accordance with the
PAGE 65
<PAGE>
laws of such State applicable to contracts to be made and performed entirely
within such State.
Section 33. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
PAGE 66
<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.
INTEGON CORPORATION
By: /s/ John B. Yorke
---------------------
Name: John B. Yorke
Title: Vice President, Corporate General Counsel and
Secretary
FIRST CHICAGO TRUST COMPANY OF NEW YORK
By: /s/ James R. Kuzmich
---------------------
Name: James R. Kuzmich
Title: Customer Service Officer
<PAGE>
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
INTEGON CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Integon Corporation (the "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,
DOES HEREBY CERTIFY:
That pursuant to the authority vested in the Board of Directors
in accordance with the provisions of the Certificate of Incorporation
of the Corporation and in accordance with the provisions of Section 151
of the General Corporation Law of the State of Delaware, the Board of
Directors on January 22, 1997 adopted the following resolution creating
a series of Preferred Stock designated as "Series A Junior
Participating Preferred Stock":
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the
Certificate of Incorporation, a series of Preferred Stock designated as
Series A Junior Participating Preferred Stock, $0.01 par value per
share, be, and it hereby is, created, and that the designation and
amount thereof and the powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof (in addition to the
provisions in the Certificate of Incorporation that are applicable to
the Preferred Stock of all classes and series) are as follows:
Series A Junior Participating Preferred Stock
1. Designation and Amount. The shares of such series of Preferred
Stock shall be designated as "Series A Junior Participating Preferred
Stock," par value $0.01 per share, and the number of shares
constituting such series shall be 300,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors;
provided, however,
PAGE A-1
<PAGE>
that no decrease shall reduce the number of shares of Series A Junior
Participating Preferred Stock to less than the number of shares then
issued and outstanding plus the number of shares issuable upon exercise
of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
2. Dividends and Distribution.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior
to the shares of Series A Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series A Junior
Participating Preferred Stock, in preference to the holders of shares
of the Corporation's Common Stock, par value $0.01 per share ("Common
Stock"), and of any other shares of any class or series of stock of the
Corporation ranking junior to the Series A Junior Participating
Preferred Stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the 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 Series A Junior Participating
Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $10.00 or (b) the sum of (x) the Adjustment
Number (as defined below) times the aggregate per share amount of all
cash dividends, and (y) the Adjustment Number times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Junior Participating
Preferred Stock. The "Adjustment Number" shall initially be one
thousand (1000). In the event the Corporation shall at any time after
January 22, 1997, declare or pay any dividend on Common Stock payable
in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into
a greater or lesser number of shares of Common Stock, then in each such
case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which
is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Junior Participating Preferred Stock as provided in
paragraph (A) above immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of
PAGE A-2
<PAGE>
$10.00 per share on the Series A Junior Participating Preferred Stock
shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date of
issue of such shares of Series A Junior Participating Preferred Stock,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series A Junior Participating Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Junior Participating Preferred Stock in
an amount less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of
holders of shares of Series A Junior Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the
date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred Stock
shall entitle the holder thereof at any time to a number of votes equal
to the Adjustment Number (as in effect at such time) on all matters
submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation as from time to time amended, or by law, the holders of
Series A Junior Participating Preferred Stock and the holders of Common
Stock and any other capital stock of the Corporation having general
voting rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) Except as otherwise provided herein, in the Certificate of
Incorporation as from time to time amended, or by law, holders of
Series A Junior Participating Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
PAGE A-3
<PAGE>
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred
Stock as provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Junior Participating Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Series A Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Junior Participating Preferred Stock, except
dividends paid ratably on the Series A Junior Participating
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which
the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any
stock of the Corporation ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A
Junior Participating Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Junior Participating
Preferred Stock, or any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Junior Participating Preferred
Stock, except in accordance with a purchase offer made in writing
or by publication (as determined by the Board of Directors) to
all holders of Series A Junior Participating Preferred Stock, or
to such holders and holders of any such shares ranking on a
parity therewith, upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
PAGE A-4
<PAGE>
5. Reacquired Shares. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their retirement and
cancellation become authorized but unissued shares of Preferred Stock
and may be reissued as part of a new series of Preferred Stock to be
created by resolution or resolutions of the Board of Directors, subject
to any conditions and restrictions on issuance set forth herein.
