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
SHELDAHL, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0758073
(State of incorporation (I.R.S. Employer/Identification No.)
or organization)
1150 Sheldahl Road
Northfield, Minnesota 55057
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Preferred Stock Purchase Rights
(Title of Class)
Item 1. Description of Securities to be Registered.
On June 16, 1996, the Board of Directors of Sheldahl, Inc. (the
"Company") declared a dividend of one Right for each outstanding share
of the Company's Common Stock, par value $.25 per share (the "Common
Stock"), to the stockholders of record at the close of business on July 8,
1996 (the "Record Date"). Except as set forth below, each Right entitles
the registered holder to purchase from the Company one one-hundredth
(1/100) of a share of Series A Junior Participating Preferred Stock, par
value $1.00 per share (the "Preferred Stock"), at a price of $170 per one
one-hundredth of a share (the "Purchase Price"). The description and
terms of the Rights are set forth in a Rights Agreement dated as of
June 16, 1996 (the "Rights Agreement") between the Company and Norwest
Bank Minnesota, N.A., as Rights Agent.
Initially, the Rights will be attached implicitly to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. A Distribution Date for the Rights
will occur upon the earlier of ten days following (i) a public
announcement that, without the prior consent of the Board of Directors,
a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired, or obtained the right to acquire, beneficial
ownership of voting securities having 15% or more of the voting power
of the Company (the "Stock Acquisition Date"), or (ii) the commencement
of (or a public announcement of an intention to make) a tender offer or
exchange offer which would result in any person or group and related
persons having beneficial ownership of voting securities having 15% or
more of the voting power of the Company.
Until the Distribution Date, the Rights will be transferred with and
only with Common Stock certificates. From as soon as practicable after
the Record Date and until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Stock certificates issued after
the Record Date upon transfer or new issuance of the Common Stock will
contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for Common Stock
outstanding as of the Record Date will also constitute the transfer of
the Rights associated with the Common Stock represented by such
certificate. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights ("Rights Certificates") will
be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date, and the separate Rights Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on June 16, 2006 unless earlier redeemed by the
Company as described below.
In the event that any person becomes the beneficial owner of 15% or
more of the voting power of the Company, ten (10) days thereafter (the
"Flip-In Event") each holder of a Right will thereafter have the right
to receive, upon exercise thereof at the then current Purchase Price of
the Right, Common Stock (or, in certain circumstances, a combination of
cash, other property, Common Stock or other securities) which has a value
of two times the Purchase Price of the Right (such right being called the
"Flip-In Right"). In the event that the Company is acquired in a merger
or other business combination transaction where the Company is not the
surviving corporation or in the event that 50% or more of its assets or
earning power is sold, proper provision shall be made so that each
holder of a Right will thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price of the Right, common
stock of the acquiring entity which has a value of two times the Purchase
Price of the Right. Upon the occurrence of the Flip-In Event, any Rights
that are or were at any time owned by an Acquiring Person shall become
null and void insofar as they relate to the Flip-In Right.
The Purchase Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution
(i) in the event of a stock dividend on, or a subdivision, combination
or reclassification of the Preferred Stock, (ii) upon the grant to
holders of the Preferred Stock of certain rights or warrants to subscribe
for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or assets
(excluding regular quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above).
At any time after the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 15% or more of the voting
power of the Company and prior to the acquisition by such person or group
of 50% or more of the voting power of the Company, the Board of Directors
of the Company may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an
exchange ratio of one share of Common Stock, or one one-hundredth of a
share of Preferred Stock (or of a share of a class or series of the
Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least
1% in the Purchase Price. No fractions of shares will be issued and,
in lieu thereof, an adjustment in cash will be made based on the market
price of the Preferred Stock on the last trading date prior to the date
of exercise.
At any time prior to the earlier to occur of (i) the tenth day after
the Stock Acquisition Date, or (ii) the expiration of the Rights, the
Company may redeem the Rights in whole, but not in part, at a price of
$.001 per Right (the "Redemption Price"), which redemption shall be
effective at such time as the Board of Directors shall establish.
Additionally, the Continuing Directors may, following the Stock
Acquisition Date, redeem the then outstanding Rights in whole, but not
in part, at the Redemption Price provided that either (a) the Acquiring
Person reduces his beneficial ownership to less than 15% of the voting
power of the Company in a manner which is satisfactory to the Continuing
Directors and there are no other Acquiring Persons, or (b) such
redemption is incidental to a merger or other business combination
transaction or series of transactions involving the Company but not
involving an Acquiring Person or any person who was an Acquiring Person.
The redemption of Rights described in the preceding sentence shall be
effective only after ten (10) business days prior notice. Upon the
effective date of the redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
Until a Right is exercised, it will not entitle the holder to any
rights as a stockholder of the Company (other than those as an existing
stockholder), including, without limitation, the right to vote or to
receive dividends.
The terms of the Rights may be amended by the Board of Directors
of the Company (i) prior to the Distribution Date in any manner, and
(ii) on or after the Distribution Date to cure any ambiguity, to correct
or supplement any provision of the Rights Agreement which may be
defective or inconsistent with any other provisions, or in any manner
not adversely affecting the interests of the holders of the Rights.
