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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
NANOPHASE TECHNOLOGIES CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3687863
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(STATE OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
453 COMMERCE STREET, BURR RIDGE, IL 60521
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
IF THIS FORM RELATES TO THE REGISTRATION OF A CLASS OF SECURITIES PURSUANT TO
SECTION 12(b) OF THE EXCHANGE ACT AND IS EFFECTIVE PURSUANT TO GENERAL
INSTRUCTION A.(c), PLEASE CHECK THE FOLLOWING BOX. / /
IF THIS FORM RELATES TO THE REGISTRATION OF A CLASS OF SECURITIES PURSUANT TO
SECTION 12(g) OF THE EXCHANGE ACT AND IS EFFECTIVE PURSUANT TO GENERAL
INSTRUCTION A.(d), PLEASE CHECK THE FOLLOWING BOX. /X/
SECURITIES ACT REGISTRATION STATEMENT FILE NUMBER
TO WHICH THIS FORM RELATES: N/A
SECURITIES TO BE REGISTERED PURSUANT TO SECTION
12(b) OF THE ACT:
NONE
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
PREFERRED STOCK PURCHASE RIGHTS
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Item 1. Description of Registrant's Securities to be Registered.
On October 26, 1998, the Board of Directors of Nanophase Technologies
Corporation (the "Company") declared a dividend of one Right for each
outstanding share of common stock (a "Right"), par value $.01 per share (the
"Common Shares"), of the Company. The dividend is payable on November 10, 1998
(the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one ten-thousandth
of a share of Series A Junior Participating Preferred Stock, par value $.01 per
share (the "Preferred Shares"), of the Company at a price of $25.00 per one
ten-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The Purchase Price was established by the Company's Board of
Directors after consultations with, and recommendations by, its financial
advisor. Customary factors considered by the Company's Board of Directors in
determining the Purchase Price included, without limitation, implied ranges of
future stock prices for the Company based upon potential and projected growth
rates over a ten-year period, and exercise prices (as a multiple of stock
prices) set by other companies adopting similar rights plans. The Purchase Price
does not reflect the Board's view of the current value of the Company.
The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and LaSalle National
Bank, as Rights Agent (the "Rights Agent").
Until the earlier of (i) the close of business on the tenth day after
the first public announcement that a person or group of affiliated or associated
persons have acquired beneficial ownership of 15% or more of the outstanding
Common Shares (an "Acquiring Person"), or (ii) the close of business on the
tenth day (or such later date as may be determined by action of the Company's
Board of Directors prior to such time as any Person 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 such person or group of 15% or more of such outstanding Common
Shares (the earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced by the Common Share certificates, will be transferable
only by the transfer of the Common Shares associated with such Rights and any
transfer of the Common Shares (including a transfer to the Company) will
constitute a transfer of the Rights. As described below, after a person or group
becomes an Acquiring Person, the Rights may not be redeemed or amended.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record Date, upon
transfer or new issuance of Common Shares, 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 Common Shares outstanding as of the Record Date, even without
such notation will also constitute the transfer of the Rights associated with
the Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Rights Certificates") will be mailed to holders of record of the Common Shares
as of the close of business on the Distribution Date and such separate Rights
Certificates alone will evidence the Rights. Each Right is exercisable for one
ten-thousandth of a Preferred Share at any time after the Distribution Date.
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The Rights are not exercisable for Common Shares until a person, entity
or group becomes an Acquiring Person. The Rights will expire on October 28, 2008
(the "Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are redeemed earlier by the Company, in each case, as
described below.
If a person or group of affiliated or associated persons becomes an
Acquiring Person, each holder of a Right (other than those described in the next
sentence) will thereafter have the right to receive, upon exercise, Common
Shares (or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the Purchase Price of the Right. All
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be void.
At any time after the first date of public announcement by the Company
or an Acquiring Person than an Acquiring Person has become such, if (i) the
Company is the surviving corporation in a merger with any other company or
entity, (ii) the Company is acquired in a merger or other business combination
transaction, (iii) 50% or more of the Company's consolidated assets or earning
power are sold or (iv) an Acquiring Person engages in certain "self-dealing"
transactions with the Company, each holder of an outstanding Right (other than
those whose Rights have become void) will thereafter have the right to receive,
upon the exercise thereof at the then current Purchase Price of the Right, that
number of shares of common stock of the surviving or acquiring company which at
the time of such transaction will have a market value of two times the Purchase
Price of such Right.
At any time after a person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by an Acquiring Person which have become
void), in whole or in part, without any additional payment, for Common Shares at
an exchange ratio of one Common Share (or of a share of a class or series of the
Company's preferred shares having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Rights surrendered for exercise must be accompanied by payment to the
Company of the then current aggregate Purchase Price by wire transfer, certified
check, cashier's check or money order. Some holders of Rights may find that the
level of the Purchase Price precludes them from exercising all or a portion of
their Rights. The Rights, however, will be separately tradeable from and after
the Distribution Date, should such holders wish to transfer their Rights. There
can be no assurance, however, that an active trading market for the Rights will
develop.
The Purchase Price payable, and the number of Preferred Shares 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
Shares, (ii) upon the grant to holders of the Preferred Shares of certain
rights, options or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then-current market price of the Preferred Shares or (iii) upon
the distribution to holders of the Preferred Shares of evidences of indebtedness
or assets (excluding regular periodic cash dividends or
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dividends payable in Preferred Shares) or of subscription rights or warrants
(other than those referred to above).
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to an aggregate dividend of
10,000 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to an
aggregate payment of 10,000 times the payment made per Common Share. Each
Preferred Share will have 10,000 votes, voting together with the Common Shares.
In the event of any consolidation, merger, combination or other transaction in
which Common Shares are exchanged for or changed into other stock or securities,
cash and/or other property, each Preferred Share will be entitled to receive
10,000 times the amount received per Common Share. The foregoing dividend and
liquidation rights of the Preferred Shares are protected against dilution in the
event additional Common Shares are issued pursuant to a stock split, stock
dividend or similar recapitalization.
Because of the nature of the dividend, liquidation and voting rights of
the Preferred Shares, the value of one ten-thousandth of a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one ten-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to a person or group becoming an Acquiring Person,
the Board of Directors of the Company may redeem all, but not less than all, of
the Rights 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.
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.
Any of the provisions of the Rights may be amended by the Board of
Directors of the Company in order to cure any ambiguity or to make any other
changes which the Board deems necessary or desirable. However, after a person or
group becomes an Acquiring Person, any such amendment must not adversely affect
the interests of holders of Rights (excluding the interests of any Acquiring
Person).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights should not,
however, interfere with any merger or business combination approved by the
Company's Board of Directors because the Rights may be redeemed by the Company
at the Redemption Price prior to the time
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that a person or group has acquired beneficial ownership of 15% or more of the
Common Shares. However, by causing substantial dilution to a person or group
that attempts to acquire the Company on terms not approved by the Company's
Board of Directors, the Rights may interfere with certain acquisitions,
including acquisitions that may offer a premium over market price to some or all
of the Company's stockholders. The Company's Board of Directors has stated that
the Rights are not intended to prevent an acquisition of the Company on terms
that are favorable and fair to all the Company's stockholders.