6. Liquidation, Dissolution or Winding Up.
(A) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, no distribution shall be made to the
holders of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of
shares of Series A Junior Participating Preferred Stock shall have
received $1000.00 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the
date of such payment (the "Series A Liquidation Preference"). Following
the payment of the full amount of the Series A Liquidation Preference,
no additional distributions shall be made to the holders of shares of
Series A Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) the Adjustment
Number. Following the payment of the full amount of the Series A
Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of (1) Series A Junior Participating Preferred Stock
and (2) Common Stock, respectively, (a) holders of Series A Junior
Participating Preferred Stock and (b) holders of shares of Common Stock
shall, subject to the prior rights of all other series of Preferred
Stock, if any, ranking prior thereto, receive their ratable and
proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to (x) the Series A
Junior Participating Preferred Stock and (y) the Common Stock, on a per
share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of
Preferred Stock, if any, that rank on a parity with the Series A Junior
Participating Preferred Stock, then such remaining assets shall be
distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences. In the event, however,
that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be
distributed ratably to the holders of Common Stock.
7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction
in which the shares of Common Stock are exchanged for or changed into
other stock or securities, cash and/or any other property, then in any
such case each share of Series A Junior Participating Preferred Stock
PAGE A-5
<PAGE>
shall at the same time be similarly exchanged or changed in an amount
per share equal to the Adjustment Number times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as
the case may be, into which or for which each share of Common Stock is
changed or exchanged.
8. No Redemption. Shares of Series A Junior Participating
Preferred Stock shall not be subject to redemption by the Company.
9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred
Stock as to the payment of dividends and the distribution of assets,
unless the terms of any such series shall provide otherwise, and shall
rank senior to the Common Stock as to such matters.
10. Amendment. At any time that any shares of Series A Junior
Participating Preferred Stock are outstanding, the Certificate of
Incorporation of the Corporation shall not be amended in any manner
which would materially alter or change the powers, preferences or
special rights of the Series A Junior Participating Preferred Stock so
as to affect them adversely without the affirmative vote of the holders
of at least two-thirds of the outstanding shares of Series A Junior
Participating Preferred Stock, voting separately as a single class.
11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share that shall entitle the
holder, in proportion to such holder's fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Junior
Participating Preferred Stock.
PAGE A-6
<PAGE>
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 _______, ____.
INTEGON CORPORATION
By:
---------------------
Name:
---------------------
Title:
---------------------
Attest:
----------------------------------
Name: ___________________________
Title: ___________________________
PAGE A-7
<PAGE>
Exhibit B
Form of Right Certificate
Certificate No. R- ______ Rights
NOT EXERCISABLE AFTER JANUARY 22, 2007 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT ZERO PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT (AS REFERRED TO BELOW), RIGHTS BENEFICIALLY OWNED BY OR
TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF MAY BECOME
NULL AND VOID AND MAY NO LONGER BE TRANSFERABLE. [THE RIGHTS
REPRESENTED BY THIS RIGHT 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 RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID UNDER THE CIRCUMSTANCES SPECIFIED IN SECTION 7(E) OF THE
RIGHTS AGREEMENT.](1)
Right Certificate
INTEGON 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 January
22, 1997, as the same may be amended from time to time (the "Rights
Agreement"), between Integon Corporation, a Delaware corporation (the
"Company"), and First Chicago Trust Company of New York (the "Rights
Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 p.m., Winston-Salem, North Carolina time, on January 22,
2007 at the office of the
________________________
(1)The bracketed language shall be inserted only if applicable.
