<Page 1>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
For Registration of Certain Classes of Securities
Pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
KEMET Corporation
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 57-0923789
- -------------------------------------------------------------------------------
(State of incorporation or organization) (I.R.S. Employer Identification No.)
P.O. Box 5928, Greenville, SC 29606
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
If this Form relates to the registration of a class of debt securities and is
effective upon filing pursuant to General Instruction A.(c)(1), please check the
following box. ___
If this Form relates to the registration of a class of debt securities and is to
become effective simultaneously with the effectiveness of a concurrent
registration statement under the Securities Act of 1933 pursuant to General
Instruction A.(c)(2), please check the following box.___
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which class
to be registered is to be registered
- -------------------------------------------------------------------------------
none
- -------------------------------------------------------------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Share Purchase Rights,
with respect to Common Stock, par value $0.01 per share
- -------------------------------------------------------------------------------
(Title of Class)
This document contains 69 pages.
The Exhibit Index is located on page 8.
<Page 2>
Item 1. Description of Registrant's Securities to be Registered:
Preferred Stock Purchase Rights
On June 30, 1996, the Board of Directors of KEMET Corporation (the "Company")
authorized the issuance of one preferred share purchase right (a "Right") for
each outstanding share of common stock, par value $0.01 per share (the "Voting
Common"),and non-voting common stock,par value $0.01 per share(the "Non-Voting
Common," and together with the Voting Common, the "Common Securities"), of the
Company. The distribution is payable to the stockholders of record at the close
of business on July 1, 1996 (the "Record Date"), which is also the payment
date, and with respect to all Common Securities that become outstanding after
the Record Date and prior to the earliest of the Distribution Date (as defined
below), the redemption of the Rights, the exchange of the Rights, and the
expiration of the Rights (and, in certain cases, following the Distribution
Date). Each Right entitles the registered holder to purchase from the Company
one one-thousandth of a share of a Junior Participating Preferred Stock, Series
A, par value $0.10 per share, of the Company (the "Preferred Shares") at a price
of $85.00 per one one-thousandth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights, and certain
defined terms used herein, are set forth in a Rights Agreement (the "Rights
Agreement") between the Company and Wachovia Bank of North Carolina, N.A., as
Rights Agent (the "Rights Agent"), dated as of July 1, 1996.
Until the earlier to occur of (i) the expiration of the Company's
redemption rights following the date of public disclosure that a person or group
other than certain Exempt Persons (an "Acquiring Person"), together with persons
affiliated or associated with such Acquiring Person (other than those that are
Exempt Persons), has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Securities (the "Stock
Acquisition Date") or (ii) the tenth business day after the date of commencement
or public disclosure of an intention to commence a tender offer or exchange
offer by a person other than an Exempt Person if, upon consummation of the
offer, such person could acquire beneficial ownership of 15% or more of the
outstanding Common Securities (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by Common Security
certificates and not by separate certificates. The Rights Agreement provides
that, until the Distribution Date (or earlier redemption, exchange or expiration
of the Rights), the Rights will be transferred with and only with the Common
Securities. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), new Common Security certificates issued after July 1,
1996, upon transfer or new issuance of the Common Securities, will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights)
the surrender for transfer of any certificate for Common Securities, with or
without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
Common Securities represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common
Securities as of the close of business on the Distribution Date, and such
separate Right Certificates alone will evidence the Rights.
<Page 3>
The Rights will first become exercisable after the Distribution Date
(unless sooner redeemed or exchanged). The Rights will expire at the close of
business on July 1, 2006 (the "Expiration Date"), unless earlier redeemed or
exchanged by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or
other securities, cash or other property issuable, upon exercise of the Rights
are subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend or distribution on, or a subdivision, 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
Preferred Shares or securities convertible into Preferred Shares at less than
the 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 out of earnings or retained earnings)
or of subscription rights or warrants (other than those referred to above). In
addition, the Purchase Price payable and the number of Preferred Shares
purchasable, on exercise of a Right is subject to adjustment in the event that
the Company should (i) declare or pay any dividend on the Common Securities
payable in Common Securities or (ii) effect a subdivision or combination of the
Common Securities into a different number of Common Securities.
In the event that, at any time following public disclosure that an
Acquiring Person has become such, the Company is involved in a merger or other
business combination transaction where the Company is not the surviving
corporation or where Common Securities are changed or exchanged or in a
transaction or transactions wherein 50% or more of its consolidated assets or
earning power are sold, proper provision would be made so that each holder of a
Right (other than such Acquiring Person and certain related persons or
transferees) shall thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Right, that number of shares
of common stock of the acquiring company or the Company, as the case may be,
which at the time of such transaction would have a market value of two times the
exercise price of the Right. In the event that there is public disclosure that
an Acquiring Person has become such, proper provision would be made so that each
holder of a Right, other than Rights that are or were beneficially owned by the
Acquiring Person and certain related persons and transferees (which will
thereafter be void), on or after the earlier of the Distribution Date and the
first public disclosure that an Acquiring Person has become such, will
thereafter have the right to receive upon exercise that number of shares of
Voting Common (or other securities) having at the time of such transaction a
market value of two times the exercise price of the Right. In addition, the
Company's Board of Directors has the option of exchanging all or part of the
Rights (excluding void Rights) for an equal number of shares of Voting Common in
the manner described in the Rights Agreement.
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
<Page 4>
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading date prior to the date
of exercise.
At any time prior to public disclosure that an Acquiring Person has
become such, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price"),
payable in cash, shares (including fractional shares) of Voting Common or any
other form of consideration deemed appropriate by the Board of Directors.
At any time prior to public disclosure that an Acquiring Person has
become such, the Board of Directors of the Company may amend or supplement the
Rights Agreement without the approval of the Rights Agent or any holder of the
Rights, except for an amendment or supplement which would change the Redemption
Price, provide for an earlier expiration date of the Rights or change the
Purchase Price. Thereafter, the Board of Directors of the Company may amend or
supplement the Rights Agreement without such approval only to cure ambiguity,
correct or supplement any defective or inconsistent provision or change or
supplement the Rights Agreement in any manner which shall not adversely affect
the interests of the holders of the Rights (other than an Acquiring Person or an
affiliate or associate thereof). Immediately upon the action of the Board of
Directors providing for any amendment or supplement, such amendment or
supplement will be deemed effective.
The Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of $25 per share and 1,000 times
the dividend declared per Common Security. In the event of liquidation, the
holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment equal to the greater of $100 per share and 1,000 times the
payment made per Common Security. Each Preferred Share will have 1,000 votes
per share, voting together with the Voting Common. In the event of any merger,
consolidation or other transaction in which Common Securities are exchanged,
each Preferred Share will be entitled to receive 1,000 times the amount received
per Common Security.
Exempt Persons include (i) the Company, (ii) any Subsidiary of the
Company, (iii) Citicorp Venture Capital, Ltd., and its affiliates and associates
("CVC"), (iv) the parties to the existing voting agreement (together with their
respective affiliates and associates, the "Voting Agreement Parties") covering
the Company's Common Securities, (v) any employee benefit plan of the Company or
of any Subsidiary of the Company, and (vi) any Person holding Common Securities
for any such employee benefit plan or for employees of the Company or of any
Subsidiary of the Company pursuant to the terms of any such employee benefit
plan.
<Page 5>
Subject to certain exceptions and Permitted Acquisitions, CVC is
allowed to acquire additional Common Securities in an amount not to exceed the
sum of (i) 1% and (ii) its beneficial ownership of Common Securities on the date
of the Rights Agreement, as such beneficial ownership of Common Securities may
be increased as a result of certain subsequent events such as an acquisition of
Common Securities by the Company or any Subsidiary or as a result of acquiring
Common Securities as a result of the operation of the Rights Agreement.
Subject to certain exceptions and Permitted Acquisitions, the Voting
Agreement Parties are allowed to acquire additional Common Securities in an
amount not to exceed the sum of (i) 1% and (ii) the beneficial ownership of
Common Securities of such Persons on the date of the Rights Agreement, as such
beneficial ownership of Common Securities may be increased as a result of
certain subsequent events such as an acquisition of Common Securities by the
Company or any Subsidiary or as a result of acquiring Common Securities as a
result of the operation of the Rights Agreement.
"Permitted Acquisition" means (i) solely with respect to CVC, any
acquisition by way of any stock dividend, stock split, reorganization,
recapitalization, merger, consolidation, rights offering or other like
distribution made available to holders of Common Securities generally or under
this Agreement (as the same may be amended, restated or supplemented from time
to time) or any other shareholder rights agreement; and (ii) solely with respect
to the Voting Agreement Parties, (A) any acquisition by way of any stock
dividend, stock split, reorganization, recapitalization, merger, consolidation,
rights offering or other like distribution made available to holders of Common
Securities generally or under this Agreement (as the same may be amended,
restated or supplemented from time to time) or any other shareholder rights
agreement, and (B) any acquisition pursuant to any employee benefit plan,
executive compensation plan, management agreement, director, executive,
management or employee stock option plan, or any other officer or employee
incentive award, benefit, bonus or similar plan, agreement, system or
arrangement.
The Rights may have certain anti-takeover effects. The Rights may
cause substantial dilution to a person or group (except as described above with
respect to an Exempt Person) that attempts to acquire the Company on terms not
approved by the Board, except pursuant to an offer conditioned on a substantial
number of Rights being acquired. The Rights should not interfere with any
merger or other business combination approved by the Board of Directors prior to
the time a person or group other than an Exempt Person has acquired beneficial
ownership of 15% or more of the Common Securities, because until such time the
Rights may generally be redeemed by the Company at $.01 per Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
<Page 6>
This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement attached
hereto as Exhibit 1.1, which is incorporated in this Registration Statement on
Form 8-A by reference.
Item 2. Exhibits
1.1 Rights Agreement, dated as of July 1, 1996, between KEMET Corporation
and Wachovia Bank of North Carolina, N.A., as Rights Agent, including the form
of Certificate of Designation, Preferences and Rights of Junior Participating
Preferred Stock, Series A attached thereto as Exhibit A, the form of Rights
Certificate attached thereto as Exhibit B and the Summary of Rights attached
thereto as Exhibit C.
<Page 7>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
KEMET Corporation
By: /S/ Glenn H. Spears
---------------------------
Glenn H. Spears
Its: Senior Vice President and Secretary
Date: July 8, 1996
<Page 8>
EXHIBIT INDEX
Exhibit No. Description Page No.
1.1 Rights Agreement, dated as of July 1, 1996, 9
between KEMET Corporation and Wachovia Bank
of North Carolina, N.A., as Rights Agent,
including the form of Certificate of Designation,
Preferences and Rights of Junior Participating
Preferred Stock, Series A attached thereto as
Exhibit A, the form of Rights Certificate
attached thereto as Exhibit B and the Summary of
Rights attached thereto as Exhibit C.
<Page 1>
[Execution Copy]
KEMET Corporation
and
Wachovia Bank of North Carolina, N.A.
Rights Agent
RIGHTS AGREEMENT
Dated as of July 1, 1996
<Page 2>
Table of Contents
Page
Recitals 1
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 8
Section 3. Issuance of Rights Certificates 8
Section 4. Form of Rights Certificates 10
Section 5. Execution, Countersignature and Registration 11
Section 6. Transfer, Division, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates 11
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights12
Section 8. Cancellation and Destruction of Rights Certificates 14
Section 9. Reservation and Availability of Preferred Stock 14
Section 10. Preferred Stock Record Date 16
Section 11. Adjustments to Purchase Price, Number of Shares or Number of
Rights 16
Section 12. Certification of Adjustments 23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power 24
Section 14. Fractional Rights and Fractional Shares 26
Section 15. Rights of Action 27
Section 16. Agreement of Rights Holders Concerning Transfer and
Ownership of Rights 28
Section 17. Rights Holder Not Deemed a Stockholder 28
Section 18. Concerning the Rights Agent 28
Section 19. Merger or Consolidation or Change of Name of Rights Agent 29
Section 20. Duties of Rights Agent 29
Section 21. Change of Rights Agent 31
Section 22. Issuance of New Rights Certificates 32
Section 23. Redemption and Termination 32
Section 24. Notice of Certain Events 33
Section 25. Notices 34
Section 26. Supplements and Amendments 34
Section 27. Successors 35
Section 28. Benefits of this Agreement; Determinations and Actions
by the Board of Directors 35
Section 29. Severability 36
Section 30. Governing Law 36
Section 31. Counterparts 36
Section 32. Descriptive Headings 36
Section 33. Grammatical Construction 36
Section 34. Special CVC Provisions 36
Section 35. Special Voting Agreement Parties Provisions 37
Exhibit A Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A
Exhibit B Form of Rights Certificate
Exhibit C Form of Summary of Rights
<Page 3>
RIGHTS AGREEMENT
Rights Agreement dated as of July 1, 1996, between KEMET Corporation,
a Delaware corporation (the "Company"), and Wachovia Bank of North Carolina,
N.A., a national banking association (the "Rights Agent").
RECITALS
The Board of Directors of the Company has authorized and declared the
payment of a dividend of one preferred share purchase right (the "Right") for
each share of Common Securities (as defined in Section 1) outstanding on the
Record Date (as defined in Section 1) and has authorized the issuance of one
Right for each share of Common Securities issued between the Record Date and the
Distribution Date (as defined in Section 1), and, in certain cases following the
Distribution Date. Each Right represents, as of the Record Date, the right to
purchase one one-thousandth of a share of Preferred Stock (as defined in
Section 1) upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" means any Person who or which, together
with all Affiliates and Associates of such Person, is (or has previously been,
at any time after the date of this Agreement, whether or not such Person(s)
continues to be) the Beneficial Owner of 15% or more of the Common Securities
then outstanding, (determined without taking into account any securities
exercisable or exchangeable for, or convertible into, Common Securities, other
than any such securities beneficially owned by the Acquiring Person and
Affiliates and Associates of such Person). However, "Acquiring Person" shall
not include any Exempt Person.