As of October 28, 1998, there were 12,564,638 Common Shares
outstanding. Each outstanding Common Share on November 11, 1998 will have one
Right attached thereto. Until the Distribution Date, the Company will issue one
Right with each Common Share that shall become outstanding so that all such
shares will have attached Rights. 2,500 Preferred Shares are initially reserved
for issuance upon exercise of the Rights.
Item 2. Exhibits.
Exhibit
Number Description of Document
1 Rights Agreement dated as of October 28, 1998 between
Nanophase Technologies Corporation and LaSalle National Bank
which includes as Exhibit A the Form of Certificate of
Designations, as Exhibit B the Form of Rights Certificate and
as Exhibit C the Summary of Rights to Purchase Preferred
Stock. Pursuant to the Rights Agreement, Rights Certificates
will not be mailed until after the Distribution Date.
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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, thereunto duly authorized.
NANOPHASE TECHNOLOGIES CORPORATION
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(Registrant)
Dated: October 29, 1998 By: /s/ ROBERT W. CROSS
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Robert W. Cross
President and Chief Executive Officer
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Index to Exhibits
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Exhibit No. Exhibit
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1 Rights Agreement dated as of October 28, 1998 between
Nanophase Technologies Corporation and LaSalle National
Bank, which includes as Exhibit A the Form of Certificate
of Designations, as Exhibit B the Form of Rights
Certificate and as Exhibit C the Summary of Rights to
Purchase Preferred Stock. Pursuant to the Rights
Agreement, Rights Certificates will not be mailed until
after the Distribution Date.
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EXHIBIT 1
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Nanophase Technologies Corporation
and
LaSalle National Bank
Rights Agent
Rights Agreement
Dated as of October 28, 1998
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<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C> <C>
Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Issuance of Rights Certificates . . . . . . . . . . . . . . . . . . . . . 4
Section 4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5. Countersignature and Registration . . . . . . . . . . . . . . . . . . . . 7
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . . . 9
Section 8. Cancellation and Destruction of Rights Certificates . . . . . . . . . . . 10
Section 9. Availability of Capital Stock . . . . . . . . . . . . . . . . . . . . . . 11
Section 10. Preferred Shares Record Date. . . . . . . . . . . . . . . . . . . . . . . 12
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares. . . . . . . . 20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . . . 23
Section 15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . . . 24
Section 17. Rights Certificate Holder Not Deemed a Stockholder. . . . . . . . . . . . 25
Section 18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . . . 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . . . 26
Section 20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . . . 29
Section 23. Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 27. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . . . . 33
Section 28. Determination and Actions by the Board of Directors, etc. . . . . . . . . 33
Section 29. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 30. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . . . . . . 34
Section 31. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 33. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 34. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
i
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<TABLE>
<CAPTION>
<S> <C> <C>
Page
Exhibit A - Form of Certificate of Designations of Series A Junior
Participating Preferred Stock of Source Services Corporation . . . . . . . . . . A-1
Exhibit B - Form of Rights Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C - Summary of Rights to Purchase Preferred Shares . . . . . . . . . . . . . . . . . C-1
</TABLE>
ii
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RIGHTS AGREEMENT
Agreement, dated as of October 28, 1998, between Nanophase Technologies
Corporation, a Delaware corporation (the "Company"), and LaSalle National Bank
(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 Common Share (as hereinafter defined) of the Company
outstanding on November 10, 1998 (the "Record Date"), each Right representing
the right to purchase one ten-thousandth of a Preferred Share (as hereinafter
defined), upon the terms and subject to the conditions herein set forth, and has
further authorized and directed the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date (as such terms are hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person,
shall be the Beneficial Owner (as hereinafter defined) of 15% or more
of the Common Shares of the Company then outstanding, but shall not
include (i) the Company, (ii) any Subsidiary (as hereinafter defined)
of the Company, (iii) any employee benefit plan of the Company or any
Subsidiary of the Company, (iv) any entity organized, appointed or
established by the Company for, or pursuant to the terms of, any such
plan, or (v) any Person who, prior to the Company's public announcement
of the Board's approval of this Agreement, is the Beneficial Owner of
15% or more of the Common Shares of the Company then outstanding (a
"Current 15% Owner"); provided, however, that if following such public
announcement of the Board's approval of this Agreement, such Current
15% Owner becomes the Beneficial Owner of any additional Common Shares
of the Company and is the Beneficial Owner of 15% or more of the Common
Shares of the Company then outstanding, then such Current 15% Owner
shall be deemed an "Acquiring Person". Notwithstanding the foregoing,
no Person shall become an "Acquiring Person" as the result of (a) an
acquisition of Common Shares by the Company which, by reducing the
number of Common Shares outstanding, increases the proportionate number
of Common Shares beneficially owned by such Person to 15% or more of
the Common Shares of the Company then outstanding or (b) the
acquisition by such Person of newly issued Common Shares directly from
the Company (it being understood that a purchase from an underwriter or
other intermediary is not directly from the Company); provided,
however, that if a Person becomes the Beneficial Owner of 15% or more
of the Common Shares of the Company then outstanding by reason of share
purchases by the Company or the receipt of newly-issued Common Shares
directly from the Company and, after such share purchases or direct
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issuance by the Company, becomes the Beneficial Owner of any additional
Common Shares of the Company and is the Beneficial Owner of 15% or more
of the Common Shares of the Company then outstanding, then such Person
shall be deemed to be an "Acquiring Person". Notwithstanding the
foregoing, if the Board of Directors determines in good faith that a
Person who would otherwise be an "Acquiring Person", as defined
pursuant to the foregoing provisions of this Section 1(a), has become
such inadvertently, and such Person divests as promptly as practicable
a sufficient number of Common Shares so that such Person would no
longer be an Acquiring Person, as defined pursuant to the foregoing
provisions of this Section 1(a), then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
(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 hereinafter defined) as in
effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (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 (other than customary
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, (x) 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, (y) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering
Event (as hereinafter defined) or (z) securities issuable upon
exercise of Rights from, and after the occurrence of, a
Triggering Event which Rights were acquired by such Person or
any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to Section 3(a) or Section 22
hereof (the "Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect to
any Original Rights; or (B) the sole or shared right to vote
or dispose pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in
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accordance with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D or Schedule 13G under the Exchange
Act (or any comparable or successor report); or (C)
"beneficial ownership" of (as determined pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange
Act); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding, whether written or oral (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 contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when used
with reference to a Person's Beneficial Ownership of securities of the
Company, shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to
own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banking institutions in Illinois 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., Chicago, Illinois time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., Chicago,
Illinois time, on the next succeeding Business Day.
(f) "Common Shares" shall mean the shares of Common Stock, par
value $.01 per share, of the Company, except that when the context
refers to "Common Shares" of any Person other than the Company such
term shall mean the capital stock (or equity interest) of such other
Person with the greatest voting power, or the equity securities or
other equity interest having power to control or direct the management
of such Person.
(g) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(i) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.
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(j) "Person" shall mean any individual, trust, firm,
corporation, partnership, limited liability company or other entity,
and shall include any successor (by merger or otherwise) of such
entity.
(k) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.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.
(l) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.
(m) "Section 11(a)(ii) Event" shall mean an event described in
Section 11(a)(ii) hereof.
(n) "Shares 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)
under the Exchange Act) by the Company or an Acquiring Person that an
Acquiring Person has become such.
(o) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting
equity securities or equity interest is owned, directly or indirectly,
by such Person.