PAGE B-1
<PAGE>
Rights Agent designated for such purpose, or of its successor as Rights
Agent, one one-thousandth of a fully paid nonassessable share of Series
A Junior Participating Preferred Stock, par value $0.01 per share (the
"Preferred Stock"), of the Company, at a purchase price of $70.00 per
one one-thousandth of a share of Preferred Stock (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with
the Form of Election to Purchase and related certificate duly executed.
The number of Rights evidenced by this Right Certificate (and the
number of one one-thousandths of a share of Preferred Stock which may
be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of January
22, 1997 based on the Preferred Stock as constituted at such date. As
provided in the Rights Agreement, the Purchase Price, the number of one
one-thousandths of a share of Preferred Stock (or other securities or
property) which may be purchased upon the exercise of the Rights and
the number of Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events,
including Section 11(a)(ii) Events and Section 13 Events (as such terms
are defined in the Rights Agreement).
This Right 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 Right Certificates. Copies of the Rights Agreement
are on file at the principal executive offices of the Company and the
above-mentioned office of the Rights Agent. The Company will mail to
the holder of this Right Certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor.
This Right Certificate, with or without other Right Certificates,
upon surrender at the office of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of shares of Preferred Stock
as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged in whole or
in part for shares of the Company's Common Stock, par value $0.01 per
share, or shares of Preferred Stock.
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
PAGE B-2
<PAGE>
evidenced by depositary receipts), but in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of
the 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 Right
Certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of ________________.
ATTEST: INTEGON CORPORATION
By: By:
------------------- -------------------
Name: Name:
------------------- -------------------
Title: Title:
------------------- -------------------
Countersigned:
First Chicago Trust Company of New York
By:
-----------------------
Authorized Signature
PAGE B-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Right Certificate)
FOR VALUE RECEIVED_____________________ hereby sells, assigns and
transfers unto _________________________________________________
_______________________________________________________________
(Please print name and address of transferee)
_______________________ Rights represented by this Right Certificate,
together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint___________________ Attorney, to
transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ___________________
----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution
(including banks, stockbrokers, savings and loan associations, clearing
agencies and credit unions with membership in an approved signature
guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended.
PAGE B-4
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) This Right Certificate [ ] is [ ] is not being sold,
assigned or 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); and
(2) After due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the
Rights evidenced by this Right Certificate from any Person who is,
was or subsequently became an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Rights
Agreement).
Dated: ___________________
----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution
(including banks, stockbrokers, savings and loan associations, clearing
agencies and credit unions with membership in an approved signature
guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended.
NOTICE
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
PAGE B-5
<PAGE>
Form of Reverse Side of Right Certificate - continued
FORM OF ELECTION TO PURCHASE
___________________________
(To be executed if holder desires to exercise Rights represented
by the Right Certificate)
To: Integon Corporation
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the shares of
Preferred Stock (or other securities or property) issuable upon the
exercise of such Rights and requests that certificates for such shares
be issued in the name of:
Please insert social security or other identifying number:
_________________________
__________________________________________________
__________________________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of
such Rights shall be registered in the name of and delivered to:
Please insert social security or other identifying number:
(Please print name and address)
Dated: ___________________
----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution
(including banks, stockbrokers, savings and loan associations, clearing
agencies and credit unions with membership in an approved signature
guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended.
PAGE B-6
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) The Rights evidenced by the attached Right 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); and
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
Dated: ___________________
----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution
(including banks, stockbrokers, savings and loan associations, clearing
agencies and credit unions with membership in an approved signature
guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended.
NOTICE
------
The signatures to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or
any change whatsoever.
PAGE B-7
<PAGE>
Exhibit C
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT
(REFERRED TO BELOW), RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON
WHO IS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND
CERTAIN TRANSFEREES THEREOF MAY BECOME NULL AND VOID AND MAY NO
LONGER BE TRANSFERABLE.