As of June 16, 1996, there were 8,911,010 shares of Common Stock
issued and outstanding and 972,595 shares reserved for issuance pursuant
to the exercise of outstanding stock options. Each outstanding share of
Common Stock on July 8, 1996 will receive one Right. As long as the
Rights are attached to the Common Stock, the Company will issue one Right
for each share of Common Stock issued between the Record Date and the
Distribution Date so that all such shares will have attached Rights.
There will be 150,000 shares of Preferred Stock reserved for issuance
upon exercise of the Rights.
The Rights Agreement is designed to protect shareholders in the event
of an unsolicited attempt to acquire the Company for an inadequate price
and to protect against abusive practices that do not treat all
shareholders equally, including partial and two-tier tender offers,
coercive offers, and creeping stock accumulation programs. Such
practices can pressure shareholders into tendering their investments
prior to realizing the full value or total potential of such investments.
The Rights Agreement is intended to make the cost of such abusive
practices prohibitive and create an incentive for a potential acquiror
to negotiate in good faith with the Board. The Rights Agreement is not
intended to, and will not, prevent all unsolicited offers to acquire the
Company. If an unsolicited offer is made, and the Board determines that
it is fair and in the best interests of the Company and its shareholders,
then, pursuant to the terms of the Rights Agreement, the Board has the
authority to redeem the Rights and permit the offer to proceed.
Essentially, the Rights Agreement will provide the Board with sufficient
opportunity to evaluate the fairness of any unsolicited offer and the
credibility of the bidder, and will therefore enable the Board to
represent the interests of all shareholders more effectively. Of
course, in deciding whether to redeem the Rights in connection with any
unsolicited offer, the Board will be bound by its fiduciary obligations
to act in the best interests of the Company and its shareholders.
The form of Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights, which includes as Exhibit B the
form of Rights Certificate, is attached hereto as Exhibit 1 and is
incorporated herein by reference. The foregoing description of the
Rights does not purport to be complete and is qualified in its entirety
by reference to such Exhibit.
Item 2. Exhibits.
Exhibit 1:
Form of Rights Agreement dated as of June 16, 1996 between Sheldahl,
Inc. and Norwest Bank Minnesota, National Association, which includes
as Exhibit B thereto the form of Rights Certificate. Pursuant to the
Rights Agreement, Rights Certificates will not be mailed until after
the earlier of (i) the tenth day after the Stock Acquisition Date,
or (ii) the tenth day after the date of the commencement of, or first
public announcement of the intent to commence, a tender or exchange
offer by any person or group of affiliated or associated persons if,
upon consummation thereof, such person or group would be the
beneficial owner of 15% or more of the voting power of the Company.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELDAHL, INC
Dated: June 20, 1996
/s/ James E. Donaghy
James E. Donaghy, Chief Executive Officer
<PAGE>
June 20, 1996
Board of Directors
Sheldahl, Inc.
1150 Sheldahl Road
Northfield, Minnesota 55057
Gentlemen:
Reference is made to the Rights Agreement dated as of June 16, 1996
between Sheldahl, Inc. (the "Company") and Norwest Bank Minneapolis,
N.A. as Rights Agent (the "Rights Agreement") and the rights issuable
thereunder (the "Rights"). As counsel to the Company, we have examined
such corporate documents, records and matters of law, including an
analysis of the Minnesota Business Corporation Act and the opinion of
the United States District Court for the District of Minnesota in Gelco
Corporation v. Coniston Partners, and have satisfied ourselves as to
such matters of fact, as we have deemed necessary or advisable for the
purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
(1) The Company is duly organized and validly existing under the
laws of the State of Minnesota.
(2) The Board of Directors of the Company has the legal authority
to adopt and implement the Rights Agreement and the Rights.
(3) The Rights Agreement and the Rights have been duly and validly
authorized by all necessary corporate action.
(4) In considering and adopting the Rights Agreement, the Board of
Directors acted in accordance with its fiduciary duties to the
Company and its shareholders as such fiduciary duties are
interpreted on the date hereof.
(5) The Rights will, upon issuance, be validly issued and will
constitute legal and valid securities under Minnesota law.
(6) The issuance of the Rights as a dividend to the holders of
common stock of the Company does not constitute an "offer"
or "sale" within the meaning of the Securities Act of 1933,
as amended, and therefore registration of such issuance is
not required under such Act.
Very truly yours,
/S/ Lindquist & Vennum P.L.L.P.
LINDQUIST & VENNUM P.L.L.P.
<PAGE>
Exhibit 1
SHELDAHL, INC.
and
NORWEST BANK MINNESOTA, N.A.
Rights Agent
_______________
RIGHTS AGREEMENT
Dated as of June 16, 1996
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of June 16, 1996 (the "Agreement"), between
Sheldahl, Inc., a Minnesota corporation (the "Company"), and Norwest Bank
Minnesota, N.A., a Minnesota corporation (the "Rights Agent").