(p) "Triggering Event" shall mean a Section 11(a)(ii) Event
(as hereinafter defined) or an event described in Section 13(a) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the earlier of (i) the Close of Business on the
tenth day after the Shares Acquisition Date or (ii) the Close of
Business on 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 the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any person or entity organized, appointed
or established by the Company for, or pursuant to the terms of, any
such plan) of, or of the first public announcement of the intention of
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company or any person or entity organized, appointed or established by
the Company for, or pursuant to the terms of, any such plan)
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to commence, a tender or exchange offer the consummation of which would
result in any Person becoming the Beneficial Owner of Common Shares
aggregating 15% or more of the then outstanding Common Shares
(including any such date which is after the date of this Agreement and
prior to the issuance of the Rights; the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be certificates for
Rights) and not by separate certificates, (y) the Rights will be
transferable only in connection with the transfer of Common Shares and
(z) each transfer of Common Shares (including a transfer to the
Company) shall constitute a transfer of the Rights associated with such
Common Shares. As soon as practicable after the Distribution Date, the
Company will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, insured, postage-prepaid
mail, to each record holder of Common Shares as of the Close of
Business on the Distribution Date, at the address of such holder shown
on the records of the Company, a Rights Certificate, in substantially
the form of Exhibit B hereto (a "Rights Certificate"), evidencing one
Right for each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Rights 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
Preferred Shares, in substantially the form of Exhibit C hereto (the
"Summary of Rights"), by first-class, postage-prepaid mail, to each
record holder of Common Shares 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 Shares outstanding as
of the Record Date, until the Distribution Date, the Rights will be
evidenced by such certificates registered in the names of the holders
thereof together with a copy of the Summary of Rights attached thereto.
Until the Distribution Date (or the earlier of the Redemption Date or
the Final Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or
without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.
(c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in
the last sentence of this Section 3 (c)) after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date or
the Final Expiration Date shall have impressed on, printed on, written
on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between
Nanophase Technologies Corporation and LaSalle National Bank
dated as of October 28, 1998 (the "Rights Agreement"), the
terms
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<PAGE> 9
of which are hereby incorporated herein by reference and
a copy of which is on file at the principal executive offices
of Nanophase Technologies 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. Nanophase
Technologies Corporation will mail to the holder of this
certificate a copy of the Rights Agreement, without charge,
after receipt of a written request therefor. As described in
the Rights Agreement, Rights issued to any Person who becomes
an Acquiring Person or any Associate or Affiliate thereof (as
such terms are defined in the Rights Agreement) shall become
null and void.
With respect to such certificates containing the foregoing legend,
until the Distribution Date, the Rights associated with the Common
Shares represented by such certificates shall be evidenced by such
certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated
with the Common Shares represented thereby. In the event that the
Company purchases or acquires any Common Shares after the Record Date
but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common
Shares which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates and the forms of election to
purchase and of assignment to be printed on the reverse thereof, shall
be substantially the same as Exhibit B hereto, and may have such marks
of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may
be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Rights may from time to time be listed, or
to conform to usage. Subject to the terms, provisions and restrictions
elsewhere herein, the Rights Certificates shall entitle the holders
thereof to purchase such number of one ten-thousandths of a Preferred
Share as shall be set forth therein at the price per one ten-thousandth
of a Preferred Share set forth therein (the "Purchase Price"), but the
amount and type of securities purchasable upon the exercise of each
Right and the Purchase Price shall be subject to adjustment as provided
herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person became
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<PAGE> 10
an Acquiring Person, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming an Acquiring Person
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 such
Acquiring Person has any continuing agreement, arrangement or
understanding, whether written or oral, regarding the transferred
Rights or (B) a transfer which the Board of Directors has determined in
good faith is part of a plan, arrangement or understanding, whether
written or oral, which has as a primary purpose or effect avoidance of
the second paragraph of Section 11(a)(ii) hereof, and any Rights
Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent
feasible) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become null and void in the circumstances specified in the
second paragraph of Section 11(a)(ii) of the Rights Agreement.
The provisions of the second paragraph of Section 11(a)(ii) shall apply
whether or not any Rights Certificate actually contains the foregoing legend.
Section 5. Countersignature and Registration. The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its Chief Executive Officer, its President, any of its Vice Presidents,
or its Treasurer, 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 an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be manually countersigned by
the Rights 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 Rights
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the Person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificate may be signed on behalf of the
Company by any Person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate (as described in the first sentence of this Section 5), although at
the date of the execution of this Rights Agreement any such Person was not such
an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration and transfer of the
Rights Certificates of each series
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<PAGE> 11
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Rights Certificates, the number of Rights evidenced on
its face by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 4(b), 14 and 24
hereof, at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the earlier of the
Redemption Date or the Final Expiration Date, any Rights Certificate or
Rights Certificates (other than Rights Certificates representing Rights
that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred,
split-up, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like
number of one ten-thousandths of a Preferred Share (or Common Shares,
other securities or property, as the case may be) as the Rights
Certificate or Rights Certificates surrendered then entitle such holder
to purchase. Any registered holder desiring to transfer, split-up,
combine or exchange any Rights Certificate or Rights Certificates shall
make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be
transferred, split-up, combined or exchanged at the principal office of
the Rights Agent. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of
any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form
of assignment on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon,
the Rights Agent shall, subject to Sections 4 and 11(a)(ii) hereof,
countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with
any transfer, split-up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the
Rights Certificate, if mutilated, the Company will make and deliver a
new Rights Certificate of like tenor to the Rights Agent for delivery
to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
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<PAGE> 12
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 11(a)(ii) hereof, the registered holder
of any valid Rights Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section
9(c) hereof) in whole or in part at any time after the Distribution
Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the
Rights Agent, together with payment of the Purchase Price (as defined
below) for each one ten-thousandth of a Preferred Share (or Common
Shares, other securities, cash 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 October 28, 2008 (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as provided in Section
23 hereof (the "Redemption Date"), or (iii) the time at which such
Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price for each one ten-thousandth of a
Preferred Share to be issued upon exercise of a Right shall initially
be $25.00, shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with Section 7(c) below.
(c) Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate on the reverse side of the Rights Certificate duly
executed, accompanied by payment of the aggregate Purchase Price for
the Preferred Shares (or other securities 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 Rights Certificate in
accordance with Section 9 hereof by wire transfer, certified check,
cashier's check or money order payable to the order of the Company, or
such other payment method reasonably required by the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition from any
transfer agent of the Preferred Shares (or make available if the Rights
Agent is the transfer agent of the Preferred Shares) certificates for
the number of Preferred Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such
requests or (B) requisition from the depositary agent depositary
receipts as provided in Section 14(b) hereof, representing such number
of one ten-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares 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
or such other entity the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 14 hereof, (iii) after
receipt of such certificates or depositary receipts, cause the same to
be delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt,
deliver such cash to, or upon the order of, the registered holder of
such
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<PAGE> 13
Rights Certificate. In the event that the Company elects or is
obligated to issue other securities (including Common Shares) of the
Company, pay cash and/or distribute other property pursuant to Section
11(a)(iii) hereof, the Company will make all arrangements necessary so
that such other securities, cash and/or property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered
holder of such Rights Certificate or to his duly authorized assigns,
subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated
to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such
exercise, and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
(f) Notwithstanding any statement to the contrary contained in
this Agreement or in any Rights Certificate, if the Distribution Date
or the Shares Acquisition Date shall occur prior to the Record Date,
the provisions of this Agreement, including (without limitation)
Sections 3 and 11(a)(ii), shall be applicable to the Rights upon their
issuance to the same extent such provisions would have been applicable
if the Record Date were the date of this Agreement.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
split-up, combination or exchange shall, if surrendered to the Company or 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
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Rights Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
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<PAGE> 14
Section 9. Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued
Preferred Shares (and, following the occurrence of a Distribution Date,
out of its authorized and unissued Common Shares and/or other
securities or out of its authorized and issued shares held in its
treasury), the number of Preferred Shares (or Common Shares and/or
other securities, as the case may be) that will be sufficient to permit
the exercise in full of all outstanding Rights as provided in this
Agreement.