A Person does not become an "Acquiring Person" solely as the result of
(i) an acquisition of Common Securities by the Company or any of its
Subsidiaries which, by reducing the number of shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15% or more
of the Common Securities then outstanding as determined above, or (ii) such
Person becoming the Beneficial Owner of 15% or more of the Common Securities
then outstanding as determined above solely as a result of an Exempt Event;
provided, however, that if a Person becomes the Beneficial Owner of 15% or more
of the Common Securities then outstanding as determined above solely by reason
of such a share acquisition by the Company or the occurrence of such an Exempt
Event and such Person shall, after becoming the Beneficial Owner of such Common
Securities, become the Beneficial Owner of any additional shares of Common
Securities by any means whatsoever (other than as a result of the subsequent
occurrence of an Exempt Event, a stock dividend or a subdivision of the Common
Securities into a larger number of shares or a similar transaction), then such
Person shall be deemed to be an "Acquiring Person."
<Page 4>
(b) "Affiliate" of a Person has the meaning given to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement; provided that, for purposes of this
Agreement, the term "Affiliate" shall not include any Person that is an Exempt
Person.
(c) "Associate" of a Person has the meaning given to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement; provided that, for purposes of this
Agreement, the term "Associate" shall not include any Person that is an Exempt
Person.
(d) Except as provided below, a Person is the "Beneficial Owner"
of, and "beneficially owns," any securities:
(i) which such Person or any Affiliate or Associate of such
Person beneficially owns, directly or indirectly;
(ii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right or obligation (whether or not then
exercisable or effective) to acquire pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of conversion
rights, exchange rights, rights (other than these Rights), warrants or options,
or otherwise; provided, however, that a Person will not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any Affiliate or Associate
of such Person until such tendered securities are accepted for purchase or
exchange; and provided further, that prior to the occurrence of a Triggering
Event, a Person will not be deemed the Beneficial Owner of, or to beneficially
own, securities obtainable upon exercise of the Rights;
(iii) which such Person or any Affiliate or Associate of such
Person has, directly or indirectly, the right (whether or not then exercisable)
to vote, or to direct the voting of, pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security pursuant to this clause (iii) if the agreement, arrangement or
understanding to vote, or to direct the voting of, such security (A) arises
solely from a revocable proxy or consent given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the Exchange Act
and applicable rules and regulations thereunder and (B) is not also then
reportable under Item 6 (or any comparable or successor item) of Schedule 13D
under the Exchange Act (or any comparable or successor schedule or report);
(iv) which such Person or any Affiliate or Associate of such
Person has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of
the General Rules and Regulations under the Exchange Act or any successor
provision); or
(v) which are beneficially owned, directly or indirectly, by
any other Person or any Affiliate or Associate of such other Person with whom
<Page 5>
such Person or any Affiliate or Associate of such Person has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in
subparagraph (iii) of this Section 1(d)) or disposing of any securities of the
Company.
Nothing in this Section 1(d) causes a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such Person's participation in good faith
in a firm commitment underwriting until the expiration of 40 days after the date
of such acquisition.
Notwithstanding anything in this Agreement to the contrary, for
purposes of this Agreement, no Person is to be treated as the "Beneficial Owner"
of, or to "beneficially own," any securities owned by any other Person that is
an Exempt Person.
(e) "Board of Directors" means the Board of Directors of the
Company, as the same is constituted from time to time, or if the Company ceases
to exist as a result of a Business Combination or otherwise, the board of
directors of the Company's successor, if any.
(f) "Business Combination" has the meaning set forth in Section 13
of this Agreement.
(g) "Business Day" means any day other than a Saturday, Sunday, or
a day on which banking institutions in the State of North Carolina are
authorized or obligated by law or executive order to close.
(h) "Close of Business" on any given date means 5:00 p.m.,
Winston-Salem, North Carolina time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 p.m., Winston-Salem, North
Carolina time, on the next succeeding Business Day.
(i) "Common Securities" means either (i) Common Stock of the
Company, (ii) the Non-Voting Common Stock, or (iii) both the Common Stock of
the Company and the Non-Voting Common Stock, as the context requires.
(j) "Common Stock" when used in any context applicable prior to a
Business Combination means the Common Stock, par value $.01 per share, of the
Company (as the same may be changed by reason of any combination, subdivision or
reclassification of the Common Stock). "Common Stock" when used with reference
to any Person (other than the Company prior to a Business Combination) means
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which shares or units do
not limit (as a fixed amount and not merely in proportional terms) the amount of
dividends or income payable or distributable on such shares or units or the
amount of assets distributable on such shares or units upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person and do not
provide that such shares or units are subject to redemption at the option of
<Page 6>
such Person, or any shares of capital stock or units of equity interests into
which the foregoing shall be reclassified or changed; provided, however, that if
at any time there are more than one such class or series of capital stock of or
equity interests in such Person, "Common Stock" of such Person will include all
such classes and series substantially in the proportion of the total number of
shares or other units of each such class or series outstanding at such time.
(k) "Current Market Price" per share of Common Stock, Preferred
Stock or Equivalent Shares on any date is the average of the daily closing
prices per share of such Common Stock, Preferred Stock or Equivalent Shares for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date for the purpose of any computation under this
Agreement except computations made pursuant to Section 11(a)(iv), and for the
Trading Day immediately prior to such date for the purpose of any computation
under Section 11(a)(iv); provided, however, that in the event that the Current
Market Price per share of Common Stock, Preferred Stock or Equivalent Shares is
determined during a period following the announcement by the issuer of such
Common Stock, Preferred Stock or Equivalent Shares of (i) a dividend or
distribution on such Common Stock, Preferred Stock or Equivalent Shares other
than a regular quarterly cash dividend, or (ii) any subdivision, combination or
reclassification of such Common Stock, Preferred Stock or Equivalent Shares, and
prior to the expiration of 30 Trading Days after the "ex-dividend" date for such
dividend or distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "Current Market Price" must
be appropriately adjusted to take into account such dividend, distribution,
subdivision, combination or reclassification. The closing price for each
Trading Day shall be the last sale price, regular way, on such day, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, on such day, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange ("NYSE") or, if the Common
Stock, Preferred Stock or Equivalent Shares are not listed or admitted to
trading on the NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal United
States national securities exchange on which the Common Stock, Preferred Stock
or Equivalent Shares are listed or admitted to trading or, if the Common Stock,
Preferred Stock or Equivalent Shares are not listed or admitted to trading on
any United States national securities exchange, the last quoted sale price on
such day or, if not so quoted, the average of the high bid and low asked prices
in the over-the-counter market on such day, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("Nasdaq") or
such other system then in use. If on such day the Common Stock, Preferred Stock
or Equivalent Shares are not quoted by any such organization, the average of the
closing bid and asked prices on such day as furnished by a professional market
maker making a market in the Common Stock, Preferred Stock or Equivalent Shares
selected by a majority of the Board of Directors shall be used. If no such
market maker is making a market, the fair market value of such shares on such
day as determined in good faith by a majority of the Board of Directors or the
Board of Directors of the issuer of such Common Stock, Preferred Stock or
Equivalent Shares must be used, which determination must be described in a
statement filed with the Rights Agent and is binding and conclusive for all
<Page 7>
purposes. The term "Trading Day" means a day on which the principal United
States national securities exchange on which the Common Stock, Preferred Stock
or Equivalent Shares are listed or admitted to trading is open for the
transaction of business or, if the Common Stock, Preferred Stock or Equivalent
Shares are not listed or admitted to trading on any United States national
securities exchange, but are traded in the over-the-counter market and reported
by Nasdaq, then any day for which Nasdaq reports the high bid and low asked
prices in the over-the-counter market, or if the Common Stock, Preferred Stock
or Equivalent Shares are not traded in the over-the-counter market and reported
by Nasdaq, then a Business Day. If the Common Stock, Preferred Stock or
Equivalent Shares have not been so listed or admitted to trading for 30 or more
Trading Days or traded in the over-the-counter market and reported by Nasdaq for
30 or more Trading Days, "Current Market Price" per share means the fair market
value per share as determined in good faith by a majority of the Board of
Directors, whose determination must be described in a statement filed with the
Rights Agent and will be final, binding and conclusive for all purposes.
(l) "CVC" means Citicorp Venture Capital, Ltd. and its
subsidiaries and affiliates, the directors and officers of Citicorp Venture
Capital, Ltd., any investment fund sponsored by Citicorp Venture Capital, Ltd.
or its affiliates, and all Persons who are associates of such entities,
directors and officers, as "affiliate" and "associate" are defined in Rule 12b-2
of the General Rules and Regulations of the Exchange Act.
(m) "Distribution Date" means the earlier of (i) the day after the
Company's right to redeem the Rights pursuant to Section 23(a)(i) expires or
(ii) the tenth Business Day after commencement or public disclosure of an
intention to commence (including, without limitation, any such commencement or
public disclosure which occurs on or after the date of this Agreement and prior
to the issuance of the Rights) a tender offer or exchange offer by a Person if,
after acquiring the maximum number of securities sought pursuant to such offer,
such Person, or any Affiliate or Associate of such Person, would be an Acquiring
Person. The Board of Directors of the Company may, at its election, defer the
date set forth in clause (ii) of the preceding sentence to a specified later
date or to an unspecified later date to be determined by a subsequent action or
event.
(n) "Equivalent Shares" means any class or series of capital stock
of the Company, other than the Preferred Stock, which is entitled to participate
on a proportional basis with the Preferred Stock in dividends and other
distributions, including distributions upon the liquidation, dissolution or
winding up of the Company. In calculating the number of any class or series of
Equivalent Shares for purposes of Section 11, the number of shares, or fractions
of a share, of such class or series of capital stock that is entitled to the
same dividend or distribution as a whole share of Preferred Stock shall be
deemed to be one share.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any successor statute.
(p) "Exchange Date" means the time at which the Rights are
<Page 8>
exchanged pursuant to Section 11(a)(iv).
(q) "Exempt Event" means with respect to any Person, the
acquisition by such Person of Beneficial Ownership of Common Stock solely as a
result of the occurrence of a Triggering Event and the effect of such Triggering
Event on the last proviso of clause (ii) of the definition of Beneficial Owner,
other than a Triggering Event in which such Person becomes an Acquiring Person.
(r) "Exempt Person" means (i) the Company, (ii) any Subsidiary of
the Company, (iii) subject to Sections 34 and 35, CVC, (iv) subject to Sections
34 and 35, the Voting Agreement Parties, (v) any employee benefit plan of the
Company or of any Subsidiary of the Company, and (vi) any Person holding Common
Securities for any such employee benefit plan or for employees of the Company or
of any Subsidiary of the Company pursuant to the terms of any such employee
benefit plan.
(s) "Expiration Date" means the Close of Business on July 1, 2006.
(t) "Non-Voting Common Stock" when used in any context applicable
prior to a Business Combination means the Non-Voting Common Stock, par value
$.01 per share, of the Company (as the same may be changed by reason of any
combination, subdivision or reclassification of the Non-Voting Common Stock).
(u) "Permitted Acquisition" means (i) solely with respect to CVC,
any acquisition by way of any stock dividend, stock split, reorganization,
recapitalization, merger, consolidation, rights offering or other like
distribution made available to holders of Common Securities generally or under
this Agreement (as the same may be amended, restated or supplemented from time
to time) or any other shareholder rights agreement; and (ii) solely with respect
to the Voting Agreement Parties, (A) any acquisition by way of any stock
dividend, stock split, reorganization, recapitalization, merger, consolidation,
rights offering or other like distribution made available to holders of Common
Securities generally or under this Agreement (as the same may be amended,
restated or supplemented from time to time) or any other shareholder rights
agreement, and (B) any acquisition pursuant to any employee benefit plan,
executive compensation plan, management agreement, director, executive,
management or employee stock option plan, or any other officer or employee
incentive award, benefit, bonus or similar plan, agreement, system or
arrangement.
(v) "Person" means any individual, firm, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity,
and shall include any "group" as that term is used in Rule 13d-5(b) under the
Exchange Act (or any successor provision).
(w) "Preferred Stock" means the Company's Junior Participating
Preferred Stock, Series A, par value $0.10 per share, having the rights and
preferences set forth in the Certificate of Designation, Preferences and Rights
of Junior Participating Preferred Stock, Series A, attached hereto as Exhibit A.