W I T N E S S E T H
WHEREAS, on June 16, 1996, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as hereinafter
defined) for each outstanding share of the Company's Common Stock, par value
$.25 per share (the "Common Stock") outstanding at the close of business on
July 8, 1996 (the "Record Date"), each Right representing the right to
purchase one one-hundredth of a share of Series A Junior Participating
Preferred Stock of the Company having the rights, powers and preferences set
forth in the form of Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock attached hereto as Exhibit A,
upon the terms and subject to the conditions hereinafter set forth (the
"Rights") and further authorized the issuance of one Right with respect to
each share of Common Stock that would become outstanding after the close of
business on the Record Date in accordance with the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, without the prior approval of a majority of the
Board of Directors, shall be the Beneficial Owner (as such term is
hereinafter defined) of voting securities having fifteen percent (15%)
or more of the then voting power of the Company, but shall not include
the Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any entity
organized, appointed or established by the Company for or pursuant to
the terms of any such plan; provided, however, that if a Person is the
Beneficial Owner at the close of business on the date of this Agreement
of fifteen percent (15%) or more of the voting power of the Company,
such Person shall not be deemed an Acquiring Person unless and until
such Person acquires any additional Common Stock in any manner other
than pursuant to a stock dividend, stock split, recapitalization or
similar transaction that does not affect the percentage of outstanding
Common Stock beneficially owned by such Person. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of
an acquisition of Common Stock by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to fifteen percent (15%) or
more of the then voting power of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of fifteen
percent (15%) or more of the then voting power of the Company then
outstanding by reason of shares purchased by the Company and shall,
after such share purchases by the Company, become the Beneficial Owner
of any additional Common Stock of the Company, then such Person shall be
deemed to be an "Acquiring Person." Notwithstanding the foregoing, if a
majority of the Continuing Directors then in office determines in good
faith that a Person who would otherwise be an "Acquiring Person", as
defined pursuant to the foregoing provisions of this paragraph (a), has
become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such
Person would no longer be an Acquiring Person, as defined pursuant to
the foregoing provisions of this paragraph (a), then such Person shall
not be deemed to be an "Acquiring Person" for any purposes of this
Agreement.
(b) "Acquisition Event" shall mean the Flip-In Event or any
event described in Section 13(a) hereof.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall
be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates
or Associates has (A) the right or obligation to acquire (whether
such right or obligation is exercisable or effective immediately
or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights (other
than the Rights at any time prior to the occurrence of an
Acquisition Event, but thereafter including the Rights acquired
from and after the Distribution Date (as defined in Section 3(a)
below) other than pursuant to Section 3(a) below), warrants or
options, or otherwise; provided, however, that a Person shall not
be deemed the "Beneficial Owner" of, or to "beneficially own,"
securities tendered pursuant to a tender or exchange offer made by
such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange; or
(B) the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that
a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this clause (B) if the
agreement, arrangement or understanding to vote such security:
(1) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the
Exchange Act, and (2) is not also then reportable by such Person
on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with
which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding (whether or not in
writing and other then customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities), for the purpose of acquiring,
holding, voting (except pursuant to a revocable proxy as described
in clause (B) of subparagraph (ii) of this paragraph (d)) or
disposing of any voting securities of the Company.
Notwithstanding the foregoing, a Person shall not be deemed
to be the "Beneficial Owner" of or to "beneficially own" any
securities that are issued, or proposed to be issued, to such
Person pursuant to any stock option plan or other employee
compensation plan or arrangement of the Company or any of its
Subsidiaries. Furthermore, directors and officers of the Company
shall not be deemed to beneficially own each others Common Stock
solely due to their status as a director or officer of the
Company.
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when
used with reference to a Person's Beneficial Ownership of
securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of
such securities not then actually issued and outstanding which
such Person would be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the States of Minnesota
or New York are authorized or obligated by law or executive order to
close.
(f) "Close of business" on any given date shall mean 5:00 P.M.,
Minneapolis, Minnesota time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., Minneapolis,
Minnesota time, on the next succeeding Business Day.
(g) "Common Stock" shall mean the Common Stock, par value $.25
per share, of the Company (as such term is defined in the introductory
paragraphs above) or any other shares of capital stock of the Company
into which the Common Stock shall be reclassified or changed, except
that "Common Stock" when used with reference to any Person other than
the Company shall mean the 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 do not limit (as a fixed amount and
not merely in proportional terms) the amount of dividends or income
payable or distributable on such class or series or the amount of assets
distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide
that such class or series is subject to redemption at the option of 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 shall be more than one such class or series of
capital stock or equity interests of such Person, "Common Stock" of such
Person shall include all such classes and series substantially in the
proportion of the total number of shares or other units of each class or
series outstanding at such time. "Par value" as used herein or in any
instrument relating to this Agreement shall have the same meaning as
"stated value" in the Company's Articles of Incorporation, as amended.
(h) "Continuing Director" shall mean (i) any member of the Board
of Directors of the Company, while such person is a member of the Board,
who is not an Acquiring Person or an Affiliate or Associate of an
Acquiring Person, or a representative or nominee of an Acquiring Person
or of any such Affiliate or Associate, and was a member of the Board
prior to the Stock Acquisition Date, and (ii) any successor of a
Continuing Director, while such successor is a member of the Board, who
is not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative or nominee of an Acquiring Person or of any
such Affiliate or Associate and is recommended or elected to succeed the
Continuing Director by a majority of the Continuing Directors.