(b) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Preferred Shares (or
Common Shares and/or other securities, as the case may be) delivered
upon exercise of Rights shall be, at the time of delivery of the
certificates for such Preferred Shares (or Common Shares and/or other
securities, as the case may be) (subject to any necessary payment of
the Purchase Price), duly and validly authorized and issued and fully
paid and nonassessable shares.
(c) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of
the Rights Certificates or of any Preferred Shares (or Common Shares
and/or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer
tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery
of certificates or depositary receipts for the Preferred Shares (or
Common Shares and/or other securities, as the case may be) in a name
other than that of, the registered holder of the Rights Certificate
evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares (or Common
Shares and/or other securities, as the case may be) upon the exercise
of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's reasonable
satisfaction that no such tax is due.
(d) So long as the Preferred Shares (and, following the
occurrence of a Distribution Date, Common Shares and/or other
securities, as the case may be) issuable and deliverable upon the
exercise of the Rights may be listed on any inter-dealer quotation
system or national securities exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on one
such system or exchange upon official notice of issuance upon such
exercise.
(e) The Company shall use its best efforts to (i) file on the
appropriate form, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the
Rights has been determined hereunder, a registration statement under
the Securities
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<PAGE> 15
Act of 1933, as amended (the "Act"), with respect to the securities
purchasable upon exercise of the Rights, (ii) cause such registration
statement to become effective as soon as practicable after such filing,
and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Final Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed
ninety (90) days after the date set forth in clause (i) of the first
sentence of this Section 9(e), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. In addition, if the
Company shall determine that a registration statement is required
following the Distribution Date, the Company may temporarily suspend
the exercisability of the Rights until such time as a registration
statement has been declared effective. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with
the exercisability of the Rights. Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted
under applicable law or a registration statement shall not have been
declared effective.
Section 10. Preferred Shares Record Date. Each Person in whose name
any certificate for Preferred Shares (or Common Shares 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 Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the applicable
Purchase Price (and any applicable transfer taxes) was made (or Rights were duly
surrendered in exchange for Common Shares pursuant to Section 24 hereof);
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares (or Common Shares 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 Preferred Shares
(or Common Shares and/or other securities, as the case may be) transfer books of
the Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a holder
of Preferred Shares (or Common Shares and/or other securities, as the case may
be) for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
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<PAGE> 16
Section 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights. The Purchase Price, the number and kind of shares covered
by and obtainable 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 and Section 13 hereof.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Preferred Shares payable in Preferred Shares, (B) subdivide
the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (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 capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Shares transfer
books of the Company were open, such holder would have owned
upon such exercise and 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 capital stock of the
Company issuable upon exercise of one Right. If an event
occurs which would require adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided
for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) Subject to Section 24 hereof, in the event any
Person shall become an Acquiring Person, each holder of a
valid Right shall thereafter have a right to receive, upon
exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one ten-thousandths of a
Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement, and in lieu of
Preferred Shares, such number of Common Shares of the Company
as shall equal the result obtained by (x) multiplying the then
current Purchase Price by the number of one ten-thousandths of
a Preferred Share for which a Right is then exercisable, and
dividing that product by (y) 50% of the then current per share
market price of the Company's Common Shares (determined
pursuant to Section 11(d) hereof) on the date of the
occurrence of the event described above. In the event that any
Person shall become an Acquiring Person and the Rights shall
then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be
afforded by the Rights.
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<PAGE> 17
From and after the time when a Person becomes
an Acquiring Person (a "Section 11(a)(ii) Event") any Rights
that are or were acquired or beneficially owned by (i) any
Acquiring Person or any Associate or Affiliate of such
Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee
after the Acquiring Person became an Acquiring Person or (iii)
a transferee of an Acquiring Person (or of any such Associate
or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming an Acquiring
Person 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 such Acquiring Person has any
continuing agreement, arrangement or understanding, whether
written or oral, regarding the transferred Rights or (B) a
transfer which the Board of Directors has determined in good
faith is part of a plan, arrangement or understanding, whether
written or oral, which has as a primary purpose or effect the
avoidance of this second paragraph of this Section 11(a)(ii),
shall each be void and any holder of such Rights shall
thereafter have no exercise or any other rights whatsoever
with respect to such Rights under any provision of this
Agreement or otherwise. No Rights Certificate shall be issued
pursuant to Section 3, this Section 11(a)(ii) or Section 24
that represents Rights beneficially owned by an Acquiring
Person or any Associate or Affiliate thereof whose Rights
would be void pursuant to the preceding sentence; no Rights
Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person or any Associate or
Affiliate thereof whose Rights would be void pursuant to the
preceding sentence or to any nominee of such Acquiring Person,
Associate or Affiliate; and any Rights Certificate delivered
to the Rights Agent for transfer to an Acquiring Person,
Associate or Affiliate thereof whose Rights would be void
pursuant to the preceding sentence shall be cancelled.
(iii) In lieu of issuing Common Shares of the
Company in accordance with Section 11(a)(ii) hereof, the
Company may, in the sole discretion of the Board of Directors,
elect to (and, in the event that the Board of Directors has
not exercised the exchange right contained in Section 24
hereof and there are not sufficient issued but not outstanding
and authorized but unissued Common Shares to permit the
exercise in full of the Rights in accordance with Section
11(a)(ii) hereof, the Company shall) take all such action as
may be necessary to authorize, issue or pay, upon the exercise
of the Rights, cash (including by way of a reduction of the
Purchase Price), property, other securities or any combination
thereof having an aggregate value equal to the value of the
Common Shares of the Company which otherwise would have been
issuable pursuant to Section 11(a)(ii), which aggregate value
shall be determined by the Board of Directors. For purposes of
the preceding sentence, the value of the Common Shares shall
be determined pursuant to Section 11(d) hereof and the value
of any equity securities which the Board of Directors
determines to be a
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<PAGE> 18
"common stock equivalent" (including the Preferred Shares, in
such ratio as the Board of Directors shall determine) shall be
deemed to have the same value as the Common Shares. Any such
election by the Board of Directors must be made and publicly
announced within 60 days following the date on which the event
described in Section 11(a)(ii) shall have occurred. Following
the occurrence of the event described in Section 11(a)(ii),
the Board of Directors may suspend the exercisability of the
Rights for a period of up to 60 days following the date on
which the event described in Section 11(a)(ii) shall have
occurred to the extent that the Board of Directors has not
determined whether to exercise the Company's right of election
under this Section 11(a)(iii). 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.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Shares entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares
(or shares having the same rights, privileges and preferences as the
Preferred Shares ("equivalent preferred shares")) or securities
convertible into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred
Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares (as defined in Section
11(d)) 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 Preferred Shares outstanding
on such record date plus the number of Preferred Shares which could be
purchased at the current per share market price for the aggregate
offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be
offered) and the denominator of which shall be the number of Preferred
Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares 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 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. Preferred Shares owned by or held for the account of the Company
shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be
the Purchase Price which would then be in effect if such record date
had not been fixed.