(x) "Principal Party" means (i) in the case of any Business
<Page 9>
ination described in clause (i), (ii) or (iii) of the first sentence of
Section 13(a), (A) the Person that is the issuer of any securities into which
shares of Common Securities of the Company are converted or for which they are
exchanged in such Business Combination or, if there is more than one such
issuer, the issuer of the Common Stock which has the greatest aggregate market
value or (B) if no securities are so issued, the Person that survives or results
from the Business Combination or, if there is more than one such Person, the
Person the Common Stock of which has the greatest aggregate market value, and
(ii) in the case of any Business Combination described in clause (iv) of the
first sentence in Section 13(a), the Person that receives the greatest portion
of the assets or earning power transferred pursuant to such Business Combination
or, if each Person that is a party to such Business Combination receives the
same portion of the assets or earning power so transferred or if the Person
receiving the greatest portion of the assets or earning power cannot reasonably
be determined, whichever of such Persons is the issuer of the Common Stock which
has the greatest aggregate market value; provided, however, that in any such
case, if the Common Stock of such Person is not at such time and has not been
continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act and such Person is a direct or indirect Subsidiary of one or
more other Persons, then (x) "Principal Party" refers to whichever of such other
Persons has Common Stock that is and has been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act; (y) if the
Common Stocks of two or more of such other Persons are and have been so
registered, "Principal Party" refers to whichever of such other Persons is the
issuer of the Common Stock which has the greatest aggregate market value; or
(z) if the Common Stock of none of such other Persons has been so registered,
"Principal Party" refers to whichever of such other Persons (other than an
individual) is the Person which has the equity securities with the greatest
aggregate market value. In case such Person is owned, directly or indirectly,
by a joint venture formed by two or more Persons that are not owned, directly or
indirectly, by the same Person, the rules set forth above apply to each of the
chains of ownership having an interest in such joint venture as if such Person
were a Subsidiary of both or all of such joint venturers and the Principal
Parties in each such chain shall bear the obligations set forth in Section 13 in
the same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(y) "Purchase Price" with respect to each Right is initially
$85.00 per one one-thousandth of a share of Preferred Stock, shall be subject to
adjustment from time to time as provided in Sections 11 and 13, and shall be
payable in lawful money of the United States of America in cash or by certified
check or bank draft payable to the order of the Company.
(z) "Record Date" means the Close of Business on July 1, 1996.
(aa) "Redemption Date" means the time at which the Rights are
scheduled to be redeemed as provided in Section 23.
(bb) "Redemption Price" has the meaning given to such term in
Section 23.
<Page 10>
(cc) "Securities Act" means the Securities Act of 1933, as
amended, and any successor statute.
(dd) "Stock Acquisition Date" means the first date (including,
without limitation, any such date which is on or after the date of this
Agreement and prior to the issuance of the Rights) of public disclosure by the
Company, an Acquiring Person or otherwise that an Acquiring Person has become
such.
(ee) "Subsidiary" has the meaning given to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Agreement.
(ff) "Triggering Event" occurs when a Person becoming an Acquiring
Person.
(gg) "Voting Agreement Parties" means each of Citicorp Venture
Capital, Ltd., David E. Maguire, James J. Jerozal, Glenn H. Spears, Charles E.
Volpe, Kenneth L. Martin, John Piper, D. Ray Cash, Brian G. Hawthornwaite, Bernd
K. Scheumann, Donald A. Adams, Robert A. Taylor, Jr., Donald J. Poinsette, Edwin
H. Bost, Harris L. Crowley, Jr., as parties to the Voting Agreement, dated June
15, 1992, as amended on September 29, 1992 and on April 28, 1993; all
subsidiaries, affiliates, and associates of such Persons, as "affiliate" and
"associate" are defined in Rule 12b-2 of the General Rules and Regulations of
the Exchange Act; and each of such entities' respective directors, officers,
partners or principals, as the case may be.
Section 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents as
it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the Distribution Date: (i) the Rights shall be issued
in respect of and shall be evidenced by the certificates representing the shares
of Common Securities issued and outstanding on the Record Date and shares of
Common Securities issued or which become outstanding after the Record Date and
prior to the earliest of the Distribution Date, the Redemption Date, the
Exchange Date or the Expiration Date (which certificates for Common Securities
shall be deemed to also be certificates evidencing the Rights), and not by
separate certificates; (ii) the registered holders of such shares of Common
Securities shall also be the registered holders of the Rights associated with
such shares; and (iii) the Rights shall be transferable only in connection with
the transfer of shares of Common Securities, and the surrender for transfer of
any certificate for such shares of Common Securities shall also constitute the
surrender for transfer of the Rights associated with such shares. As soon as
practicable after the Company has notified the Rights Agent of the occurrence of
the Distribution Date, the Rights Agent shall mail, by first-class, insured,
postage prepaid mail, to each record holder of the Common Securities as of the
<Page 11>
Close of Business on the Distribution Date, as shown by the records of the
Company, at the address of such holder shown on such records, one or more
certificates evidencing the Rights ("Rights Certificates"), in substantially the
form of Exhibit B hereto, evidencing one Right (as adjusted from time to time
pursuant to this Agreement) for each share of Common Securities so held. From
and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates. In the event that an adjustment in the number of Rights
per share of Common Securities has been made pursuant to Section 11(o) of this
Agreement, at the time of distribution of the Rights Certificates, the Company
may make the necessary and appropriate adjustments (in accordance with
Section 14(a) of this Agreement) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights.
(b) Rights shall be issued in respect of all shares of Common
Securities which are issued or sold by the Company after the Record Date but
prior to the earliest of the Distribution Date, the Redemption Date, the
Exchange Date and the Expiration Date. In addition, in connection with the
issuance or sale of Common Securities by the Company following the Distribution
Date and prior to the earliest of the Redemption Date, the Exchange Date or the
Expiration Date, the Company shall, with respect to Common Securities so issued
or sold pursuant to (i) the exercise of stock options issued prior to the
Distribution Date or under any employee plan or arrangement created prior to the
Distribution Date, or (ii) upon the exercise, conversion or exchange of
securities issued by the Company prior to the Distribution Date, issue Rights
and Rights Certificates representing the appropriate number of Rights in
connection with such issuance or sale; provided, however, that (x) no such
Rights and Rights Certificates shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificates would be issued and (y) no such Rights
and Rights Certificates shall be issued, if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Certificates issued after the Record Date representing shares of Common
Securities outstanding on the Record Date or shares of Common Securities issued
after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date, the Exchange Date and the Expiration Date shall have impressed,
printed, or written on, or otherwise affixed to them a legend substantially in
the following form:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between KEMET Corporation and
Wachovia Bank of North Carolina, N.A., as Rights Agent, dated as of July 1, 1996
(the "Rights Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices of
KEMET 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. KEMET Corporation will mail to the
holder of this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances, as set
forth in the Rights Agreement, Rights that were, are or become beneficially
<Page 12>
owned by Acquiring Persons or their Associates or Affiliates (as such terms are
defined in the Rights Agreement) may become null and void and the holder of any
of such Rights (including any subsequent holder) shall not have any right to
exercise such Rights.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the form of election to purchase
shares and form of assignment to be printed on the reverse thereof) shall be in
substantially the form of Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of this Agreement,
the Rights Certificates, whenever issued, shall be dated as of the Distribution
Date, and on their face shall entitle the holders thereof to purchase such
number of shares of Preferred Stock as shall be set forth therein at the
Purchase Price set forth therein, but the number of such securities and the
Purchase Price shall be subject to adjustment as provided in this Agreement.
(b) Notwithstanding any other provision of this Agreement, (i) any
Rights Certificate issued pursuant to this Agreement that represents Rights
beneficially owned or formerly beneficially owned, on or after the earlier of
the Distribution Date and the Stock Acquisition Date, by a Person known by the
Company to be: (A) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person; (B) a direct or indirect transferee of an Acquiring Person (or
of an Associate or Affiliate of such Acquiring Person) who becomes or becomes
entitled to be a transferee after the Acquiring Person becomes such; or (C) a
direct or indirect transferee of an Acquiring Person (or of an Associate or
Affiliate of such Acquiring Person) who becomes or becomes entitled to be a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (x) a direct or indirect transfer
(whether or not for consideration) from the Acquiring Person (or from an
Associate or Affiliate of such Acquiring Person) to holders of equity interests
in such Acquiring Person (or to holders of equity interests in an Associate or
Affiliate of such Acquiring Person) or to any Person with whom such Acquiring
Person (or an Associate or Affiliate of such Acquiring Person) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (y) a direct or indirect transfer which a majority of the Board of
Directors has determined is part of a plan, arrangement or understanding which
has as a primary purpose or effect the avoidance of Section 7(e) of this
Agreement, or (ii) any Rights Certificate issued pursuant to this Agreement upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
beneficially owned by a Person referred to in this Section 4(b), 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
<Page 13>
Rights Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified in
Section 7(e) of the Rights Agreement.
Section 5. Execution, Countersignature and Registration.
(a) Each Rights Certificate shall be executed on behalf of the
Company by the Company's Chairman of the Board, Chief Executive Officer,
President or any Vice President, either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be attested by the Company's Secretary or an Assistant Secretary, either
manually or by facsimile signature. Each Rights Certificate shall be
countersigned by the Rights Agent either manually or, if permitted by the
Company, by facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed a
Rights Certificate shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificate nevertheless may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person who
signed such Rights Certificate had not ceased to be such officer of the Company;
and any Rights Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate, shall be a
proper officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Agreement any such Person was not such an officer.
(b) Following the Distribution Date, the Rights Agent shall keep
or cause to be kept, at its principal corporate trust office, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced by each Rights Certificate, and the
certificate number and the date of issuance of each Rights Certificate.
Section 6. Transfer, Division, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14, at any time after the
Close of Business on the Distribution Date and at or prior to the Close of
Business on the earliest of the Redemption Date, the Exchange Date and the
Expiration Date, any Rights Certificate or Rights Certificates may be
transferred, divided, combined or exchanged for another Rights Certificate or
Rights Certificates, entitling the registered holder to purchase a like number
of shares of Preferred Stock (or other securities, cash or other property,
following a Triggering Event or a Business Combination, as the case may be) as
the Rights Certificate or Rights Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, divide, combine
or exchange any Rights Certificate shall make such request in writing delivered
to the Rights Agent, and shall surrender the Rights Certificate or Rights
Certificates to be transferred, divided, combined or exchanged at the principal
corporate office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. As a condition to
<Page 14>
such transfer, division, combination or exchange, the Company may require
payment by the surrendering holder of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection therewith. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have duly completed and executed the form of
assignment on the reverse side of such Rights Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
such former or proposed Beneficial Owner) thereof or such Beneficial Owner's
Affiliates or Associates as the Company shall reasonably request.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and reimbursement to the Company
and the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will make and deliver a new Rights Certificate of like
tenor to the Rights Agent for delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Each Right shall entitle (except as otherwise provided in this
Agreement) the registered holder thereof, upon the exercise thereof as provided
in this Agreement, to purchase, for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date and the Redemption Date, one one-thousandth (1/1000) of a share of
Preferred Stock, subject to adjustment from time to time as provided in
Sections 11 and 13.
(b) The registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided in this Agreement) in
whole or in part (except that no fraction of a Right may be exercised) at any
time after the Distribution Date and prior to the earliest of the Expiration
Date, the Exchange Date and the Redemption Date, by surrendering the Rights
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal corporate trust office of
the Rights Agent, together with payment of the Purchase Price for each one
one-thousandth of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which the Rights are exercised.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for each one one-thousandth of a share of
Preferred Stock (or, following a Triggering Event or a Business Combination,
other securities, cash or other assets, as the case may be) to be purchased and
an amount in cash, certified bank check or bank draft payable to the order of
the Company equal to any applicable transfer tax required to be paid by the
surrendering holder pursuant to Section 9(d), the Rights Agent shall, subject
<Page 15>
to the provisions of this Agreement, thereupon promptly (i)(A) requisition
from any transfer agent for the Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-thousandths of a share of Preferred Stock (or other
securities, as the case may be) to be purchased (and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests), or
(B) if the Company shall have elected to deposit the total number of shares of
Preferred Stock (or other securities, as the case may be) issuable upon exercise
of the Rights with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a share
of Preferred Stock (or other securities, as the case may be) as are to be
purchased (in which case certificates for the Preferred Stock (or other
securities, as the case may be) represented by such receipts shall be deposited
by the transfer agent with the depositary agent) and the Company shall direct
the depositary agent to comply with such request; (ii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder; and (iii) if
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 of this Agreement
and, promptly after receipt thereof, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate. In the event
that the Company is obligated to issue other securities (including shares of
Common Stock) of the Company, pay cash and/or distribute other property pursuant
to this Agreement, the Company will make all arrangements necessary so that such
other securities, cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Rights
Certificate or to his duly authorized assigns, subject to the provisions of
Section 6 and Section 14.
(e) Notwithstanding anything in this Agreement to the contrary,
any Rights that are or were formerly beneficially owned on or after the earlier
of the Distribution Date or the Stock Acquisition Date by (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a direct or
indirect transferee of an Acquiring Person (or of an Associate or Affiliate of
such Acquiring Person) who becomes or becomes entitled to be a transferee after
the Acquiring Person becomes such, or (iii) a direct or indirect transferee of
an Acquiring Person (or of an Associate or Affiliate of such Acquiring Person)
who becomes or becomes entitled to be a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a direct or indirect transfer (whether or not for consideration) from the
Acquiring Person (or from an Associate or Affiliate of such Acquiring Person) to
holders of equity interests in such Acquiring Person (or to holders of equity
interests in any Associate or Affiliate of such Acquiring Person) or to any
Person with whom the Acquiring Person (or an Associate or Affiliate of such
Acquiring Person) has any continuing agreement, arrangement or understanding
<Page 16>
regarding the transferred Rights or (B) a direct or indirect transfer which a
majority of the Board of Directors of the Company determines is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall, immediately upon the occurrence of a
Triggering Event and without any further action, be null and void and no holder
of such Rights shall have any rights whatsoever with respect to such Rights
whether under this Agreement or otherwise, provided, however, that, in the case
of transferees under clause (ii) or clause (iii) above, any Rights beneficially
owned by such transferee shall be null and void only if and to the extent such
Rights were formerly beneficially owned by a Person who was, at the time such
Person beneficially owned such Rights, or who later became, an Acquiring Person
or an Affiliate or Associate of such Acquiring Person. The Company shall use
all reasonable efforts to ensure that the provisions of this Section 7(e) and
Section 4(b) are complied with, but shall have no liability to any holder of a
Rights Certificate or to any other Person as a result of the Company's failure
to make, or any delay in making (including any such failure or delay by the
Board of Directors of the Company) any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to the registered holder of a Rights Certificate upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former or proposed
Beneficial Owner) thereof or the Affiliates or Associates of such Beneficial
Owner (or former or proposed Beneficial Owner) as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer,
division, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Preferred Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available at all times out of its authorized and unissued
shares of Preferred Stock or its authorized and issued shares of Preferred Stock
held in its treasury (and, following the occurrence of a Triggering Event, out
<Page 17>
of its authorized and unissued shares of Common Stock and/or other securities or
out of its authorized and issued shares of Common Stock and/or other securities
held in its treasury) free from preemptive rights or any right of first refusal,
a sufficient number of shares of Preferred Stock (and, following the occurrence
of a Triggering Event, shares of Common Stock and/or other securities) to permit
the exercise in full of all Rights from time to time outstanding.