(i) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(j) "Final Expiration Date" shall have the meaning set forth in
Section 7 hereof.
(k) "Flip-In Event" shall have the meaning set forth in Section
11(a)(ii) hereof.
(l) "Person" shall mean any individual, firm, corporation,
partnership or other entity and shall include any successor (by merger
or otherwise) of such entity.
(m) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $1.00 per share, of the
Company.
(n) "Stock Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(o) "Subsidiary" shall mean, with reference to any other Person,
any corporation of which a majority of any class of equity security is
beneficially owned, directly or indirectly, by such other Person.
(p) "Voting power of the Company" shall mean the collective
voting power of the Common Stock of the Company.
Any determination required by the definitions contained in this Section
1 shall be made by the continuing Directors in their good faith judgment,
which determination shall be final and binding on the Rights Agent.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution
Date also be the holders of the Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. In the event the Company appoints one or more
Co-Rights Agents, the respective duties of the Rights Agent and any Co-Rights
Agent shall be as the Company shall determine.
Section 3. Issue of Rights Certificates.
(a) Until the earlier of (i) the close of business on the tenth
(10th) day after the Stock Acquisition Date, or (ii) the close of
business on the tenth (10th) day (or such later date as may be
determined by action of the Continuing Directors prior to such time as
any Person becomes an Acquiring Person) after the date of the
commencement of, or first public announcement of the intent of any
Person (other than the Company, any Subsidiary of the Company or any
employee benefit plan of the Company or of any Subsidiary of the Company
or any entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan), to commence, a tender or
exchange offer which would result in such person becoming an Acquiring
Person (including any such date which is after the date of this
Agreement and prior to the issuance of the Rights) (the earliest of (i)
and (ii) being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of paragraph (b) of
this Section 3) by the certificates for Common Stock registered in the
names of the holders of the Common Stock (which certificates for Common
Stock shall be deemed also to be certificates for Rights) and not by
separate certificates, and (y) the Rights (and the right to receive
certificates therefor) will be transferable only in connection with the
transfer of the underlying shares of Common Stock (including a transfer
to the Company). As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, postage prepaid mail, to each
record holder of the Common Stock as of the close of business on the
Distribution Date, at the address of such holder shown on the records of
the Company, one or more rights certificates, in substantially the form
of Exhibit B hereto (the "Rights Certificates"), evidencing one Right
for each share of Common Stock so held. As of and after the
Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of the Shareholders' Rights Plan,
in substantially the form attached hereto as Exhibit C (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the close of business on the Record Date, at the
address of such holder shown on the records of the Company. With
respect to certificates for the Common Stock outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced
by such certificates for the Common Stock and the registered holders of
the Common Stock shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration
Date (as such term is defined in Section 7 hereof), the surrender for
transfer of any of the certificates for the Common Stock outstanding on
the Record Date shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
(c) Certificates for the Common Stock issued after the Record
Date but prior to the earlier of the Distribution Date or the Expiration
Date, shall be deemed also to be certificates for Rights, and shall bear
the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the Rights Agreement between
Sheldahl, Inc.and Norwest Bank Minnesota, N.A. dated as of June
16, 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 offices of Sheldahl, Inc. 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. Sheldahl, Inc.will mail to the
holder of this certificate a copy of the Rights Agreement without
charge promptly after receipt of a written request therefor.
Under certain circumstances, Rights issued to, or held by, an
Acquiring Person, or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and any subsequent
holder of such Rights may become null and void.
With respect to such certificates containing the foregoing legend, until
the earlier of (i) the Distribution Date or (ii) the Expiration Date,
the Rights associated with the Common Stock represented by such
certificates shall be evidenced by such certificates alone and the
registered holders of Common Stock shall also be the registered holders
of the associated Rights, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights associated
with the Common Stock represented by such certificates. In the event
the Company purchases or acquires any Common Stock after the Record Date
but prior to the Distribution Date, any Rights associated with such
Common Stock shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common
Stock which is no longer outstanding.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
exercise and of assignment to be printed on the reverse thereof) shall
each be substantially in the form attached hereto as Exhibit B and may
have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of shares of
Preferred Stock (or Common Stock, as the case may be) as shall be set
forth therein at the price per share set forth therein (the "Purchase
Price"), but the number of such shares and the Purchase Price shall be
subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes
such, except a transferee purchasing from or through a nationally
recognized broker-dealer where such transferee and such transferee's
Associates and Affiliates do not collectively acquire, and will not have
acquired during the preceding 20 calendar days, in combination with the
proposed transfer, an amount of Common Stock equal to more than one
percent (1%) of the outstanding shares of Common Stock, and (iii) a
transferee of an Acquiring Person (or any such Associate or Affiliate)
who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to
or on behalf of holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing
agreement, arrangement or understanding regarding the transferred Rights
or (B) a transfer which the Continuing Directors otherwise conclude in
good faith is part of a plan, arrangement or understanding which has as
a primary purpose or effect avoidance of Section 7(e) hereof, and any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent
feasible and reasonably identifiable as such) the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement). Accordingly,
this Rights Certificate and the Rights represented hereby may
become void in the circumstances specified in Section 7(e) of such
Agreement.