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(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (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 Shares) 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
Shares 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) of the portion of
the assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred Share and
the denominator of which shall be such current per share market price
of the Preferred Shares; 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 which would then be in effect if
such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices (determined as provided in the next
sentence) per share of such Security for the 30 consecutive Trading
Days (as such term is hereinafter defined) immediately prior to such
date, and for the purpose of any computation under Section 11(a)(iii)
hereof, the "current per share market price" of a Security 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 immediately
following such date; provided, however, that in the event that the
current per share market price of the 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 (other than the
Rights), 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 share
equivalent of such Security as if such dividend, distribution,
combination or reclassification has not been declared. The closing
price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the Nasdaq National Market or, if the Security is
listed or admitted for trading on a national exchange, as reported in
the principal consolidated
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<PAGE> 20
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, if the Security is not listed on the Nasdaq
National Market or listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by any 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
inter-dealer quotation system or principal national securities exchange
on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted
to trading on any inter-dealer quotation system or national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares shall be
determined in accordance with the method set forth in Section 11(d)(i)
hereof. If the Preferred Shares are not publicly traded, the "current
per share market price" of the Preferred Shares shall be conclusively
deemed to be the current per share market price of the Common Shares as
determined pursuant to Section 11(d)(i) (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by ten-thousand. If
neither the Common Shares nor the Preferred Shares are publicly held or
so listed or traded, "current per share market price" shall mean the
fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed
with the Rights Agent.
(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 one-millionth of a Preferred Share or one
ten-thousandth of any 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 which
requires such adjustment or (ii) the date of the expiration of the
right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section
11(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 Shares, thereafter the number of such other shares so
receivable upon exercise of any Right 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 Shares
contained in Sections 11(a), 11(b) and
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<PAGE> 21
11(c), and the provisions of Sections 7, 9, 10, 13 and 14 with respect
to the Preferred Shares 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 ten-thousandths of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights all subject to further adjustment
as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i) hereof, upon each adjustment of the Purchase
Price as a result of the calculations made in Sections 11(b) and 11(c)
hereof, each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one ten-thousandths of a
Preferred Share (calculated to the nearest one one-millionth of a
Preferred Share) obtained by (i) multiplying (x) the number of one
ten-thousandths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of one ten-thousandths of
a Preferred Share 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 ten-thousandths of a Preferred
Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least 10 days later than the date of the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be
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<PAGE> 22
issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one ten-thousandths of a Preferred Share
issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price and the number of one ten-thousandths of a Preferred Share which
were expressed in the initial Rights Certificates issued hereunder,
without prejudice to the validity of such Rights Certificate(s) or the
application of the provisions hereof.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one ten-thousandth of the then par
value, if any, of the Preferred Shares issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Preferred Shares
at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that
an adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until the
occurrence of such event the issuing to the holder of any Right
exercised after such record date of the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the Preferred Shares 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 Shares, issuance wholly
for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares,
dividends on Preferred Shares payable in Preferred Shares or issuance
of rights, options or warrants referred to in Section 11(b), hereafter
made by the Company to holders of its Preferred Shares shall not be
taxable to such stockholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Shares Acquisition Date, the Company shall
(i) declare or pay any dividend on the Common Shares payable in Common
Shares or (ii) effect a subdivision, combination or consolidation of
the Common Shares (by reclassification or otherwise than by payment
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<PAGE> 23
of dividends in Common Shares) into a greater or lesser number of
Common Shares, then in any such case (i) the number of one
ten-thousandths of a Preferred Share purchasable after such event upon
proper exercise of each Right shall be determined by multiplying the
number of one ten-thousandths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which
is the number of Common Shares outstanding immediately before such
event and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (ii) each Common Share
outstanding immediately after such event shall have issued with respect
to it that number of Rights which each Common Share 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 such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 and 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares or the Preferred Shares a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Rights Certificate in accordance with
Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) If, after the Shares Acquisition Date, directly or
indirectly, (w) the Company shall consolidate with, or merge with and
into, any other Person, (x) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be
the continuing or surviving corporation of such merger and, in
connection with such merger or consolidation all or part of the
outstanding Common Shares are changed into or exchanged for stock or
other securities of any other Person (or the Company) or cash or any
other property, (y) the Company shall sell, mortgage or otherwise
transfer (or one or more of its Subsidiaries shall sell, mortgage or
otherwise transfer), in one or more transactions, assets or earning
power aggregating 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person other
than the Company or one or more of its wholly-owned Subsidiaries, or
(z) any Acquiring Person or any Associate or Affiliate of any such
Acquiring Person, at any time after the date of this Agreement,
directly or indirectly, (A) shall, in one transaction or a series of
transactions, transfer any assets to the Company or to any of its
Subsidiaries in exchange (in whole or in part) for Common Shares, for
shares of other equity securities of the Company or for securities
exercisable for or convertible into shares of equity securities of the
Company (Common Shares or otherwise) or otherwise obtain from the
Company, with or without consideration, any additional shares of such
equity securities or securities exercisable for or convertible into
shares of such equity securities (other than pursuant to a pro rata
distribution to all holders of Common Shares), (B) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of assets, in one transaction or a series of
transactions, to,
20
<PAGE> 24
from or with the Company or any of its Subsidiaries without obtaining a
written opinion from a nationally recognized investment banking firm
that the terms of such transaction or arrangement are no less favorable
to the Company than the Company would be able to obtain in arm's-length
negotiation with an unaffiliated third party, (C) shall sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of in one transaction or a series of transactions, to, from or
with the Company or any of the Company's Subsidiaries (other than
incidental to the lines of business, if any, engaged in as of the date
hereof between the Company and such Acquiring Person or Associate or
Affiliate) assets having an aggregate fair market value of more than
$5,000,000, (D) shall receive any compensation from the Company or any
of the Company's Subsidiaries other than compensation for full-time
employment as a regular employee at rates in accordance with the
Company's (or its Subsidiaries') past practices, or (E) shall receive
the benefit, directly or indirectly (except proportionately as a
stockholder and except if resulting from a requirement of law or
governmental regulation), of any loans, advances, guarantees, pledges
or other financial assistance or any tax credits or other tax advantage
provided by the Company or any of its Subsidiaries, then, and in each
such case, (i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price multiplied
by the number of one ten-thousandths of a Preferred Share for which a
Right is then exercisable in accordance with the terms of this
Agreement, and in lieu of Preferred Shares, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable
Common Shares of the Principal Party (as hereinafter defined) not
subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall equal the result obtained by (A) multiplying
the then current Purchase Price by the number of one ten-thousandths of
a Preferred Share for which a Right is then exercisable and dividing
that product by (B) 50% of the then current per share market price of
the Common Shares of the Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such
consolidation, merger, sale or transfer; (ii) 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; (iii) the term "Company"
shall thereafter be deemed to refer to such Principal Party; and (iv)
such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation
as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation
to the Common Shares thereafter deliverable upon the exercise of the
Rights.