(b) The Company further covenants and agrees, so long as the
Preferred Stock (and, following the occurrence of a Triggering Event, shares of
Common Stock and/or other securities) issuable upon the exercise of Rights may
be listed on any United States national securities exchange or quoted on any
automated quotation system, to use its best efforts to cause, from and after the
time that the Rights become exercisable, all such shares and/or other securities
reserved for such issuance to be listed on such exchange or quoted on such
automated quotation system upon official notice of issuance upon such exercise.
(c) The Company further covenants and agrees that it will take all
such action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of a Triggering Event or a Business Combination,
shares of Common Stock and/or other securities) delivered upon the exercise of
Rights shall, at the time of delivery of the certificates for such shares and/or
such other securities (subject to payment of the Purchase Price), be duly and
validly authorized and issued, fully paid, nonassessable, freely tradeable, not
subject to liens or encumbrances, and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof, of any kind or nature whatsoever.
(d) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the original issuance or delivery of the Rights
Certificates or of any certificates for shares of Preferred Stock (or Common
Stock and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to (i) pay any transfer tax which
may be payable in respect of any transfer involved in the issuance or delivery
of any Rights Certificates or the issuance or delivery of any certificates for
shares of Preferred Stock (or Common Stock and/or other securities as the case
may be) to a Person other than, or in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
(ii) transfer or deliver any Rights Certificate or issue or deliver any
certificates for shares of Preferred Stock (or Common Stock and/or other
securities as the case may be) upon the exercise of any Rights until any such
tax shall have been paid (any such tax being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) as soon as
practicable following a Triggering Event (provided the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) of this Agreement), or as soon as is required
by law following the Distribution Date, as the case may be, to prepare and file
a registration statement on an appropriate form under the Securities Act with
<Page 18>
respect to the securities purchasable upon exercise of the Rights, (ii) to cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) to cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which Rights are no longer exercisable
for such securities and (B) the Expiration Date. The Company shall also use its
best efforts to take such action as may be necessary or appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercise of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date of a
Triggering Event described in clause (i) of the first sentence of this paragraph
of Section 9, the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall make a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective.
Section 10. Preferred Stock Record Date. Each Person in whose
name any certificate for shares of Preferred Stock (or Common Stock and/or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (and/or such other securities, as the
case may be) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock and/or other
securities, as the case may be) transfer books of the Company are open.
Section 11. Adjustments to Purchase Price, Number of Shares or
Number of Rights. The Purchase Price, the number and kind of securities, cash
and other property obtainable upon exercise of each Right and the number of
Rights outstanding shall be subject to adjustment from time to time as provided
in this Section 11.
(a) (i) In the event the Company shall at any time on or after
the date of this Agreement (A) pay a dividend or make a distribution on the
Preferred Stock payable in shares of Preferred Stock, (B) subdivide (by a stock
split or otherwise) the outstanding Preferred Stock into a larger number of
shares, (C) combine (by a reverse stock split or otherwise) the outstanding
Preferred Stock into a smaller number of shares, or (D) issue any securities in
a reclassification of the Preferred Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
<Page 19>
surviving corporation), then in each such event the Purchase Price and the
Redemption Price set forth in Section 23, as each is in effect at the time of
the record date for such dividend or distribution, or of the effective date of
such subdivision, combination or reclassification, shall be proportionately
adjusted by multiplying the Purchase Price and such Redemption Price by a
fraction the numerator of which shall be the total number of shares of Preferred
Stock outstanding immediately prior to the occurrence of such event and the
denominator of which shall be the total number of shares of Preferred Stock
outstanding immediately following the occurrence of such event. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Upon the first occurrence of a Triggering Event, proper
provision shall be made so that each holder of a Right, except as otherwise
provided in this Agreement, shall thereafter have the right to receive, and the
Company shall issue, upon exercise thereof at the then-current Purchase Price
required to be paid in order to exercise a Right in accordance with the terms of
this Agreement, in lieu of the number of one one-thousandths of a share of
Preferred Stock or other securities receivable upon exercise of a Right prior to
the occurrence of the Triggering Event, such number of shares of Common Stock of
the Company as shall equal the result obtained by (x) multiplying the
then-current Purchase Price by the number of one-thousandths of a share of
Preferred Stock or other securities for which a Right was then exercisable
(without giving effect to such Triggering Event) and (y) dividing that product
by 50% of the Current Market Price per share of Common Stock on the date of the
occurrence of the Triggering Event (such number of shares being referred to as
the "Adjustment Shares"); provided, however, that if the transaction or event
that would otherwise give rise to the foregoing adjustment is also subject to
the provisions of Section 13 of this Agreement, then only the provisions of
Section 13 of this Agreement shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii). Upon the occurrence of such Triggering
Event, the Purchase Price required to be paid in order to exercise a Right shall
be unchanged, and the Purchase Price shall be appropriately adjusted to reflect,
and shall thereafter mean, the amount required to be paid per share of Common
Stock upon exercise of a Right.
(iii) In lieu of issuing shares of Common Stock in accordance
with Section 11(a)(ii), the Company may, if a majority of the Board of Directors
of the Company determine that such action is necessary or appropriate and not
contrary to the interests of holders of Rights (and, in the event that the
number of shares of Common Stock which are authorized by the Company's
certificate of incorporation, but which are not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights, are not sufficient
to permit the exercise in full of the Rights in accordance with Section
11(a)(ii), the Company shall) take one or more of the following actions:
(A) reduce the Purchase Price required to be paid in order to exercise a Right
by any amount (the "Reduction Amount"), in which event the number of Adjustment
Shares and/or the amount of any Substitute Consideration (as hereinafter
defined) issuable in respect of each Right (the Adjustment Shares, if any, and
<Page 20>
the Substitute Consideration, if any, issuable in respect of a Right are herein
collectively referred to as the "Total Consideration") shall be reduced so that
the aggregate value of the Total Consideration issuable in respect of each Right
is equal to the Current Value (as hereinafter defined) less the Reduction Amount
(herein the "Adjusted Current Value"), and/or (B) make adequate provision with
respect to each Right to substitute for all or part of the Adjustment Shares
otherwise obtainable upon exercise of a Right: (1) cash, (2) other equity
securities of the Company (including, without limitation, shares, or units of
shares, of preferred stock which a majority of the Board of Directors of the
Company have determined to have the same value as shares of Common Stock (such
shares or units of preferred stock being referred to as "Common Stock
Equivalents")), (3) debt securities of the Company, (4) other assets, or (5) any
combination of the foregoing (collectively, "Substitute Consideration"), having
an aggregate value which, when added to the value of the Adjustment Shares (if
any) in respect of which no substitution is being made, is equal to the Adjusted
Current Value. If a majority of the Board of Directors determine to issue or
deliver any equity securities (other than Common Stock or Common Stock
Equivalents), debt securities and/or other assets pursuant to this
Section 11(a)(iii), the value of such securities and/or assets shall be
determined by a majority of the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by a majority
of the Board of Directors of the Company. If the Company is required to make
adequate provision to deliver value pursuant to the first sentence of this
Section 11(a)(iii) and the Company shall not have made such adequate provision
to deliver value within ninety (90) days following the first occurrence of a
Triggering Event (the "Substitution Period"), then notwithstanding any provision
of Section 11(a)(ii) or this Section 11(a)(iii) to the contrary, the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the excess of the Current Value over the Purchase
Price. If both Common Stock and cash are to be delivered pursuant to the
preceding sentence, amounts of both Common Stock and cash shall be delivered
upon surrender of each Right in a ratio of Common Stock to cash that bears the
same ratio as the total value of all Common Stock to be delivered (as determined
pursuant to this Section 11(a)(iii)) bears to the total value of all cash to be
delivered; provided, however, that the Company may adjust such ratio to avoid
issuing any fractional shares of Common Stock so long as the method of
adjustment is applied consistently to each holder of Rights entitled to receive
value thereon pursuant to this Section 11(a)(iii). To the extent that the
Company determines that some action is to be taken pursuant to the first and/or
third sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights, and (y) may suspend the exercisability of the Rights but in
no event to a time later than the expiration of the Substitution Period. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer in
effect. Upon any change in the Adjustment Shares obtainable upon exercise of a
Right pursuant to this Section 11(a)(iii), the Purchase Price shall thereafter
mean the amount, if any, required to be paid upon exercise of a Right for the
<Page 21>
Adjustment Shares, if any, and the Substitute Consideration, if any, then
issuable or deliverable upon exercise of a Right, and a majority of the Board of
Directors of the Company shall make any necessary provisions to ensure that the
provisions of Section 11(e) shall thereafter apply as appropriate to the Total
Consideration. For purposes of this Section 11(a)(iii), (A) "Current Value"
shall be the product derived by multiplying (x) the number of Adjustment Shares
issuable in respect of each Right determined under Section 11(a)(ii), by (y) the
Current Market Price per share of Common Stock on the date of the Triggering
Event, and (B) the value of each share of Common Stock and each share or unit of
any "Common Stock Equivalent" shall be deemed conclusively to be equal to the
Current Market Price per share of the Common Stock on the date of the Triggering
Event.
(iv) A majority of the Board of Directors of the Company may, at
their option, at any time and from time to time after the first occurrence of a
Triggering Event, cause the Company to exchange, for all or part of the
then-outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e) hereof), shares of
Common Stock or Common Stock Equivalents at an exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of this Agreement (such
exchange ratio being hereinafter referred to as the "Exchange Ratio"). Any
partial exchange shall be effected on a pro rata basis based on the number of
Rights (other than Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.
Immediately upon the action of a majority of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to this Section
11(a)(iv) and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of shares of Common Stock and/or
Common Stock Equivalents equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange and in addition, the Company shall promptly mail a notice
of any such exchange to all of the holders of such Rights in accordance with
Section 25 of this Agreement; provided, however, that the failure to give, any
delay in giving or any defect in, such notice shall not affect the validity of
such exchange. Each such notice of exchange will state the method by which the
exchange of the Common Stock or Common Stock Equivalents for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. In the event that the number of shares of Common Stock
which is authorized but not outstanding or reserved for issuance for a purpose
other than exercise of the Rights is not sufficient to permit any exchange of
Rights as contemplated in accordance with this Section 11(a)(iv), the Board of
Directors of the Company shall take all such action within its power as may be
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights. The Company shall not be required to issue fractions of
shares of Common Stock or Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents.
In lieu of such fractional shares of Common Stock or Common Stock Equivalents,
the Company shall pay to the registered holders of the Rights Certificates with
<Page 22>
regard to which such fractional shares of Common Stock or Common Stock
Equivalents would otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) the last sale price of
the Company's Common Stock on the fifth Trading Day following the public
announcement of the exchange by the Company, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices on such day,
in either case on a when issued basis (taking into account the exchange), as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the NYSE (or, if the Company's
Common Stock is not so listed or traded, then as determined in the manner
provided under the definition of "Current Market Price," adjusted to take into
account the exchange). For the purposes of this Section 11(a)(iv) the value of
any Common Stock Equivalent on any date shall be the same as the value of the
Common Stock, as determined pursuant to the previous sentence, on such date.
(b) If the Company shall at any time on or after the date of this
Agreement fix a record date for the issuance of rights, options or warrants to
holders of Preferred Stock entitling them to subscribe for or purchase Preferred
Stock or Equivalent Shares (or securities convertible into Preferred Stock or
Equivalent Shares) at a price per share of Preferred Stock or Equivalent Shares
(or, in the case of a convertible security, having a conversion price per share
of Preferred Stock or Equivalent Shares) less than the Current Market Price per
share of Preferred Stock on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of shares of Preferred Stock and Equivalent Shares (if
any) outstanding on such record date, plus the number of shares of Preferred
Stock or Equivalent Shares, as the case may be, which the aggregate exercise
and/or conversion price for the total number of shares of Preferred Stock or
Equivalent Shares, as the case may be, which are obtainable upon exercise and/or
conversion of such rights, options, warrants or convertible securities would
purchase at such Current Market Price, and the denominator of which shall be the
number of shares of Preferred Stock and Equivalent Shares (if any) outstanding
on such record date, plus the number of additional shares of Preferred Stock or
Equivalent Shares, as the case may be, which may be obtained upon exercise
and/or conversion of such rights, options, warrants or convertible securities.
In case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by a majority of the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent. Preferred Stock and
Equivalent Shares owned by or held for the account of the Company or any
Subsidiary of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights, options or warrants are
not issued following such adjustment, the Purchase Price shall be readjusted to
be the Purchase Price which would have been in effect if such record date had
not been fixed.