The provisions of Section 7(e) of the Rights Agreement shall be
operative whether or not the foregoing legend is contained on any such Rights
Certificate.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
President, any Executive Vice President or Vice President either
manually or by facsimile signature, which shall be attested by the
Secretary or any Assistant Secretary of the Company, either manually or
by facsimile signature. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such
officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent, and issued and
delivered by the Company with the same force and effect as though the
person who signed such Rights Certificates had not ceased to be such
officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the
execution of such Rights Certificate, shall be a proper officer of the
Company to sign such Rights Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
(b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its offices in South St. Paul, Minnesota or New
York, New York, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 14 hereof, at any time
after the close of business on the Distribution Date, and at or prior to
the close of business on the Expiration Date, any Rights Certificate or
Certificates (other than Rights Certificates representing rights that
have become void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of shares of
Preferred Stock as the Rights Certificate or Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring
to transfer, split up, 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, split up, combined or exchanged at the office or offices of
the Rights Agent designated for such purpose. 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.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer,
split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them,
and 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
execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu
of the Rights Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein
including without limitation, the restrictions on exercisability set
forth in Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in
whole or in part at any time after the Distribution Date upon surrender
of the Rights Certificate, with the form of election to exercise on the
reverse side thereof duly executed, to the Rights Agent at the office or
offices of the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one one-hundredth of a share of
Preferred Stock (or, if applicable, such other number of shares or other
securities) as to which the Rights are exercised, at or prior to the
earlier of (i) the close of business on June 16, 2006 (the "Final
Expiration Date"), or (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (such earlier time being herein referred
to as the "Expiration Date"). Any Person who prior to the Distribution
Date becomes a record holder of shares of Common Stock may exercise all
of the rights of a registered holder of a Rights Certificate with
respect to the Rights associated with such shares of Common Stock in
accordance with and subject to the provisions of this Agreement,
including the provisions of Section 7(e) hereof, as of the date such
Person becomes a record holder of shares of Common Stock.
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be
One Hundred Seventy and No/100 Dollars ($170.00), and shall be subject
to adjustment from time to time as provided in Section 11 hereof and
shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to exercise duly executed, accompanied
by payment of the Purchase Price for the shares to be purchased and an
amount equal to any applicable transfer tax, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the
shares of Preferred Stock (or make available, if the Rights Agent is the
transfer agent for such shares) certificates for the number of shares of
Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B)
if the Company, in its sole discretion, shall have elected to deposit
the shares of Preferred Stock issuable upon exercise of the Rights
hereunder into a depositary, requisition from the depositary agent
depositary receipts representing such number of one one-hundredth of a
share of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such
receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with
such request, (ii) when appropriate, requisition from the Company the
amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such
certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Rights Certificate,
registered in such name or names as may be designated by such holder,
and (iv) when appropriate, after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights
Certificate. The payment of the Purchase Price (as such amount may be
reduced pursuant to Section 11(a)(iii) hereof) shall be made in cash or
by certified check, cashier's check, bank draft or money order payable
to the order of the Company, except that if so provided by the Board,
the payment of the Purchase Price following the Flip-In Event and until
the first occurrence of an event described in Section 13 may be made
wholly or in part by delivery of a certificate or certificates (with
appropriate stock powers executed in blank attached thereto) evidencing
a number of shares of Common Stock of the Company equal to the then
Purchase Price divided by the closing price (as determined pursuant to
Section 11(d) hereof) per share of Common Stock on the Trading Day
immediately preceding the date of such exercise. In the event that the
Company is obligated to issue other securities of the Company, pay cash
and/or distribute other property pursuant to Section 11(a)(iii) hereof,
the Company will make all arrangements necessary so that such other
securities, cash, and/or property are available for distribution by the
Rights Agent, if and when appropriate. In addition, in the case of an
exercise of the Rights by a holder pursuant to Section 11(a)(ii), the
Rights Agent shall return such Rights Certificate to the registered
holder thereof after imprinting, stamping or otherwise indicating
thereon that the rights represented by such Rights Certificate no longer
include the rights provided by Section 11(a)(ii) of the Rights Agreement
and if less than all the Rights represented by such Rights Certificate
were so exercised, the Rights Agent shall indicate on the Rights
Certificate the number of Rights represented thereby which continue to
include the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Rights Certificate shall
exercise (except pursuant to Section 11(a)(ii)) 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 14
hereof.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the occurrence of a Flip-In Event, any Rights
beneficially owned by (a) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (b) except as provided below or in
Section 4(b), a transferee of an Acquiring Person (or any such Associate
or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, and (c) except as provided below, a transferee of an
Acquiring Person (or any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (i) a transfer (whether
or not for consideration) from the Acquiring Person to or on behalf of
holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement
or understanding regarding the transferred Rights or (ii) a transfer
which the Continuing Directors otherwise conclude in good faith is part
of a plan, arrangement or understanding which has as a primary purpose
or effect avoidance of this Section 7(e), shall become null and void
without any further action, and any holder of such Rights shall
thereupon have no right to exercise such Rights under any provision of
this Agreement. A majority of the Continuing Directors may in
appropriate circumstances waive application of this Section 7(e) and the
requirements of Section 4(b) to any transfer by an Acquiring Person in