(b) "Principal Party" shall mean:
(i) In the case of any transaction described in (w)
or (x) of the first sentence of Section 13(a) hereof, the
Person that is the issuer of any securities into which Common
Shares of the Company are converted in such merger or
21
<PAGE> 25
consolidation, and if no securities are so issued, the Person
that is the surviving entity of such merger or consolidation
(including the Company if applicable); and
(ii) in the case of any transaction described in (y)
or (z) of the first sentence in Section 13(a) hereof, the
Person that is the party receiving the greatest portion of the
assets, securities, earning power or other benefit transferred
pursuant to such transaction or transactions;
provided, however, that in any such case described in clauses (b)(i)
and (b)(ii): (1) if the Common Shares of such Person are not at such
time and have not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Shares of
which are and have been so registered, "Principal Party" shall refer to
such other Person; (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one person, the Common Shares of two or more
of which are and have been so registered, "Principal Party" shall refer
to whichever of such Persons is the issuer of the Common Shares having
the greatest aggregate market value; and (3) in case such Person is
owned, directly or indirectly, by a joint venture formed by two or more
Persons that are not owned, directly or indirectly, by the same person,
the rules set forth in (1) and (2) above shall apply to each of the
chains of ownership having an interest in such joint venture as if such
party were a "Subsidiary" of both or all of such joint venturers and
the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect
interests in such Person bear to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have
sufficient Common Shares authorized to permit the full exercise of the
Rights and 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 Sections 13(a) and 13(b)
hereof and further providing that, as soon as practicable after the
date of any consolidation, merger, sale or transfer mentioned in
Section 13(a) hereof, the Principal Party will:
(i) prepare and file a registration statement under the
Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as
practicable after such filing and (B) remain effective (with
a prospectus at all times meeting the requirements of the
Act) until the Final Expiration Date;
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act; and
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<PAGE> 26
(iii) take such actions as may be necessary or appropriate
under the blue sky laws of the various states.
The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there
are any rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the consummation of
such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. The provisions of this
Section 13 shall similarly apply to successive mergers, consolidations,
sales or transfers.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence fractional
Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Rights Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal
to the same fraction of the current market value of a whole Right. For
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 for any day shall be
the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the principal national securities exchange or
the Nasdaq National Market on which the Rights are listed or admitted
to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange or the Nasdaq National 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 any
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 Shares (other than fractions which are integral multiples of
one ten-thousandth of a Preferred Share) upon exercise of the Rights or
to distribute certificates which evidence fractional Preferred Shares
(other than fractions which are integral multiples of one
ten-thousandth of a Preferred Share). Fractions of Preferred Shares in
integral multiples of one ten-thousandth of a Preferred Share may, at
the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided, that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial
owners of the Preferred Shares
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<PAGE> 27
represented by such depositary receipts. In lieu of fractional
Preferred Shares that are not integral multiples of one ten-thousandth
of a Preferred Share, the Company shall pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current
market value of one Preferred Share. For the purposes of this Section
14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) Following the occurrence of a Distribution Date, the
Company shall not be required to issue fractions of Common Shares upon
exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of fractional Common Shares, the
Company may pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash
equal to the same fraction of the current market value of one Common
Share. For purposes of this Section 14(c), the current market value of
one Common Share shall be the closing price of one Common Share (as
determined pursuant to the second sentence of Section 11(d)(i) hereof)
for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the 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 Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in its own behalf and for its own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, its right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Rights Holders. 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:
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<PAGE> 28
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates will
be transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer and with appropriate
forms and certificates fully executed;
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Rights Certificate (or, prior to the
Distribution Date, the associated certificate for Common Shares) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated certificate for Common Shares
made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall
be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or any 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.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any
Rights Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Rights
Agent, for anything done
25
<PAGE> 29
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability arising, directly or indirectly, therefrom. The
indemnity in the foregoing sentence shall survive the resignation or
substitution of the Rights Agent or the termination of this Agreement. In no
case shall the Rights Agent be liable for special, indirect, incidental or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the possibility
of such loss or damage.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for the Preferred Shares or Common Shares 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.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the 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 Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
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<PAGE> 30
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions by all of which the Company and the holders of Rights 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 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 any one of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Treasurer or
the Secretary of the Company and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder 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 Rights Certificates (except its countersignature thereof) or
be required to verify the same, but all such statements and recitals
are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for
any change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment
in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24 hereof, or the
ascertaining of the existence of facts that would require any such
change or adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice that such change
or adjustment is required); nor shall it by any act hereunder be deemed
to make any representation or warranty as to the authorization or
reservation of any Preferred Shares (or Common Shares and/or other
securities, as the case may be) to be issued pursuant to this agreement
or any Rights Certificate or as to whether any Preferred Shares (or
27
<PAGE> 31
Common Shares and/or other securities, as the case may be) will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments
and assurances as may reasonably be required by the Rights Agent for
the carrying out or performing by the Rights Agent of the provisions of
this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept, prior to the Shares Acquisition Date, instructions with respect
to the performance of its duties hereunder from any one of the Chairman
of the Board, the Chief Executive Officer, the President, any Vice
President, the Secretary or the 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.
(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.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and thereafter 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 Shares or Preferred Shares by registered or
certified mail, and to the holders of the Rights 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 Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been
28
<PAGE> 32
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then the registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be
either (A) a corporation organized and doing business under the laws of the
United States or of any state of the United States, in good standing, authorized
under such laws to exercise corporate trust or stock transfer powers, and
subject to supervision or examination by federal or state authority and which
has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million or (B) an affiliate of such a corporation. 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 Shares or
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Rights 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 Rights Certificates . Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by the Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption.
(a) The Rights may be redeemed by action of the Board of
Directors pursuant to Section 23 (b) hereof and shall not be redeemed
in any other manner.
(b) The Board of Directors may, at its option, at any time
prior to such time as any Person becomes an Acquiring Person, redeem
all, but not less than all, of 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"). The redemption of the Rights by the Board of
Directors 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. If redemption of the Rights is to be effective as of a
future date, the Rights shall continue to be exercisable, subject to
Section 11(a)(ii) hereof, until the effective date of the redemption,
provided that nothing contained herein shall preclude
29
<PAGE> 33
the Board of Directors from subsequently causing the Rights to be
redeemed at a date earlier than the previously scheduled effective date
of the redemption. The Company may, at its option, pay the Redemption
Price in cash, Common Shares (based on the current per share market
price of the Common Shares at the time of redemption) or any other form
of consideration deemed appropriate by the Board of Directors.
(c) Immediately upon the action of the Board of Directors
ordering the redemption of the Rights pursuant to Section 23(b) hereof
(or at the effective time of such redemption established by the Board
of Directors pursuant to Section 23(b) hereof), and without any further
action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall
be to receive the Redemption Price. 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 pursuant to
Section 23(b) hereof or if later, the effectiveness of the redemption
of the rights pursuant to the last sentence of Section 23(b), 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 Shares. Any
notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made. The Company may, at its option,
discharge all of its obligations with respect to the Rights by (i)
issuing a press release announcing the manner of redemption of the
Rights, (ii) depositing with a bank or trust company having a capital
and surplus of at least $100 million, funds necessary for such
redemption, in trust, to be applied to the redemption of the Rights so
called for redemption and (iii) arranging for the mailing of the
Redemption Price to the registered holders of the Rights; then, and
upon such action, all outstanding Rights Certificates shall be null and
void without further action by the Company. Neither the Company nor any
of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically
set forth in this Section 23 or in Section 24 hereof, and other than in
connection with the purchase of Common Shares prior to the Shares
Acquisition Date.