Integon Corporation
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
On January 22, 1997, the Board of Directors of Integon
Corporation (the "Company") declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of common stock,
par value $0.01 per share, of the Company (the "Common Stock"). The
dividend is payable on February 11, 1997 (the "Record Date") to the
stockholders of record on that date. Each Right entitles the registered
holder to purchase from the Company one one-thousandth of a share of
Series A Junior Participating Preferred Stock, par value $0.01 per
share, of the Company (the "Preferred Stock") at a price of $70.00 per
one one-thousandth of a share of Preferred Stock (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights
are set forth in a Rights Agreement, dated as of January 22, 1997, as
the same may be amended from time to time (the "Rights Agreement"),
between the Company and First Chicago Trust Company of New York, as
Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons
(an "Acquiring Person"), with certain exceptions set forth below, has
acquired beneficial ownership of 20% or more of the outstanding shares
of Common Stock or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as
any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make,
a tender offer or exchange offer the consummation of which would result
in the beneficial ownership by a person or group of 20% or more of the
outstanding shares of Common Stock (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced, with
respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificate. An Acquiring Person does
not include (A) the Company, any subsidiary of the Company, any
employee benefit plan of the Company or of any subsidiary of the
Company, or any entity or trustee holding Common Stock for or pursuant
to the terms of any such plan or for the purpose of funding any such
plan or funding other employee benefits for employees of the Company or
of any subsidiary of the Company,
PAGE C-1
<PAGE>
(B) any person that would be deemed an "Acquiring Person" upon the
adoption of the Rights Agreement, unless and until such person acquires
beneficial ownership of any additional shares of Common Stock after the
date of the Rights Agreement, other than pursuant to any employee or
directors benefit plan or any dividend reinvestment plan of the
Company, or (C) any person whose beneficial ownership of 20% or more of
the outstanding shares of Common Stock results from an acquisition of
shares of Common Stock by the Company that, by reducing the number of
shares outstanding, increases the proportionate number of shares of
Common Stock beneficially owned by such person to 20% or more of the
shares of Common Stock then outstanding, unless such person thereafter
become the beneficial owner of any additional shares of Common Stock,
other than pursuant to any employee or directors benefit plan or any
dividend reinvestment plan of the Company, and upon the consummation of
such acquisition such person beneficially owns 20% or more of the
shares of Common Stock then outstanding.
The Rights Agreement provides that, until the Distribution Date
(or earlier redemption or expiration of the Rights), the Rights will be
transferred with and only with the Common Stock. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common
Stock certificates issued after the Record Date upon transfer or new
issuances of Common Stock will contain a legend incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of
any certificates for shares of Common Stock outstanding as of the
Record Date, even without such notation or a copy of this Summary of
Rights, will also constitute the transfer of the Rights associated with
the shares of Common Stock represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders
of record of the Common Stock as of the close of business on the
Distribution Date, and such separate Right Certificates alone will
evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on January 22, 2007 (the "Final Expiration Date"),
unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described
below.
The Purchase Price payable, and the number of shares 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) upon the grant to
holders of the Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price, or securities
convertible into Preferred Stock with a conversion price, less than the
then 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 periodic cash dividends or
dividends payable in Preferred Stock) or of subscription rights or
warrants (other than those referred to above).
PAGE C-2
<PAGE>
The number of outstanding Rights and the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of
each Right are also subject to adjustment in the event of a stock split
of the Common Stock or a dividend on the Common Stock payable in shares
of Common Stock or subdivisions, consolidations or combinations of the
Common Stock occurring, in any such case, prior to the Distribution
Date.