connection with a transfer or series of transfers which cause an
Acquiring Person to become the Beneficial Owner of voting securities
having less than fifteen percent (15%) of the voting power of the
Company. The Company shall use all reasonable efforts to insure that
the provisions of this Section 7(e) hereof are complied with, but shall
have no liability to any holder of Rights for the inability to make any
determinations with respect to an Acquiring Person or any of their
respective Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake
any action with respect to a registered holder of any Rights Certificate
upon the occurrence of any purported exercise as set forth in this
Section 7 unless the certificate contained in the appropriate form of
election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise shall have been completed and
signed by the registered holder thereof and the Company shall have been
provided with such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) of such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably
request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all canceled Rights Certificates to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of an Acquisition Event,
Common Stock and/or other securities) or any authorized and issued
shares of Preferred Stock (and following the occurrence of an
Acquisition Event, Common Stock and/or other securities) held in its
treasury, the number of shares of Preferred Stock (and, following the
occurrence of an Acquisition Event, Common Stock and/or other
securities) that, except as provided in Section 11(a)(iii) and subject
to Section 7(e) hereof, will be sufficient to permit the exercise in
full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following the
occurrence of an Acquisition Event, Common Stock and/or other
securities) issuable upon the exercise of the Rights may be listed on
any national securities exchange, the Company shall use its best efforts
to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon
as practicable following the Distribution Date, a registration statement
under the Securities Act of 1933 (the "Act"), with respect to the Rights
and the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the date of the
expiration of the Rights. The Company will also take such action as may
be appropriate under the Blue Sky laws of the various states. The
Company may temporarily suspend, for a period of time not to exceed
ninety (90) days, the exercisability of the Rights in order to prepare
and file any required registration statement. Upon any such suspension,
the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock
(and, following the occurrence of an Acquisition Event, Common Stock
and/or other securities) delivered upon exercise of Rights shall, at the
time of delivery of the certificates for such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares or securities.
(e) The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of
the Rights Certificates and of any certificates for 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
pay any transfer tax which may be payable in respect of any transfer or
delivery of Rights Certificates to a person other than, or the issuance
or delivery of the shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) in respect of a name other than
that of, the registered holder of the Rights Certificates evidencing
Rights surrendered for exercise or to issue or deliver any certificates
for shares of Preferred Stock (or Common Stock and/or other securities,
as the case may be) in a name other than that of the registered holder
upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name any
certificate for shares of Preferred Stock (or Common Stock, 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 shares of Preferred Stock (or Common
Stock, as the case may be) represented thereby on, and such certificate shall
be dated, the date upon which the Rights Certificate evidencing such Rights
was duly surrendered and payment of the Purchase Price (and all applicable
transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or Common
Stock, as the case may be) transfer books of the Company are closed, such
person shall be deemed to have become the record holder of such shares on, and
such certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Purchase Price, Number and Kind of Stock or
Number of Rights. The Purchase Price, the number and kind of shares covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred
Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding Preferred
Stock into a smaller number of shares, or (D) issue any shares of
its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a) and in Section 7(e) hereof, the Purchase Price in
effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassifi-
cation, and the number and kind of shares of Preferred Stock or
capital stock, as the case may be, issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive the aggregate number
and kind of shares of Preferred Stock or capital stock, as the
case may be, which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer
books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of
one Right. If an event occurs which would require an adjustment
under both Section 11(a)(i) and Section 11(a)(ii), the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to any adjustment required pursuant to Section
11(a)(ii).
(ii) Subject to Section 24 of this Agreement, at the close
of business on the tenth (10th) day after the Stock Acquisition
Date (the "Flip-In Event"), proper provision shall be made so that
each holder of a Right, except as provided below and in Section
7(e) hereof, shall thereafter have a right to receive, upon
exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of shares of Preferred
Stock, such number of shares of Common Stock of the Company as
shall equal the result obtained by (x) multiplying the then
current Purchase Price by the then number of one one-hundredths of
a share of Preferred Stock for which a Right is then exercisable
and dividing that product by (y) 50% of the current market price
(determined pursuant to Section 11(d) hereof) per share of Common
Stock on the date on the Stock Acquisition Date. In the event
that any Person shall become an Acquiring Person and the Rights
shall then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be
afforded by the Rights.
(iii) In lieu of issuing shares of Common Stock in
accordance with Section 11(a)(ii) hereof, the Company may, if a
majority of the Continuing Directors then in office determine that
such action is necessary or appropriate and not contrary to the
interests of holders of Rights, elect to issue or pay, upon the
exercise of the Rights, cash, property, shares of Common Stock,
other securities or any combination thereof having an aggregate
value equal to the value of the shares of Common Stock which
otherwise would have been issuable pursuant to Section 11(a)(ii),
which value shall be determined by a nationally recognized
investment banking firm selected by a majority of Continuing
Directors then in office. For purposes of the preceding sentence,
the value of any preferred stock which a majority of the
Continuing Directors determines to be a "common stock equivalent"
shall be deemed to have the same value as the Common Stock. Any
such election by the Continuing Directors must be made and
publicly announced within 60 days of the Flip-In Event. Following
the occurrence of the Flip-In Event, a majority of the Continuing
Directors then in office may suspend the exercisability of the
Rights for a period of up to 60 days following the occurrence of
such Flip-In Event to the extent that the Continuing Directors
have not determined whether to exercise their rights of election
under this paragraph (a)(iii). In the event of any such
suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily
suspended.