(c) In case the Company shall at any time after the date of this
Agreement fix a record date for the making of a distribution to holders of
<Page 23>
Preferred Stock (including any such distribution made in connection with a
reclassification of the Preferred Stock or a consolidation or merger in which
the Company is the surviving corporation) of securities (other than Preferred
Stock and rights, options or warrants referred to in Section 11(b)), cash (other
than a regular periodic cash dividend at an annual rate not in excess of: (x)
125% of the annual rate of the regular cash dividend paid on the Preferred Stock
during the immediately preceding fiscal year (or, if the Preferred Stock was not
outstanding during such preceding fiscal year, then 125% of the annual rate of
the regular cash dividend paid on the Common Securities during such year), or
(y) in the event that a regular cash dividend was not paid on the Preferred
Stock (or Common Securities) during such preceding fiscal year, 5% of the
Current Market Value of the Preferred Stock on the date such regular cash
dividend was first declared), property, evidences of indebtedness, or assets,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by a majority of the Board of Directors of the Company
whose determination shall be described in a statement filed with the Rights
Agent) of such securities, cash, property, evidences of indebtedness or assets
to be so distributed in respect of one share of Preferred Stock, and the
denominator of which shall be such Current Market Price per share of Preferred
Stock on such record date. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not made
following such adjustment, the Purchase Price shall be readjusted to be the
Purchase Price which would have been in effect if such record date had not been
fixed.
(d) Except as provided below, 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(d) 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, to the
nearest ten-thousandth of a share of Common Stock, or to the nearest
ten-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(d), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or
(ii) the Expiration Date.
(e) If, as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a) of this Agreement, the holder of any Right
thereafter exercised shall become entitled to receive any securities of the
Company other than shares of Preferred Stock, thereafter the Purchase Price and
the number of such other securities 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 shares of
Preferred Stock contained in this Section 11 and the provisions of Sections 7,
9, 10, 12, 13, 14 and 24 with respect to the shares of Preferred Stock shall
apply on like terms to any such other securities.
<Page 24>
(f) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Preferred
Stock or other securities, cash or other property purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided in this Agreement.
(g) Unless the Company shall have exercised its election as
provided in Section 11(h), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(a)(i), 11(b) and 11(c), each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-thousandths of a share of Preferred Stock (calculated to the
nearest one ten-millionth of a share of Preferred Stock) obtained by
(i) multiplying the number of one one-thousandths of a share of Preferred Stock
covered by a Right immediately prior to adjustment pursuant to this
Section 11(g) by 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.
(h) The Company may elect, on or after the date of any adjustment
of the Purchase Price or any adjustment to the number of shares of Preferred
Stock for which a Right may be exercised, to adjust the number of Rights, in
lieu of an adjustment in the number of one one-thousandths of a share of
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right
outstanding prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one hundred-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to such adjustment by
the Purchase Price in effect immediately after such adjustment. 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 after 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(h) the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date a new Rights Certificate evidencing,
subject to Section 14, 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 to be so distributed shall
be issued, executed and countersigned in the manner provided for in this
Agreement (and may bear, at the option of the Company, the adjusted Purchase
<Page 25>
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price
or the number or kind of shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Purchase Price per one one-thousandth of a share of Preferred Stock and the
number of shares of Preferred Stock which were expressed in the initial Rights
Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of one
one-thousandth of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable one one-thousandth shares of such Preferred
Stock at such adjusted Purchase Price.
(k) In any case in which this Section 11 shall require that an
adjustment be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the shares of Preferred
Stock and other securities, cash or property of the Company, if any, issuable
upon such exercise over and above the shares of Preferred Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or other securities, cash or property upon the
occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any combination or subdivision of the Preferred Stock, issuance
wholly for cash of any Preferred Stock at less than the Current Market Price,
issuance wholly for cash of Preferred Stock or securities which by their terms
are convertible into or exchangeable or exercisable for Preferred Stock, stock
dividends or issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock,
shall not be taxable to such stockholders.
(m) The Company covenants and agrees that it shall not
(i) consolidate with, (ii) merge with or into, or (iii) directly or indirectly
sell, lease, or otherwise transfer or dispose of (in one transaction or a series
of related transactions) assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries taken as a
whole, to any other Person if (A) at the time of or immediately after such
consolidation, merger, sale, lease, transfer or disposition there are any
rights, warrants, securities or other instruments outstanding or agreements in
<Page 26>
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights, (B) prior to, simultaneously with or
immediately after such consolidation, merger, sale, lease, transfer or
disposition the stockholders (or equity holders) of the Person who constitutes,
or would constitute, the Principal Party in such transaction shall have received
a distribution of Rights previously owned by such Person or any of its
Affiliates or Associates or (C) the form or nature of organization of the
Principal Party would preclude or limit the exercisability of the Rights. The
Company shall not consummate any such consolidation, merger, sale, lease,
transfer or disposition unless prior thereto the Company and such other Person
shall have executed and delivered to the Rights Agent a supplemental agreement
evidencing compliance with this Section 11(m).
(n) The Company covenants and agrees that, after the Stock
Acquisition Date it will not, except as permitted by Section 11(a)(iv), 26 or
29(b) of this Agreement, take (or permit any Subsidiary to take) any action if
at the time such action is taken it is reasonably foreseeable that such action
will, directly or indirectly, diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
(o) Anything in this Agreement to the contrary notwithstanding, if
the Company shall at any time prior to the Distribution Date (i) pay a dividend
or distribution on the outstanding shares of Common Securities payable in shares
of Common Securities, (ii) subdivide the outstanding Common Securities, or
(iii) combine the outstanding Common Securities into a smaller number of shares,
then the number of Rights associated with each share of Common Securities then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, and the Purchase Price under, and the number of one one-thousandths of a
share of Preferred Stock issuable in respect of, the Rights, shall be
proportionately adjusted, so that following such event one Right (with the
Purchase Price and the number of one one-thousandths of a share proportionately
adjusted thereunder) shall thereafter be associated with each share of Common
Securities then outstanding, or issued or delivered thereafter but prior to the
Distribution Date. For example, if the Company effects a two-for-one stock
split at a time when each Right (if it becomes exercisable) would entitle the
holder to purchase one one-thousandth of a share of Preferred Stock for a
Purchase Price of $"Z", then following such stock split each previous Right
would be split into two current Rights and thereafter each current Right, upon
becoming exercisable, would (subject to further adjustment) entitle the holder
to purchase one two-thousandth of a share of Preferred Stock at a Purchase Price
of 1/2 x $"Z".
Section 12. Certification of Adjustments. Whenever an adjustment
is made as provided in Sections 11 and 13, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (b) promptly file with the Rights Agent
and with each transfer agent for the Preferred Stock a copy of such certificate,
and (c) mail a brief summary thereof to each holder of a Rights Certificate (or,
if no Rights Certificates have been issued, to each holder of a certificate
representing shares of Common Securities) in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to give such
<Page 27>
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment. Any adjustment to be made pursuant to
Sections 11 and 13 of this Agreement shall be effective as of the date of the
event giving rise to such adjustment.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) A "Business Combination" shall be deemed to occur in the event
that, in or following a Triggering Event, (i) the Company shall, directly or
indirectly, consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction that complies with
Section 11(m) and Section 11(n) of this Agreement) in a transaction in which the
Company is not the continuing, resulting or surviving corporation of such merger
or consolidation, (ii) any Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(m) and Section 11(n) of this
Agreement) shall, directly or indirectly, consolidate with the Company, or shall
merge with and into the Company, in a transaction in which the Company is the
continuing, resulting or surviving corporation of such merger or consolidation
and, in connection with such merger or consolidation, all or part of the Common
Securities shall be changed (including, without limitation, any conversion into
or exchange for securities of the Company or of any other Person, cash or any
other property), (iii) the Company shall, directly or indirectly, effect a share
exchange in which all or part of the Common Securities shall be changed
(including, without limitation, any conversion into or exchange for securities
of any other Person, cash or any other property) or (iv) the Company shall,
directly or indirectly, sell, lease, exchange, mortgage, pledge or otherwise
transfer or dispose of (or one or more of its Subsidiaries shall directly or
indirectly sell, lease, exchange, mortgage, pledge or otherwise transfer or
dispose of), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person (other than
the Company or any of its Subsidiaries in one or more transactions each and all
of which comply with Section 11(m) and Section 11(n) of this Agreement).
In the event of a Business Combination, proper provision shall be made
so that each holder of a Right (except as otherwise provided in this Agreement)
shall thereafter have the right to receive, upon the exercise thereof at the
Purchase Price immediately prior to the first occurrence of a Triggering Event
multiplied by the number of one one-thousandths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the first occurrence of a
Triggering Event (without giving effect to the Triggering Event) in accordance
with the terms of this Agreement, such number of shares of Common Stock of the
Principal Party as shall be equal to the result obtained by (x) multiplying the
Purchase Price immediately prior to the first occurrence of a Triggering Event
by the number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a Triggering
Event (without giving effect to the Triggering Event), and (y) dividing that
product by 50% of the Current Market Price per share of the Common Stock of such
Principal Party immediately prior to the consummation of such Business
Combination. All shares of Common Stock of any Person for which any Right may
<Page 28>
be exercised after consummation of a Business Combination as provided in this
Section 13(a) shall, when issued upon exercise thereof in accordance with this
Agreement, be duly and validly authorized and issued, fully paid, nonassessable,
freely tradeable, not subject to liens or encumbrances, and free of preemptive
rights, rights of first refusal or any other restrictions or limitations on the
transfer or ownership thereof of any kind or nature whatsoever.
(b) After consummation of any Business Combination, (i) the
Principal Party shall be liable for, and shall assume, by virtue of such
Business Combination and without the necessity of any further act, all the
obligations and duties of the Company pursuant to this Agreement, (ii) the term
"Company" as used in this Agreement shall thereafter be deemed to refer to such
Principal Party, and (iii) such Principal Party shall take all steps (including,
but not limited to, the reservation of a sufficient number of shares of its
Common Stock in accordance with Section 9) in connection with such Business
Combination as necessary to ensure that the provisions of this Agreement shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
shares of its Common Stock thereafter deliverable upon the exercise of the
Rights.
(c) The Company shall not consummate any Business Combination
unless prior thereto (i) the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance (other than shares reserved for issuance pursuant to this Agreement to
the holders of Rights) to permit the exercise in full of the Rights in
accordance with this Section 13, (ii) the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the fulfillment of the Principal Party's obligations and the terms
as set forth in paragraphs (a) and (b) of this Section 13 and further providing
that, as soon as practicable on or after the date of such Business Combination,
the Principal Party, at its own expense, shall (A) prepare and file, if
necessary, a registration statement on an appropriate form under the Securities
Act with respect to the Rights and the securities purchasable upon exercise of
the Rights, (B) use its best efforts to cause such registration statement to
become effective as soon as practicable after such filing and remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date, (C) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act, (D) use its best efforts to qualify or
register the Rights and the securities purchasable upon exercise of the Rights
under the state securities or "blue sky" laws of such jurisdictions as may be
necessary or appropriate, (E) use its best efforts to list the Rights and the
securities purchasable upon exercise of the Rights on a United States national
securities exchange, and (F) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party subject
to purchase upon exercise of outstanding Rights, (iii) the Company and the
Principal Party shall have furnished to the Rights Agent an opinion of
independent counsel stating that such supplemental agreement is a legal, valid
and binding agreement of the Principal Party enforceable against the Principal
Party in accordance with its terms, and (iv) the Company and the Principal Party
<Page 29>
shall have filed with the Rights Agent a certificate of a nationally recognized
firm of independent accountants setting forth the number of shares of Common
Stock of such issuer which may be purchased upon the exercise of each Right
after the consummation of such Business Combination.
(d) The provisions of this Section 13 shall similarly apply to
successive Business Combinations. In the event a Business Combination shall be
consummated at any time after the occurrence of a Triggering Event, the Rights
which have not theretofore been exercised shall thereafter be exercisable for
the consideration and in the manner described in Section 13(a). Following a
Business Combination, the provisions of Section 11(a)(ii) of this Agreement
shall be of no effect.
(e) Notwithstanding any other provision of this Agreement, no
adjustment to the number of shares of Preferred Stock (or fractions of a share)
or other securities, cash or other property for which a Right is exercisable or
the number of Rights outstanding or associated with each share of Common
Securities or any similar or other adjustment shall be made or be effective if
such adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 13, unless the terms of this
Agreement are amended so as to preserve such benefits.
(f) The Company covenants and agrees that it shall not effect any
Business Combination if at the time of, or immediately after such Business
Combination, there are any rights, options, warrants or other instruments
outstanding which would diminish or otherwise eliminate the benefits intended to
be afforded by the Rights.
(g) Without limiting the generality of this Section 13, in the
event the nature of the organization of any Principal Party shall preclude or
limit the acquisition of Common Stock of such Principal Party upon exercise of
the Rights as required by Section 13(a) as a result of a Business Combination,
it shall be a condition to such Business Combination that such Principal Party
shall take such steps (including, but not limited to, a reorganization) as may
be necessary to ensure that the benefits intended to be derived under this
Section 13 upon the exercise of the Rights are assured to the holders thereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractional Rights
or to distribute Rights Certificates which evidence fractional Rights. In lieu
of such fractional Rights, the Company may at its option pay to the registered
holders of the Rights Certificates with respect 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 a Right
for the Trading Day immediately prior to the date on which such fractional
Rights otherwise would have been issuable. The closing price for any Trading
Day shall be the last sale price on such day, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
<Page 30>
regular way, on such day, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NYSE or, if the Rights are not listed or admitted to
trading on the NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal United
States national securities exchange on which the Rights are listed or admitted
to trading or, if the Rights are not listed or admitted to trading on any United
States national securities exchange, the last quoted sale price on such day or,
if not so quoted, the average of the high bid and low asked prices on such day
in the over-the-counter market, as reported by Nasdaq or such other system then
in use or, if on such day the Rights are not quoted by any such system, the
average of the closing bid and asked prices on such day as furnished by a
professional market maker making a market in the Rights selected by a majority
of the Board of Directors of the Company. If on such day no such market maker
is making a market in the Rights, the current market value of the Rights on such
day shall be determined in good faith by a majority of the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding and conclusive for all purposes.