Section 24. Exchange.
(a) The Board of Directors may, at its option, at any time
after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for Common Shares at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof.
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any
30
<PAGE> 34
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary, or any
entity holding Common Shares for or pursuant to the terms of any such
plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors
ordering the exchange of any Rights pursuant to Section 24(a) hereof
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 Common Shares
equal to the number of valid Rights held by such holder. 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 promptly shall
mail a notice of any such exchange to all of the holders of such Rights
at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to
the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Shares (or equivalent preferred
shares, as such term is defined in Section 11(b) hereof) for Common
Shares exchangeable for Rights, at the initial rate of one
ten-thousandth of a Preferred Share (or equivalent preferred share) for
each Common Share, as appropriately adjusted to reflect adjustments in
the voting rights of the Preferred Shares pursuant to the terms
thereof, so that the fraction of a Preferred Share delivered in lieu of
each Common Share shall have the same voting rights as one Common
Share.
(d) In the event that there shall not be sufficient Common
Shares or Preferred Shares 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 Common Shares or Preferred Shares for
issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional
Common Shares. In lieu of such fractional Common Shares, the Company
shall pay to the registered holders of the Rights Certificates with
regard to which such fractional Common Shares would otherwise be
issuable an amount in cash equal to the same fraction of the current
market value of a whole Common Share. For the purposes of this Section
24(e), the current market value
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<PAGE> 35
of a whole Common Share shall be the closing price of a Common Share
(as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events.
(a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of its Preferred Shares or
to make any other distribution to the holders of its Preferred Shares
(other than a regular quarterly cash dividend), (ii) to offer to the
holders of its Preferred Shares rights or warrants to subscribe for or
to purchase any additional Preferred Shares or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Shares (other than a reclassification
involving only the subdivision of outstanding Preferred Shares), (iv)
to effect any consolidation or merger into or with, or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50%
or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in Common
Shares or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise), then, in each such
case, the Company shall give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of such proposed action,
which shall specify the record date for such event, and the date of
participation therein by the holders of the Common Shares and/or
Preferred Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or
(ii) above at least 10 days prior to the record date for determining
holders of the Preferred Shares 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 Common Shares and/or Preferred Shares, whichever
shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, in accordance
with Section 26 hereof, a notice of the occurrence of such event, which
notice shall describe such event and the consequences of such event to
holders of Rights under Section 11(a)(ii) hereof.
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 Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
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<PAGE> 36
Nanophase Technologies Corporation
453 Commerce Street
Burr Ridge, Illinois 60521
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Rights Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
LaSalle National Bank
135 South LaSalle Street
Suite 1960
Chicago, Illinois 60603
Attention: Corporate Trust 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 Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Rights Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights (except the interests of
any Acquiring Person and its Affiliates and Associates).
Section 28. Determination and Actions by the Board of Directors, etc..
The Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors, or the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement and
whether any proposed amendment adversely affects the interests of the holders of
Rights Certificates). For all purposes of this Agreement, any calculation of the
number of Common Shares or other securities outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding Common Shares or any other securities of which any Person is the
Beneficial Owner, shall be made in accordance with
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<PAGE> 37
the last sentence of Rule 13d-3(d)(1)(I) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights Certificates and all other parties unless the Board of Directors
specifically states that such action, calculations, interpretation or
determination is not final, conclusive and binding, and (y) not subject the
Board of Directors to any liability to the holders of the Rights Certificates.
Section 29. 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 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of valid Rights Certificates (and, prior to the
Distribution Date, the Common Shares) 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
valid Rights Certificates (and, prior to the Distribution Date, the Common
Shares).
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 Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the 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.
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<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
NANOPHASE TECHNOLOGIES CORPORATION
Attest:
By: /S/ DENNIS J. NOWAK By: /S/ ROBERT CROSS
--------------------------------- ------------------------------------
Name: Dennis J. Nowak Name: Robert W. Cross
Title: Secretary Title: President and Chief Executive
Officer
LASALLE NATIONAL BANK
as Rights Agent
Attest:
By: /S/ MUSTAFA BAIG By: /S/ GREGORY MALATIA
------------------------ -------------------------------
Name: Mustafa Baig Name: Gregory Malatia
Title: Trust Officer Title: Vice President
<PAGE> 39
EXHIBIT A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
NANOPHASE TECHNOLOGIES CORPORATION
(Pursuant to Section 151 of the
Delaware General Corporation Law)
---------------------------------
NANOPHASE TECHNOLOGIES CORPORATION, a corporation organized and
existing under the General Corporation Law of the State of Delaware (hereinafter
called the "Company"), hereby certifies that the following resolution was
adopted by the Board of Directors of the Company as required by Section 151 of
the General Corporation Law at a meeting duly called and held on October 26,
1998:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Company (hereinafter called the "Board of Directors"
or the "Board") in accordance with the provisions of the Company's Certificate
of Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the Company and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall initially be 2,500. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, that no decrease
shall reduce the number of shares of Series A Preferred Stock to a number less
than the number of shares then outstanding plus the number of shares reserved
for issuance upon the exercise of outstanding options, rights or warrants or
upon the conversion of any outstanding securities or rights issued by the
Company convertible into Series A Preferred Stock and further provided that the
Board of Directors shall increase the number of shares constituting the Series
A-1
<PAGE> 40
A Preferred Stock to the extent necessary for the Company to have available
sufficient shares of such Series A Preferred Stock available to fulfill all of
the Company's obligations to holders of securities and Rights of the Company.
Section 2 Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock, in preference to the
holders of Common Stock, par value $.01 per share (the "Common Stock"),
of the Company, and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of the
funds legally available for the purpose, dividends payable when and as
dividends are declared on the Common Stock in an amount, subject to the
provision for adjustment hereinafter set forth, equal to 10,000 times
the aggregate per share amount of all cash dividends, and 10,000 times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, declared on the Common Stock (except
as provided in the next sentence). In the event the Company shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of 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 amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this
Section 2 immediately after it declares a dividend or distribution on
the Common Stock.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the
holder thereof to 10,000 votes on all matters submitted to a vote of
the stockholders of the Company.
(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital
stock of the Company having general voting rights shall vote together
as one class on all matters submitted to a vote of stockholders of the
Company.
A-2
<PAGE> 41
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject to
the conditions and restrictions on issuance set forth herein, in the Company's
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 5. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 10,000 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock. In the event the Company shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of 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 aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 6. Consolidation, Merger, etc. In case the Company 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 Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 10,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Company shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of 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 amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of
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<PAGE> 42
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
Section 8. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Company's Preferred Stock.
Section 9. Amendment. The Certificate of Incorporation of the
Company shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
IN WITNESS WHEREOF, this Certificate of Designations is executed on
behalf of the Company by its President and Chief Executive Officer and attested
by its Secretary this day of , 1998.