(b) In case the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring
within forty-five (45) calendar days after such record date) Preferred
Stock (or shares having the same rights, privileges and preferences as
the shares of Preferred Stock ("equivalent preferred stock")) or
securities convertible into Preferred Stock or equivalent preferred
stock at a price per share of Preferred Stock or per share of equivalent
preferred stock (or having a conversion price per share, if a security
convertible into Preferred Stock or equivalent preferred stock) less
than the current market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
shares of Preferred Stock outstanding on such record date, plus the
number of shares of Preferred Stock which the aggregate offering price
of the total number of shares of Preferred Stock and/or equivalent
preferred stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current market price and the denominator of which shall
be the number of shares of Preferred Stock outstanding on such record
date, plus the number of additional shares of Preferred Stock and/or
equivalent preferred stock to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price
may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined
in good faith by the Board, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent. Stock of Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of indebtedness,
cash (other than a regular quarterly cash dividend out of the earnings
or retained earnings of the Company), assets (other than a dividend
payable in Preferred Stock, but including any dividend payable in stock
other than Preferred Stock) or subscription rights or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per one one-hundredth of a
share of Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of
the cash, assets or evidences of indebtedness so to be distributed or of
such subscription rights or warrants applicable to a share of Preferred
Stock and the denominator of which shall be such current market price
(as determined pursuant to Section 11(d) hereof) per one one-hundredth
of a share of Preferred Stock; provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company to
be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall be adjusted
to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current market price" per share of Common Stock on any date shall
be deemed to be the average of the daily closing prices per share
of such Common Stock for the thirty (30) consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such
date; provided, however, that in the event that the current market
price per share of the Common Stock is determined during a period
following the announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares
of such Common Stock (other than the Rights), or (B) any
subdivision, combination or reclassification of such Common Stock,
and prior to the expiration of the thirty (30) Trading Day period
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" shall be properly adjusted to take into account ex-dividend
trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the
shares of Common Stock are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading
or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted sale
price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or such other system then in use, or,
if on any such date the shares of Common Stock are not quoted by
any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market
in the Common Stock selected by the Board (or if there are
Continuing Directors then in office, a majority of the Continuing
Directors then in office). If on any such date no market maker is
making a market in the Common Stock, the fair value of such shares
on such date as determined in good faith by the Board shall be
used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange,
a Business Day. If the Common Stock is not publicly held or not
so listed or traded, "current market price" per share shall mean
the fair value per share as determined in good faith by the Board
(or if there are Continuing Directors then in office, a majority
of the Continuing Directors then in office), whose determination
shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common
Stock in clause (i) of this Section 11(d) (other than the last
sentence thereof). If the current market price per share of
Preferred Stock cannot be determined in the manner provided above,
the "current market price" per share of Preferred Stock shall be
conclusively deemed to be an amount equal to 100 times the current
market price per share of Common Stock, as appropriately adjusted
for stock splits, stock dividends or similar transactions after
the date hereof. If neither the Common Stock nor the Preferred
Stock is publicly held or so listed or traded, "current market
price" per share shall mean the fair value per share as determined
in good faith by the Board (or if there are Continuing Directors
then in office, a majority of the Continuing Directors then in
office), whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all
purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least one percent
(1%) in the Purchase Price; provided, however, that any adjustments
which by reason of this Section 11(e) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent
or to the nearest ten-thousandth of a share of Common Stock or other
share or one-millionth of a share of Preferred Stock, as the case may
be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction which
mandates such adjustment, or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions contained in Section 11(a), (b), (c), (e),
(g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Stock shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of shares of
Preferred Stock purchasable from time to time hereunder upon exercise of
the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as
a result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase
Price, that number of one one-hundredth of a share of Preferred Stock
(calculated to the nearest one-millionth) obtained by (i) multiplying
(x) the number of one one-hundredth of a share covered by the Right
immediately prior to this adjustment, by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of shares of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one one-hundredth of a share of Preferred
Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the
number of Rights shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to
be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the
public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement
for the Rights Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the
adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in
the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-hundredth of a share of Preferred Stock
issuable upon the exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the Purchase
Price per share and the number of shares which were expressed in the
initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated or par value, if any,
of the shares of Preferred Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and
legally issue fully paid and non-assessable shares of Preferred Stock,
Common Stock or other securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the shares of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the shares of Preferred Stock and other capital
stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due
bill or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the occurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their sole discretion a
majority of the Continuing Directors then in office shall determine to
be advisable in order that any (i) consolidation or subdivision of the
Preferred Stock, (ii) issuance wholly for cash of any shares of
Preferred Stock at less than the current market price, (iii) issuance
wholly for cash of shares of Preferred Stock or securities which by
their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Company
to holders of its Preferred Stock shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with, (ii) merge with
or into, or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one or more 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 at the
time of or immediately after such consolidation, merger or sale there
are any rights, warrants or other instruments or securities outstanding
or agreement in effect which would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that, after the Stock
Acquisition Date, it will not, except as permitted by Section 23 hereof,
take (or permit any Subsidiary to take) any action the purpose or effect
of which is to diminish substantially or otherwise eliminate the
benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding,
in the event that the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare a dividend on
the outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue
any shares of its capital stock in a reclassification of the outstanding
Common Stock, the number of Rights associated with each share of Common
Stock shall be proportionately adjusted so that the number of Rights
thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to
such event by a fraction the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior to the
occurrence of the event and the denominator of which shall be the total
number of shares of Common Stock outstanding immediately following the
occurrence of such event.