(b) The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). Fractions of shares of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock. In lieu of fractional
shares of Preferred Stock that are not integral multiples of one one-thousandth
of a share of Preferred Stock, the Company may at its option (i) issue scrip or
warrants in registered form (either represented by a certificate or
uncertificated) or in bearer form (represented by a certificate) which shall
entitle the holder to receive a full one one-thousandth of a share of Preferred
Stock upon the surrender of such scrip or warrants aggregating a full one
one-thousandth of a share of Preferred Stock, or (ii) pay to the registered
holders of Rights Certificates at the time such Rights Certificates are
exercised as provided in this Agreement an amount in cash equal to the same
fraction of the current market value of a share of Preferred Stock. For
purposes of this Section 14(b), the current market value of a share of Preferred
Stock shall be the closing price of a share of Preferred Stock (as determined
pursuant to the second sentence of the definition of "Current Market Price" in
Section 1) for the Trading Day immediately prior to the date of such exercise.
(c) The Company shall not be required to issue fractions of
shares of Common Stock or Common Stock Equivalents or to distribute certificates
which evidence fractional shares of Common Stock or Common Stock Equivalents. In
lieu of such fractional shares of Common Stock or Common Stock Equivalents, the
Company shall pay to the registered holders of the Rights Certificates with
regard to which such fractional shares of Common Stock or Common Stock
<Page 31>
Equivalents would otherwise be issuable an amount in cash equal to the product
derived by multiplying (x) the subject fraction, by (y) Current Market Price of
the Company's Common Stock.
(c) The holder of a Right by his acceptance thereof expressly
waives any right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as otherwise provided in this Agreement).
Section 15. Rights of Action. Except as otherwise provided, all
rights of action in respect of this Agreement are vested in the respective
registered holders of the Rights Certificates (and, prior to the Distribution
Date, any registered holders of associated Common Stock); and any registered
holder of any Rights Certificate (or, prior to the Distribution Date, any share
of associated Common Stock), without the consent of the Rights Agent or of the
holder of any other Right, may, on his own behalf and for his own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his rights pursuant to
this Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of, the obligations of
any Person subject to this Agreement.
Section 16. Agreement of Rights Holders Concerning Transfer and
Ownership of Rights. Every holder of a Right by accepting the same consents and
agrees with the Company and the Rights Agent and with every other holder of a
Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Securities;
(b) after the Distribution Date, the Rights Certificates will be
transferable on the registry books of the Rights Agent only if surrendered at
the principal corporate trust office of the Rights Agent, duly endorsed or
accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in whose name a Rights Certificate (or, prior to the Distribution Date, the
associated Common Securities certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificate or the associated Common
Securities certificate made by anyone other than the Company, the transfer agent
for the Common Stock or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent shall be affected by any notice to the
contrary.
Section 17. Rights Holder Not Deemed a Stockholder. No holder, as
such, of any Rights Certificate shall be entitled to vote or to receive
dividends or distributions or shall be deemed for any purpose the holder of
Preferred Stock or any other securities, cash or other property which may at any
<Page 32>
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained in this Agreement or in any Rights Certificate be construed
to confer upon the holder of any Rights Certificate, as such, any of the rights
of a stockholder of the Company, including, without limitation, any right (i) to
vote for the election of directors or upon any matter submitted to stockholders
at any meeting thereof, (ii) to give or withhold consent to any corporate
action, (iii) to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 24), (iv) to receive dividends,
distributions or subscription rights, (v) to institute, as a holder of Preferred
Stock or other securities issuable on exercise of the Rights represented by any
Rights Certificate, any derivative action on behalf of the Company, or
otherwise, until and only to the extent that the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the
provisions of this Agreement.
Section 18. Concerning the Rights Agent. The Company agrees to
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad faith, willful misconduct or breach of this Agreement on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises. This indemnification shall survive the termination of this Rights
Agreement.
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 Preferred Stock or Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document reasonably believed by it to be genuine and to be signed,
executed and, when necessary, verified or acknowledged, by the proper Person or
Persons.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any document or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor Rights Agent under the provisions of Section 21. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates shall have been countersigned but not
<Page 33>
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Rights Certificate so countersigned;
and in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificate either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, 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
(including, without limitation, the identity of any Acquiring Person or any
Affiliate or Associate of an Acquiring Person or the determination of Current
Market Price) be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by the Chairman
of the Board, the President, the Chief Executive Officer, any Vice President,
the Treasurer or the Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for the
negligence, bad faith, willful misconduct or breach of this Agreement by it or
its attorneys or agents.
(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.
<Page 34>
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution and delivery of this Agreement by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any change or
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13 or 23 or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Rights Certificates after actual
notice of any change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock, Common Stock or
other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock, Common Stock or
other securities will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performance by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman 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 to be taken by it in good faith
in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though the Rights Agent were not
serving as such under this Agreement. Nothing in this Agreement shall preclude
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents.
(j) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to
<Page 35>
such requested exercise or transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock or Preferred Stock 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 Stock or Preferred Stock
by registered or certified mail, and to the holders of the Rights Certificates
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. Notwithstanding any other provision of this Agreement, in no
event shall the resignation or removal of a Rights Agent be effective until a
successor Rights Agent shall have been appointed and have accepted such
appointment. If the Company shall fail to make such appointment within a period
of 30 days after such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
any holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the incumbent Rights
Agent or the registered holder of any Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the State of South Carolina (or of any other state of the United
States so long as such corporation is authorized to conduct a corporate trust or
banking business in the State of South Carolina) in good standing, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for such purpose. Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock or Preferred Stock, 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 Certificates to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing new Rights in such form as may be approved by a majority of the Board
of Directors of the Company to reflect any adjustment or change in the Purchase
<Page 36>
Price per share and the number or kind or class of securities, cash or other
property purchasable under the Rights Certificates made in accordance with the
provisions of this Agreement.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option, at
any time prior to the earlier of (i) the Stock Acquisition Date and (ii) the
Expiration Date, redeem all but not less than all of the then-outstanding Rights
at a redemption price of $.01 per Right (the "Redemption Price") appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement. The Company may, at its option, pay
the Redemption Price in cash, shares (including fractional shares) of Common
Stock (based on the Current Market Price of the Common Stock at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors.
(b) At the time and date of effectiveness set forth in any
resolution of the Board of Directors of the Company ordering the redemption of
the Rights, without any further action and without any further notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price; provided, however,
that such resolution of the Board of Directors of the Company may be revoked,
rescinded or otherwise modified at any time prior to the time and date of
effectiveness set forth in such resolution, in which event the right to exercise
will not terminate at the time and date originally set for such termination by
the Board of Directors of the Company. As soon as practicable after the action
of the Board of Directors of the Company ordering the redemption of the Rights,
the Company shall give notice of such redemption to the Rights Agent and to the
holders of the then-outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the issuance of Rights Certificates, on the registry
books of the transfer agent for the Common Stock. Any notice which is mailed in
the manner provided in this Agreement shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made. In any case,
failure to give such notice by mail, or any defect in the notice, to any
particular holder of Rights shall not affect the sufficiency of the notice to
other holders of Rights. In the case of a redemption permitted under this
Section 23, the Company may, at its option, discharge all of its obligations
with respect to the Rights by (i) issuing a press release announcing the manner
of redemption of the Rights and (ii) mailing payment of the Redemption Price to
the registered holders of the Rights at their last addresses as they appear on
the registry books of the Rights Agent or, prior to the issuance of the Rights
Certificates, on the registry books of the transfer agent for the Common
Securities, and upon such action, all outstanding Rights Certificates shall be
null and void without any further action by the Company. Neither the Company
<Page 37>
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, and other than in connection with the purchase of
shares of Common Stock prior to the earlier of the Distribution Date and the
Expiration Date.
Section 24. Notice of Certain Events. In case the Company, on or
after the Distribution Date, shall propose to (a) pay any dividend payable in
stock of any class to the holders of its Preferred Stock or to make any other
distribution to the holders of its Preferred Stock (other than a regular
periodic cash dividend at an annual rate not in excess of 125% of the annualized
rate of the cash dividend paid on the Preferred Stock during the immediately
preceding fiscal year), or (b) offer to the holders of its Preferred Stock
rights, options, or warrants to subscribe for or to purchase any additional
shares of Preferred Stock or shares of stock of any class or any other
securities, rights or options, or (c) effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock, a change in the par value of such
Preferred Stock or a change from par value to no par value), or (d) directly or
indirectly effect any consolidation or merger into or with, or effect any sale,
lease, exchange, or other transfer or disposition (or to permit one or more of
its Subsidiaries to effect any sale, lease, exchange or other transfer or
disposition), in one transaction or a series of related transactions, of more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to, any other Person, or (e) effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 25, a notice of
such proposed action, which shall specify any record date for the purposes of
such stock dividend or distribution of rights, or the date on which such
reclassification, consolidation, merger, sale, lease, exchange, transfer,
disposition, liquidation, dissolution, or winding up is to take place and if
such holders will or may participate therein, the date of participation therein
by the holders of Common Securities and/or Preferred Stock, if any such date is
to be fixed, and such notice shall be so given in the case of any action covered
by clause (a) or (b) above at least 20 days prior to the record date for
determining holders of the Preferred Stock for purposes of such action, and in
the case of any such other action, at least 20 days prior to the date of the
taking of such proposed action or the date of participation therein, if any, by
the holders of Preferred Stock, whichever shall be the earlier. The failure to
give notice as required by this Section 24 or any defect therein shall not
affect the legality or validity of the action taken by the Company or the vote
upon any such action.
In case any Triggering Event or Business Combination shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, in accordance with Section 25, notice of
the occurrence of such Triggering Event or Business Combination, which shall
specify the Triggering Event or Business Combination and include a description
of the consequences of such event to holders of Rights under Section 11(a)(ii)
or 13.
<Page 38>
Section 25. Notices. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
KEMET Corporation
2835 Kemet Way
Simpsonville, SC 29681
Attention: Terry R. Weaver
President and Chief Operating Officer
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
Wachovia Bank of North Carolina, N.A.
P.O. Box 3001
Winston-Salem, North Carolina 27102-3001
Attention: Christopher A. Spillare
Stock Transfer Department
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class mail, postage prepaid, addressed to each holder of a certificate
representing shares of Common Securities at the address of such holder as shown
on the Company's Common Securities registry books).
Section 26. Supplements and Amendments.
(a) At any time prior to the Stock Acquisition Date, a majority of
the Board of Directors of the Company may, except as provided in Section 26(c),
and the Rights Agent shall, if so directed, supplement or amend any provision of
this Agreement without the approval of any holders of Rights.
(b) From and after the Stock Acquisition Date, a majority of the
Board of Directors of the Company may, except as provided in Section 26(c), and
the Rights Agent shall, if so directed, amend this Agreement without the
approval of any holders of Rights Certificates (i) to cure any ambiguity,
(ii) to correct or supplement any provision contained in this Agreement which
may be defective or inconsistent with any other provision of this Agreement, or
(iii) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
<Page 39>
or an Affiliate or Associate of an Acquiring Person).
(c) No supplement or amendment to this Agreement shall be made
which changes the Purchase Price, the number of shares of Preferred Stock, other
securities, cash or other property for which a Right is then exercisable or the
Redemption Price or provides for an earlier Expiration Date.
(d) Immediately upon the action of a majority of the Board of
Directors providing for any amendment or supplement pursuant to this Section 26,
and without any further action and without notice, such amendment or supplement
shall be deemed effective. Promptly following the adoption of any amendment or
supplement pursuant to this Section 26, the Company shall deliver to the Rights
Agent a copy, certified by the Secretary or any Assistant Secretary of the
Company, of resolutions of a majority of the Board of Directors of the Company
adopting such amendment or supplement. Upon such delivery, the amendment or
supplement shall be administered by the Rights Agent as part of this Agreement
in accordance with the terms of this Agreement, as so amended or supplemented.
Section 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 28. Benefits of this Agreement; Determinations and Actions
by the Board of Directors. Nothing in this Agreement shall be construed to give
to any Person other than the Company, the Rights Agent and the registered
holders of Rights any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights.
For purposes of this Agreement, any calculation of the number of
shares of Common Securities outstanding at any particular time shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act (or any successor provision); provided,
however, that any such calculation made for purposes of determining the
particular percentage of outstanding shares of Common Securities of which any
Person is the Beneficial Owner shall also include any such other securities not
then actually issued and outstanding which such Person would be deemed to be the
Beneficial Owner of, or to "beneficially own," pursuant to Section 1(d) of this
Agreement. The Board of Directors of the Company shall have the exclusive power
and authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors of the Company or the Company, or
as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret the
provisions of this Agreement, and (ii) make all determinations deemed necessary
or advisable for the administration of this Agreement (including a determination
to redeem or not redeem the Rights, to exchange or not exchange the Rights for
Common Stock or other securities of the Company, or to amend or supplement 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 of the Company in
good faith, shall (x) be final, conclusive and binding on the Company, the
<Page 40>
Rights Agent, the holders of the Rights and all other Persons, and (y) not
subject the Board of Directors of the Company to any liability to the holders of
the Rights.
Section 29. Severability.
(a) If any term, provision, covenant or restriction of this
Agreement or the application thereof to any Person or to any circumstance 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.