-------------------------------------
Robert W. Cross
President and Chief Executive Officer
Attest:
- ------------------
Dennis J. Nowak
Secretary
A-4
<PAGE> 43
EXHIBIT B
Form of Rights Certificate
Certificate No. ____ _____ Rights
NOT EXERCISABLE AFTER OCTOBER 28, 2008 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT, AND ARE VOIDABLE AND SUBJECT TO EXCHANGE ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN THE SECOND
PARAGRAPH OF SECTION 11(A)(II) OF THE RIGHTS AGREEMENT.]*
Rights Certificate
Nanophase Technologies 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 October 28, 1998 (the "Rights Agreement") between
Nanophase Technologies Corporation, a Delaware corporation (the "Company"), and
LaSalle National Bank (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., Burr Ridge, Illinois time on October 28, 2008
at the principal office of the Rights Agent, or at the office of its successor
as Rights Agent, one ten-thousandth of a fully paid nonassessable share of
Series A Junior Participating Preferred Stock, par value $.01 per share (the
"Preferred Shares"), of the Company, at a purchase price of $25.00 per one
ten-thousandth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
and the Certificate duly executed. The number
- ---------------------------------
* The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
B-1
<PAGE> 44
of Rights evidenced by this Rights Certificate (and the number of one
ten-thousandths of a Preferred Share 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 November 10, 1998, based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of one ten-thousandths of a Preferred Share which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office of the Rights Agent, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.
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 Preferred Shares
or shares of the Company's Common Stock, par value $.01 per share, on the terms
set forth in the Rights Agreement.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one ten-thousandths of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares 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 Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
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<PAGE> 45
This Rights 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: NANOPHASE TECHNOLOGIES CORPORATION
By:
- ----------------------------- -------------------------------
Countersigned:
LASALLE NATIONAL BANK
By:
-------------------------------------
Authorized Signature
B-3
<PAGE> 46
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, ______________________________ hereby sells,
assigns and transfers unto _____________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________
(Please print social security or other identifying number of transferee)
this Rights Certificate, together with all interest therein, and does hereby
irrevocably constitute and appoint ___________________ Attorney, to transfer the
within Rights Certificate on the books of the within-named Company, with full
power of substitution.
Dated:
-----------------------------
----------------------------
Signature
Signature Guaranteed:
----------------------------------------------------------
Signature must be guaranteed by an Eligible Guarantor Institution as
defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
B-4
<PAGE> 47
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate / / is / / is not being sold,
assigned and transferred by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it / / did / / did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of any such
Person.
Dated:
----------------------------
--------------------------
Signature
Signature Guaranteed:
----------------------------------------------------------
NOTICE
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
The signature must be guaranteed by an Eligible Guarantor
Institution as defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
B-5
<PAGE> 48
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Rights Certificate.)
To: Nanophase Technologies Corporation
The undersigned hereby irrevocably elects to exercise _____________
Rights represented by this Rights Certificate to purchase the Preferred Shares
issuable upon the exercise of such Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such Preferred Shares be issued in
the name of:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------
(Please insert social security or other identifying number)
If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address)
-----------------------------------------------------------
(Please insert social security or other identifying number)
Dated:
----------------------------
---------------------------------
Signature
Signature Guaranteed:
-----------------------------------------------------------
Signatures must be guaranteed by an Eligible Guarantor Institution as
defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
B-6
<PAGE> 49
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate / / are / /
are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Person (as
such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it / / did / / did not acquire the Rights evidenced by
this Rights Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of any such
Person.
Dated:
----------------------------
---------------------------------
Signature
Signature Guaranteed:
----------------------------------------------------------
NOTICE
The signatures to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
The signature must be guaranteed by an Eligible Guarantor
Institution as defined by SEC Rule 17Ad-15 (17 C.F.R. 240.17-Ad-15).
B-7
<PAGE> 50
NOTICE
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-8
<PAGE> 51
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES UNDER PLAN ADOPTED BY
NANOPHASE TECHNOLOGIES CORPORATION
On October 26, 1998, the Board of Directors of Nanophase Technologies
Corporation (the "Company") declared a dividend of one Right for each
outstanding share of common stock (a "Right"), par value $.01 per share (the
"Common Shares"), of the Company. The dividend is payable on November 10, 1998
(the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one ten-thousandth
of a share of Series A Junior Participating Preferred Stock, par value $.01 per
share (the "Preferred Shares"), of the Company at a price of $25.00 per one
ten-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and LaSalle National
Bank, as Rights Agent (the "Rights Agent").
Until the earlier of (i) the close of business on the tenth day after
the first public announcement that a person or group of affiliated or associated
persons have acquired beneficial ownership of 15% or more of the outstanding
Common Shares (an "Acquiring Person"), or (ii) the close of business on the
tenth day (or such later date as may be determined by action of the Company's
Board of Directors prior to such time as any person 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 of such person or group of 15% or more of such outstanding Common
Shares (the earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced by the Common Share certificates, will be transferable
only by the transfer of the Common Shares associated with such Rights and any
transfer of the Common Shares (including a transfer to the Company) will
constitute a transfer of the Rights. As described below, after a person or group
becomes an Acquiring Person, the Rights may not be redeemed or amended.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Share certificates issued after the Record Date, upon
transfer or new issuance of Common Shares, 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 Common Shares outstanding as of the Record Date, even without
such notation or a copy of this Summary of Rights being attached, will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date and such separate Rights
Certificates alone will evidence
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<PAGE> 52
the Rights. Each Right is exercisable for one-ten thousandth of a Preferred
Share at any time after the Distribution Date.
The Rights are not exercisable for Common Shares until a person, entity
or group becomes an Acquiring Person. The Rights will expire on October 28, 2008
(the "Final Expiration Date"), unless the Final Expiration Date is extended or
unless the Rights are redeemed earlier by the Company, in each case, as
described below.
If a person or group of affiliated or associated persons becomes an
Acquiring Person, each holder of a Right (other than those described in the next
sentence) will thereafter have the right to receive, upon exercise, Common
Shares (or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the Purchase Price of the Right. All
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be void.
At any time after the first date of public announcement by the Company
or an Acquiring Person than an Acquiring Person has become such, if (i) the
Company is the surviving corporation in a merger with any other company or
entity, (ii) the Company is acquired in a merger or other business combination
transaction, (iii) 50% or more of the Company's consolidated assets or earning
power are sold, or (iv) an Acquiring Person engages in certain "self-dealing"
transactions with the Company, each holder of a Right (other than those whose
Rights have become void) will thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price of the Right, that number of
shares of common stock of the surviving or acquiring company which at the time
of such transaction will have a market value of two times the Purchase Price of
such Right.
At any time after a person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which have become
void), in whole or in part, without any additional payment, for Common Shares at
an exchange ratio of one Common Share (or of a share of a class or series of the
Company's preferred shares having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one ten-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to a person or group becoming an Acquiring Person,
the Board of Directors of the Company may redeem all, but not less than all, of
the Rights at a price of $.01 per Right (the "Redemption Price"). The redemption
of the Rights may be made effective at
C-2
<PAGE> 53
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish.
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.
Any of the provisions of the Rights may be amended by the Board of
Directors of the Company in order to cure any ambiguity or to make any other
changes which the Board deems necessary or desirable. However, after a person or
group becomes an Acquiring Person, any such amendment must not adversely affect
the interests of holders of Rights (excluding the interests of any Acquiring
Person).
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
November __, 1998. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
C-3