Shares of Preferred Stock purchasable upon exercise of the Rights
will not be redeemable. Unless otherwise provided in connection with
the creation of a subsequent series of preferred stock, the Preferred
Stock will be subordinate to any other series of the Company's
preferred stock. Each share of Preferred Stock will be entitled, when,
as and if declared, to a minimum quarterly dividend payment of $10.00
per share but will be entitled to an aggregate dividend of 1000 times
the dividend declared per share of Common Stock. In the event of the
liquidation of the Company, the holders of the Preferred Stock will be
entitled to receive a minimum liquidation payment of $1000.00 per share
(plus any accrued but unpaid dividends) but will be entitled to an
aggregate payment of 1000 times the payment made per share of Common
Stock. Each share of Preferred Stock will have 1000 votes, voting
together with the Common Stock. In the event of any merger,
consolidation or other transaction in which shares of Common Stock are
converted or exchanged, each share of Preferred Stock will be entitled
to receive 1000 times the amount received per share of Common Stock.
The rights of Preferred Stock as to dividends, liquidation and voting
are protected by customary antidilution provisions. Because of the
nature of the Preferred Stock's dividend, liquidation and voting
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.
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, each holder of a Right, other than
Rights beneficially owned by the Acquiring Person (which will thereupon
become void), will thereafter have the right to receive, upon exercise
of a Right at the then current Purchase Price, that number of shares of
Common Stock (or other securities or property) having a market value of
two times the Purchase Price.
In the event that, after a person or group of affiliated or
associated persons has become an Acquiring Person, the Company is
acquired in a merger or other business combination transaction or 50%
or more of its consolidated assets or earning power are sold, proper
provision will be made so that each holder of a Right (other than
Rights beneficially owned by an Acquiring Person, which will have
become void) will thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price, that number of
shares of common stock of the person with whom the Company has engaged
in the foregoing transaction (or its parent), which number of shares at
the time of such transaction will have a market value of two times the
Purchase Price.
At any time after any person or group of affiliated or associated
persons becomes an Acquiring Person and prior to the acquisition by
such person or group of 50% or more of the
PAGE C-3
<PAGE>
outstanding shares of Common Stock, the Board of Directors of the
Company may cause the Company to exchange the Rights (other than Rights
owned by such person or group, which will have become void), in whole
or in part, at an exchange ratio of one share of Common Stock (or one
one-thousandth of a share of Preferred Stock, or shares of a class or
series of the Company's preferred stock having equivalent rights,
preferences and privileges) per Right, subject to adjustment.
No fractional shares of Preferred Stock will be issued (other
than fractions that are integral multiples of one one-thousandth of a
share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts), and in lieu thereof an adjustment in
cash will be made based on the market price of the Preferred Stock on
the last trading day prior to the date of exercise.
At any time prior to the earlier of (i) the tenth day after the
time that a person or group of affiliated or associated persons has
become an Acquiring Person (subject to extension by the Board of
Directors, with the approval of a majority of the Board of Directors)
and (ii) the Final Expiration Date, the Board of Directors may cause
the Company to redeem the Rights in whole, but not in part, at a price
of $.01 per Right (the "Redemption Price"). The redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may
establish, and, under certain circumstances, shall require the
concurrence of a two-thirds majority of the Board of Directors.
Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
For so long as the Rights are then redeemable, the Company may,
except with respect to the Redemption Price, amend the Rights in any
manner, including an amendment to lower certain thresholds described
above to not less than the greater of (i) the sum of 0.001% and the
largest percentage of the outstanding shares of Common Stock then known
to the Company to be beneficially owned by any person or group of
affiliated or associated persons and (ii) 10%. After the Rights are no
longer redeemable, the Company may, except with respect to the
Redemption Price, amend the Rights in any manner that does not
adversely affect the interests of holders of the Rights. Amendments to
the Rights Agreement after a person or group of affiliated or
associated persons has become an Acquiring Person require the approval
of a two-thirds majority of the Board of Directors.
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.
PAGE C-4
<PAGE>
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form
8-A dated January 31, 1997. 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, as the same may be
amended from time to time, which is hereby incorporated herein by
reference.
C-363972.12354.01018
PAGE C-5