(b) If legal counsel to the Company delivers to the Company a
written opinion to the effect that, as a result of changes in federal law or
Delaware law, any term, provision, covenant or restriction of this Agreement may
be invalid, void, or unenforceable, then, notwithstanding any other provision of
this Agreement, the Company and the Rights Agent may amend this Agreement to
modify, revise or delete such term, provision, covenant or restriction to the
extent necessary to comply with such law as so changed.
Section 30. Governing Law. This Agreement and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the internal laws of such state applicable to
contracts to be made and performed entirely within such State.
Section 31. Counterparts. This Agreement may be executed in
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and both such counterparts shall together constitute but one and
the same instrument.
Section 32. Descriptive Headings. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions of
this Agreement.
Section 33. Grammatical Construction. Throughout this Agreement,
where such meanings would be appropriate, (a) any pronouns used herein shall
include the corresponding masculine, feminine or neuter forms (e.g., references
to "he" shall also include "she" and "it" and references to "who" and "whom"
shall also include "which"), and (b) the plural form of nouns and pronouns shall
include the singular and vice-versa.
Section 34. Special CVC Provisions.
(a) Subject to subsection (d) of this Section 34, CVC shall
continue to be an Exempt Person as defined in Section 1(r) of this Agreement if
and only for so long as the amount of Common Securities (expressed as a
percentage of the total Common Securities outstanding) beneficially owned by CVC
does not, as a result of additional acquisitions of Common Securities by CVC,
exceed the sum of (i) the amount of Common Securities, expressed as the
<Page 41>
same percentage, beneficially owned by such Persons as of the date of this
Agreement, as such beneficial ownership may be increased from time to time
pursuant to subsections (b) and (c) of this Section 34, and (ii) one (1)
percent.
(b) The amount of Common Securities allowed to be beneficially
owned by CVC under clause (i) of subsection (a) of this Section 34 in
determining the status of CVC as an Exempt Person, shall be increased by any
Common Securities, any warrants, options or rights issued by the Company to
acquire Common Securities, any securities exchangeable for or convertible into
Common Securities, or any warrants, options or rights issued by the Company to
acquire any such exchangeable or convertible securities, acquired by CVC
pursuant to any Permitted Acquisition or Permitted Acquisitions.
(c) The amount of Common Securities allowed to be beneficially
owned by CVC under clause (i) of subsection (a) of this Section 34, shall be
increased as a result of (i) an acquisition of Common Securities by the Company
or any of its Subsidiaries which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by CVC, or (ii)
CVC becoming the beneficial owner of additional securities or more of the Common
Securities then outstanding solely as a result of an Exempt Event.
(d) Notwithstanding subsection (a) of this Section 34, in the event
that CVC acquires additional shares of Common Securities which, without taking
this subsection (d) into account, would otherwise result in CVC no longer being
considered an Exempt Person, CVC shall continue to be considered an Exempt
Person as long as, within ten (10) business days after the Company notifies CVC
of such increased beneficial ownership, CVC sells or otherwise transfers or
disposes of Common Securities of the Company, so that, after giving effect to
those transactions, CVC would be considered an Exempt Person without taking into
account this subsection (d).
(e) Notwithstanding any other provision of this Agreement to the
contrary, CVC shall not be deemed to be the "Beneficial Owner" of, or
"beneficially own" any securities "beneficially owned" by any of its
"associates" or "affiliates," as such terms are defined in Rule 12b-2 of the
General Rules and Regulations of the Exchange Act, which are held for third
parties by such Person in a custodial account, investment account or
discretionary account and over which such Person exercises investment and/or
voting control, or over which such Person exercises investment and/or voting
control in its capacity as advisor, manager or sponsor of any mutual fund or
similar investment fund.
Section 35. Special Voting Agreement Parties Provisions.
(a) Subject to subsection (d) of this Section 35, the Voting
Agreement Parties shall continue to be an Exempt Person as defined in Section
1(r) of this Agreement if and only for so long as the amount of Common
Securities (expressed as a percentage of the total Common Securities
outstanding) beneficially owned by the Voting Agreement Parties does not, as a
result of additional acquisitions of Common Securities by the Voting Agreement
<Page 42>
Parties, exceed the sum of (i) the amount of Common Securities, expressed as
the same percentage, beneficially owned by such Persons as of the date of this
Agreement, as such beneficial ownership may be increased from time to time
pursuant to subsections (b) and (c) of this Section 35, and (ii) one (1)
percent.
(b) The amount of Common Securities allowed to be beneficially
owned by the Voting Agreement Parties under clause (i) of subsection (a) of this
Section 35 in determining the status of the Voting Agreement Parties as an
Exempt Person, shall be increased by any Common Securities, any warrants,
options or rights issued by the Company to acquire Common Securities, any
securities exchangeable for or convertible into Common Securities, or any
warrants, options or rights issued by the Company to acquire any such
exchangeable or convertible securities, acquired by the Voting Agreement Parties
pursuant to any Permitted Acquisition or Permitted Acquisitions.
(c) The amount of Common Securities allowed to be beneficially
owned by the Voting Agreement Parties under clause (i) of subsection (a) of this
Section 35, shall be increased as a result of (i) an acquisition of Common
Securities by the Company or any of its Subsidiaries which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by the Voting Agreement Parties, or (ii) the Voting Agreement
Parties becoming the beneficial owner of additional securities or more of the
Common Securities then outstanding solely as a result of an Exempt Event.
(d) Notwithstanding subsection (a) of this Section 35, in the event
that the Voting Agreement Parties acquire additional shares of Common Securities
which, without taking this subsection (d) into account, would otherwise result
in the Voting Agreement Parties no longer being considered an Exempt Person, the
Voting Agreement Parties shall continue to be considered an Exempt Person as
long as, within ten (10) business days after the Company notifies the Voting
Agreement Parties of such increased beneficial ownership, one or more of the
Voting Agreement Parties sells or otherwise transfers or disposes of Common
Securities of the Company, so that, after giving effect to those transactions,
the Voting Agreement Parties would be considered an Exempt Person without taking
into account this subsection (d).
<Page 43>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
KEMET CORPORATION
By:/S/ D.E. Maguire
Title:Chairman and Chief Executive
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By:/S/ Molly Long
Title:Senior Vice President
<Page 1>
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
OF
KEMET CORPORATION
Pursuant to Section 151 of the Corporation Law
of the State of Delaware
I, Glenn H. Spears, Senior Vice President and Secretary of KEMET
Corporation, a corporation organized and existing under the General Corporation
Law of the State of Delaware, in accordance with the provisions of Section 151
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Restated Certificate of Incorporation of the Corporation (the "Restated
Certificate"), the Board of Directors on June 30, 1996, adopted the following
resolution creating a series of 120,000 shares of Preferred Stock designated as
Junior Participating Preferred Stock, Series A:
RESOLVED, that pursuant to the authority vested in the Board by
ARTICLE IV of the Restated Certificate of Incorporation and out of the Preferred
Stock authorized therein, the Board hereby authorizes that a series of Preferred
Stock of the Corporation be, and it hereby is, created, and that the designation
and amount thereof and the voting powers, preferences and relative, partici-
pating, optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Junior Participating Preferred Stock, Series A" (the
"Series A Preferred Stock") and the number of shares constituting such series
shall be 120,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Securities (as
referred to and defined in Article Four of the Restated Certificate) and of any
other junior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the fifteenth day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
<Page 2>
of (a) $25.00 or (b) the Adjustment Number (as defined below) times the aggre-
gate per share amount of all cash dividends, and the Adjustment Number times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Securities or a
subdivision of the outstanding shares of Common Securities (by reclassification
or otherwise), declared on the Common Securities since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. The "Adjustment Number" shall initially be 1000. In
the event the Corporation shall at any time after July 1, 1996 (i) declare or
pay any dividend on the Common Securities payable in shares of Common
Securities, (ii) subdivide the outstanding Common Securities into a greater
number of shares or (iii) combine the outstanding Common Securities into a
smaller number of shares, then in each such case the Adjustment Number in effect
immediately prior to such event shall be adjusted by multiplying such Adjustment
Number by a fraction the numerator of which is the number of shares of Common
Securities outstanding immediately after such event and the denominator of which
is the number of shares of Common Securities that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Securities (other than a
dividend payable in like shares of Common Securities); provided that, in the
event no dividend or distribution shall have been declared on the Common
Securities during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $25.00 per share
on the Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
<Page 3>
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights:
(A) Each share of Series A Preferred Stock shall entitle the holder thereof
to a number of votes equal to the Adjustment Number (as adjusted from time to
time pursuant to Section 2(A) hereof) on all matters submitted to a vote of the
stockholders of the Corporation.
(B) Except as otherwise provided herein, in the Restated Certificate or
by-laws, the holders of shares of Series A Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall be
in arrears in an amount equal to six quarterly dividends thereon, the occurrence
of such contingency shall mark the beginning of a period (herein called a
"default period") that shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly period on all shares of Series A Preferred Stock then outstanding
shall have been declared and paid or set apart for payment. During each default
period, (1) the number of Directors shall be increased by two, effective as of
the time of election of such Directors as herein provided, and (2) the holders
of Series A Preferred Stock and the holders of other Preferred Stock upon which
these or like voting rights have been conferred and are exercisable (the "Voting
Preferred Stock") with dividends in arrears equal to six quarterly dividends
thereon, voting as a class, irrespective of series, shall have the right to
elect such two Directors.
(ii) During any default period, such voting right of the holders of
Series A Preferred Stock may be exercised initially at a special meeting called
pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of
stockholders, and thereafter at annual meetings of stockholders, provided that
such voting right shall not be exercised unless the holders of at least
one-third in number of the shares of Voting Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Voting Preferred Stock of
such voting right.
(iii) Unless the holders of Voting Preferred Stock shall, during an
existing default period, have previously exercised their right to elect
Directors, the Board of Directors may order, or any stockholder or stockholders
owning in the aggregate not less than 10% of the total number of shares of
Voting Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Voting Preferred Stock, which
meeting shall thereupon be called by the Chairman of the Board, the President,
the Chief Executive Officer, an Executive Vice President, a Vice President or
the Secretary of the Corporation. Notice of such meeting and of any annual
meeting at which holders of Voting Preferred Stock are entitled to vote pursuant
to this paragraph (C)(iii) shall be given to each holder of record of Voting
Preferred Stock by mailing a copy of such notice to him at his last address as
the same appears on the books of the Corporation. Such meeting shall be called
<Page 4>
for a time not earlier than 10 days and not later than 60 days after such order
or request or, in default of the calling of such meeting within 60 days after
such order or request, such meeting may be called on similar notice by any
stockholder or stockholders owning in the aggregate not less than 10% of the
total number of shares of Voting Preferred Stock outstanding. Notwithstanding
the provisions of this paragraph (C)(iii), no such special meeting shall be
called during the period within 60 days immediately preceding the date fixed for
the next annual meeting of the stockholders.
(iv) In any default period, after the holders of Voting Preferred
Stock shall have exercised their right to elect Directors voting as a class, (x)
the Directors so elected by the holders of Voting Preferred Stock shall continue
in office until their successors shall have been elected by such holders or
until the expiration of the default period, and (y) any vacancy in the Board of
Directors may be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class or classes of stock which
elected the Director whose office shall have become vacant. References in this
paragraph (C) to Directors elected by the holders of a particular class or
classes of stock shall include Directors elected by such Directors to fill
vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the
right of the holders of Voting Preferred Stock as a class to elect Directors
shall cease, (y) the term of any Directors elected by the holders of Voting
Preferred Stock as a class shall terminate and (z) the number of Directors shall
be such number as may be provided for in the Restated Certificate or By-Laws
irrespective of any increase made pursuant to the provisions of paragraph (C) of
this Section 3 (such number being subject, however, to change thereafter in any
manner provided by law or in the Restated Certificate or By-Laws). Any
vacancies in the Board of Directors effected by the provisions of clauses (y)
and (z) in the preceding sentence may be filled by a majority of the remaining
Directors.
(D) Except as set forth herein, holders of Series A Preferred Stock shall
have no special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other distributions
on, any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock;
<Page 5>
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon liqui-
dation, dissolution or winding up) with the Series A Preferred Stock, except
dividends paid ratably on the Series A Preferred Stock and all such parity stock
on which dividends are payable or in arrears in proportion to the total amounts
to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with the
Series A Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of preferred stock and may be reissued as part of a new series
of preferred stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (A) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A Pre-
ferred Stock shall have received the greater of (i) $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, and (ii) an aggregate amount per
share, equal to the Adjustment Number (as adjusted from time to time pursuant to
Section 2(A) hereof) times the aggregate amount to be distributed per share to
holders of Common Securities, or (B) to the holders of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
<Page 6>
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock and all other such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock (or Common Securities, as the case may be) are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the shares of Series A Preferred Stock then
outstanding shall at the same time be similarly exchanged or changed in an
amount per share equal to the Adjustment Number (as adjusted from time to time
pursuant to Section 2(A) hereof) times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock or respective Common
Securities is changed or exchanged.
Section 8. No Redemption. The shares of Series A Preferred
Stock shall not be redeemable.
Section 9. Amendment. The Restated Certificate of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
<Page 7>
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this __ day of
_______, 1996.
__________________________________
Glenn H. Spears
Senior Vice President and Secretary
<Page 1>
Exhibit B
[Form of Rights Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER JULY 1, 2006 OR EARLIER IF NOTICE OF REDEMPTION OR
EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE, AT THE
OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. [THE
RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY
A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE
RIGHTS AGREEMENT.]
Rights Certificate
KEMET 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 July 1, 1996 (the "Rights Agreement") between
KEMET Corporation, a Delaware Corporation (the "Company"), and Wachovia Bank of
North Carolina, N.A., a national banking association (the "Rights Agent"),
unless notice of redemption shall have been previously given by the Company, to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M., Winston-Salem, North
Carolina, time on July 1, 2006, at the principal corporate trust office of the
Rights Agent, or at the office of its successor as Rights Agent, one
one-thousandth of a fully paid nonassessable share of the Junior Participating
Preferred Stock, Series A, par value $0.10 per share, of the Company (the
"Preferred Stock"), at a purchase price (the "Purchase Price") of $85.00 per one
one-thousandth share, upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase duly executed. The Purchase Price may be
paid in cash or by certified bank check or bank draft payable to the order of
the Company.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities, cash or other property which
may be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events.
<Page 2>
If the Rights evidenced by this Rights Certificate are or were
formerly beneficially owned, on or after the earlier of the Distribution Date
and the Stock Acquisition Date, by (i) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, or (ii) a direct or indirect transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring Person), such
Rights may become null and void, in which event the holder of any such Right
(including any subsequent holder) shall not have any right with respect to such
Right.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the Rights Agreement. Copies of the Rights Agreement are on file at the
principal executive offices of the Company and the above-mentioned office of the
Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal corporate trust office of the Rights Agent, may
be exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates surrendered entitled such holder
to purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (a) may be redeemed by the Board of Directors of
the Company at its option at a redemption price of $.01 per Right subject to
adjustment, payable, at the election of the Company, in cash or shares
(including fractional shares) of Common Stock or such other consideration as the
Board of Directors may determine, at any time prior to the earlier of (i) 12:00
a.m. (midnight, Winston-Salem, North Carolina time) on the Stock Acquisition
Date, and (ii) the Expiration Date, or, (b) may be exchanged after the Stock
Acquisition Date by the Board of Directors of the Company at its option in whole
or in part for shares of the Company's Common Stock or other Company securities.
No fractional shares of Preferred Stock (other than fractions that are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depository receipts) are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
but in lieu thereof the Company may elect to (i) evidence fractional shares by
depositary receipts, (ii) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or in bearer form (represented
by a certificate) which shall entitle the holder to receive a full share upon
<Page 3>
the surrender of such scrip or warrants aggregating a full share, or (iii) make
a cash payment, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to
vote or to receive dividends on, or shall be deemed for any purpose the holder
of, Preferred Stock or of any other securities, cash or property which may at
any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or this Certificate be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the Company, including,
without limitation, any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or to institute, as a holder of
Preferred Stock or other securities issuable on the exercise of the Rights
represented by this Certificate, any derivative action, or otherwise, until and
only to the extent the Right or Rights evidenced by this Rights Certificate
shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _______ __, ____.
KEMET CORPORATION
By: ________________________________
Title:
Countersigned:
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By: __________________________
Authorized Officer
<Page 4>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED the undersigned ___________________________________
hereby sells, assigns and transfers unto
________________________________________________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
________________________ with a power of Attorney to transfer the said Rights
and a Rights Certificate evidencing such Rights on the books of KEMET
Corporation, with full power of substitution.
A new Rights Certificate evidencing the remaining balance, if any, of such
Rights not hereby sold, assigned and transferred shall be mailed to and
registered in the name of the undersigned unless such person requests that such
Rights Certificate be registered in the name of and mailed to(complete only if
a Rights Certificate evidencing any remaining balance of Rights is to be
registered in a name other than the undersigned):
Please insert Social Security or
other identifying number of transferee: ________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
<Page 5>
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate or any Rights evidenced hereby __ are
__ are not being sold, assigned and transferred by or on behalf of a Person who
is or was an Acquiring Person or an Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned __ did __did not acquire any of the Rights
evidenced by this Rights Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: ___________________________ ____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Assignment must correspond to
the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
<Page 6>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
the Rights represented by this Rights Certificate)
To: KEMET Corporation
The undersigned hereby irrevocably elects to exercise ____________________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock or other securities, cash or other property issuable upon the
exercise of such Rights and requests that certificates for such shares or other
securities be issued in the name of, and such cash or other property be paid to:
Please insert social security
or other identifying number: ________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
A new Rights Certificate evidencing the remaining balance, if any, of
such Rights not hereby exercised shall be mailed to and registered in the name
of the undersigned unless such person requests that such Rights Certificate be
registered in the name of and mailed to (complete only if Rights Certificate
evidencing any remaining balance of Rights is to be registered in a name other
than the undersigned):
Please insert social security
or other identifying number: ________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
<Page 7>
Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate __are __are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned __ did __ did not acquire the Rights evidenced by
this Rights Certificate from any Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated: __________________________ ____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible guarantor institution with
membership in a recognized signature guarantee medallion program as approved by
the Stock Transfer Association.
NOTICE
The signature on the foregoing Form of Election to Purchase must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above in the Form of Election
to Purchase is not completed, the Company will deem the beneficial owner of the
Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby, will affix a legend to that effect on any Rights Certificate
issued in whole or partial exchange for this Rights Certificate.
<Page 1>
Exhibit C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On June 30, 1996, the Board of Directors of KEMET Corporation (the
"Company") authorized the issuance of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $0.01 per share
(the "Voting Common"), and non-voting common stock, par value $0.01 per share
(the "Non-Voting Common," and together with the Voting Common, the "Common
Securities"), of the Company. The distribution is payable to the stockholders
of record at the close of business on July 1, 1996 (the "Record Date"), which
is also the payment date, and with respect to all Common Securities that become
outstanding after the Record Date and prior to the earliest of the Distribution
Date (as defined below), the redemption of the Rights, the exchange of the
Rights, and the expiration of the Rights (and, in certain cases, following the
Distribution Date). Each Right entitles the registered holder to purchase from
the Company one one-thousandth of a share of a Junior Participating Preferred
Stock, Series A, par value $0.10 per share, of the Company (the "Preferred
Shares") at a price of $85.00 per one one-thousandth of a Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights, and certain defined terms used herein, are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and Wachovia Bank of
North Carolina, N.A., as Rights Agent (the "Rights Agent"), dated as of July 1,
1996.
Until the earlier to occur of (i) the expiration of the Company's
redemption rights following the date of public disclosure that a person or group
other than certain Exempt Persons (an "Acquiring Person"), together with persons
affiliated or associated with such Acquiring Person (other than those that are
Exempt Persons), has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Securities (the "Stock
Acquisition Date") or (ii) the tenth business day after the date of commencement
or public disclosure of an intention to commence a tender offer or exchange
offer by a person other than an Exempt Person if, upon consummation of the
offer, such person could acquire beneficial ownership of 15% or more of the
outstanding Common Securities (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced by Common Security
certificates and not by separate certificates. The Rights Agreement provides
that, until the Distribution Date (or earlier redemption, exchange or expiration
of the Rights), the Rights will be transferred with and only with the Common
Securities. Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), new Common Security certificates issued after July 1,
1996, upon transfer or new issuance of the Common Securities, will contain a
notation incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption, exchange or expiration of the Rights)
the surrender for transfer of any certificate for Common Securities, with or
without such notation or a copy of this Summary of Rights being attached
thereto, will also constitute the transfer of the Rights associated with the
<Page 2>
Common Securities represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common
Securities as of the close of business on the Distribution Date, and such
separate Right Certificates alone will evidence the Rights.
The Rights will first become exercisable after the Distribution Date
(unless sooner redeemed or exchanged). The Rights will expire at the close of
business on July 1, 2006 (the "Expiration Date"), unless earlier redeemed or
exchanged by the Company as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities, cash or other property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend or distribution on, or a subdivision, 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
Preferred Shares or securities convertible into Preferred Shares at less than
the 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 out of earnings or retained earnings)
or of subscription rights or warrants (other than those referred to above). In
addition, the Purchase Price payable and the number of Preferred Shares
purchasable, on exercise of a Right is subject to adjustment in the event that
the Company should (i) declare or pay any dividend on the Common Securities
payable in Common Securities or (ii) effect a subdivision or combination of the
Common Securities into a different number of Common Securities.
In the event that, at any time following public disclosure that an
Acquiring Person has become such, the Company is involved in a merger or other
business combination transaction where the Company is not the surviving
corporation or where Common Securities are changed or exchanged or in a
transaction or transactions wherein 50% or more of its consolidated assets or
earning power are sold, proper provision would be made so that each holder of a
Right (other than such Acquiring Person and certain related persons or
transferees) shall thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the Right, that number of shares
of common stock of the acquiring company or the Company, as the case may be,
which at the time of such transaction would have a market value of two times the
exercise price of the Right. In the event that there is public disclosure that
an Acquiring Person has become such, proper provision would be made so that each
holder of a Right, other than Rights that are or were beneficially owned by the
Acquiring Person and certain related persons and transferees (which will
thereafter be void), on or after the earlier of the Distribution Date and the
first public disclosure that an Acquiring Person has become such, will
thereafter have the right to receive upon exercise that number of shares of
Voting Common (or other securities) having at the time of such transaction a
market value of two times the exercise price of the Right. In addition, the
Company's Board of Directors has the option of exchanging all or part of the
Rights (excluding void Rights) for an equal number of shares of Voting Common in
<Page 3>
the manner described in the Rights Agreement.
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 one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading date prior to the date
of exercise.
At any time prior to public disclosure that an Acquiring Person has
become such, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the "Redemption Price"),
payable in cash, shares (including fractional shares) of Voting Common or any
other form of consideration deemed appropriate by the Board of Directors.
At any time prior to public disclosure that an Acquiring Person has
become such, the Board of Directors of the Company may amend or supplement the
Rights Agreement without the approval of the Rights Agent or any holder of the
Rights, except for an amendment or supplement which would change the Redemption
Price, provide for an earlier expiration date of the Rights or change the
Purchase Price. Thereafter, the Board of Directors of the Company may amend or
supplement the Rights Agreement without such approval only to cure ambiguity,
correct or supplement any defective or inconsistent provision or change or
supplement the Rights Agreement in any manner which shall not adversely affect
the interests of the holders of the Rights (other than an Acquiring Person or an
affiliate or associate thereof). Immediately upon the action of the Board of
Directors providing for any amendment or supplement, such amendment or
supplement will be deemed effective.
The Preferred Shares purchasable upon exercise of the Rights will not
be redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of $25 per share and 1,000 times
the dividend declared per Common Security. In the event of liquidation, the
holders of the Preferred Shares will be entitled to a minimum preferential
liquidation payment equal to the greater of $100 per share and 1,000 times the
payment made per Common Security. Each Preferred Share will have 1,000 votes
per share, voting together with the Voting Common. In the event of any merger,
consolidation or other transaction in which Common Securities are exchanged,
each Preferred Share will be entitled to receive 1,000 times the amount received
per Common Security.
Exempt Persons include (i) the Company, (ii) any Subsidiary of the
Company, (iii) Citicorp Venture Capital, Ltd., and its affiliates and associates
("CVC"), (iv) the parties to the existing voting agreement (together with their
respective affiliates and associates, the "Voting Agreement Parties") covering
the Company's Common Securities, (v) any employee benefit plan of the Company or
of any Subsidiary of the Company, and (vi) any Person holding Common Securities
for any such employee benefit plan or for employees of the Company or of any
<Page 4>
Subsidiary of the Company pursuant to the terms of any such employee benefit
plan.
Subject to certain exceptions and Permitted Acquisitions, CVC is
allowed to acquire additional Common Securities in an amount not to exceed the
sum of (i) 1% and (ii) its beneficial ownership of Common Securities on the date
of the Rights Agreement, as such beneficial ownership of Common Securities may
be increased as a result of certain subsequent events such as an acquisition of
Common Securities by the Company or any Subsidiary or as a result of acquiring
Common Securities as a result of the operation of the Rights Agreement.
Subject to certain exceptions and Permitted Acquisitions, the Voting
Agreement Parties are allowed to acquire additional Common Securities in an
amount not to exceed the sum of (i) 1% and (ii) the beneficial ownership of
Common Securities of such Persons on the date of the Rights Agreement, as such
beneficial ownership of Common Securities may be increased as a result of
certain subsequent events such as an acquisition of Common Securities by the
Company or any Subsidiary or as a result of acquiring Common Securities as a
result of the operation of the Rights Agreement.
"Permitted Acquisition" means (i) solely with respect to CVC, any
acquisition by way of any stock dividend, stock split, reorganization,
recapitalization, merger, consolidation, rights offering or other like
distribution made available to holders of Common Securities generally or under
this Agreement (as the same may be amended, restated or supplemented from time
to time) or any other shareholder rights agreement; and (ii) solely with respect
to the Voting Agreement Parties, (A) any acquisition by way of any stock
dividend, stock split, reorganization, recapitalization, merger, consolidation,
rights offering or other like distribution made available to holders of Common
Securities generally or under this Agreement (as the same may be amended,
restated or supplemented from time to time) or any other shareholder rights
agreement, and (B) any acquisition pursuant to any employee benefit plan,
executive compensation plan, management agreement, director, executive,
management or employee stock option plan, or any other officer or employee
incentive award, benefit, bonus or similar plan, agreement, system or
arrangement.
The Rights may have certain anti-takeover effects. The Rights may
cause substantial dilution to a person or group (except as described above with
respect to an Exempt Person) that attempts to acquire the Company on terms not
approved by the Board, except pursuant to an offer conditioned on a substantial
number of Rights being acquired. The Rights should not interfere with any
merger or other business combination approved by the Board of Directors prior to
the time a person or group other than an Exempt Person has acquired beneficial
ownership of 15% or more of the Common Securities, because until such time the
Rights may generally be redeemed by the Company at $.01 per Right.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
<Page 5>
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to an Application for Registration on Form 8-A
and as an Exhibit to the Company's Current Report on Form 8-K. 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.