(q) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the rights represented by the
Rights under this Rights Agreement, including the rights represented by
Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of Stock.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b)
promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock a copy of such certificate, and (c) mail
a brief summary thereof to each holder of a Rights Certificate in accordance
with Section 26 hereof. The Rights Agent shall be fully protected in relying
on any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (x) the Company shall consolidate with, or merge
with and into, any other Person, and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y)
any Person shall consolidate with, or merge with or into, the Company,
and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company), then, and in
each such case, proper provision shall be made so that: (i) each holder
of a Right, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with
the terms of this Agreement, such number of validly authorized and
issued, fully paid, non-assessable and freely tradeable shares of Common
Stock of the Principal Party (as hereinafter defined), free and clear of
liens, rights of call or first refusal, encumbrances or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the then number of one one-hundredth of a
share of Preferred Stock for which a Right is then exercisable (without
giving effect to the occurrence, if any, of any transaction described in
Section 11(a)(ii) hereof) and (2) dividing that product by 50% of the
current market price (determined pursuant to Section 11(d)(i) hereof)
per share of the Common Stock of such Principal Party on the date of
consummation of such consolidation, merger, sale or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by
virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11
hereof shall apply to such Principal Party; and (iv) such Principal
Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in
connection with the consummation of any such transaction as may be
necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be possible, in relation to its
shares of Common Stock thereafter deliverable upon the exercise of the
Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in (x) or (y)
of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to
such merger or consolidation; and
(ii) in the case of any transaction described in (z) of the
first sentence in Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over the
preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of
another Person the Common Stock of which is and has been so registered,
"Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the Common Stock having the greatest aggregate market
value; and (3) in case such Person is owned, directly or indirectly, by
a joint venture formed by two or more Persons that are not owned,
directly or indirectly, by the same Person, the rules set forth in (1)
and (2) above shall apply to each of the chains of ownership having an
interest in such joint venture as if such party were a "Subsidiary" of
both or all of such joint venturers and the Principal Parties in each
such chain shall bear the obligations set forth in this Section 13 in
the same ratio as their direct or indirect interests in such Person bear
to the total of such interests.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and such
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any consolidation, merger or sale of
assets mentioned in paragraph (a) of this Section 13, the Principal
Party will:
(i) prepare and file a registration statement under the
Act, with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, and will use
its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B)
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Expiration Date;
(ii) use its best efforts to qualify or register the Rights
and the securities purchasable upon exercise of the Rights under
the blue sky laws of such jurisdictions as may be necessary or
appropriate; and
(iii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all material respects with the
requirements for registration on Form 10 under the Exchange Act.
The Company shall not enter into any transaction of the kind referred to
in this Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the consummation of
such transaction, would eliminate or substantially diminish the benefits
intended to be afforded by the Rights. The provisions of this Section
13 shall similarly apply to successive mergers or consolidations or
sales or other transfers. The rights under this Section 13 shall be in
addition to the rights to exercise Rights and adjustments under Section
11(a)(ii) and shall survive any exercise thereof.
Section 14. Fractional Rights and Fractional Stock.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section
11(p) hereof, or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole
Right. For purposes of this Section 14(a), the current market value of
a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any
day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted
to trading, or if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted sale price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights the fair value of
the Rights on such date as determined in good faith by the Board shall
be used.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral
multiples of one one-hundredth 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-hundredth of a share of Preferred Stock).
Fractions of shares of Preferred Stock in integral multiples of one
one-hundredth of a share 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 shares of Preferred Stock
represented by such depositary receipts. In lieu of fractional shares
of Preferred Stock that are not integral multiples of one one-hundredth
of a share of Preferred Stock, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exercised as
herein provided an amount in cash equal to the same fraction of the
current market value of one one-hundredth of a share of Preferred Stock.
For purposes of this Section 14(b), the current market value of one
one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing sale price of a share of Preferred Stock (as determined
pursuant to of Section 11(d)(ii) hereof) for the Trading Day immediately
prior to the date of such exercise.
(c) Following the occurrence of an Acquisition Event, the Company
shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of
one (1) share of Common Stock. For purposes of this Section 14(c), the
current market value of one (1) share of Common Stock shall be the
closing sale price of a share of Common Stock (as determined pursuant to
Section 11(d)(i) hereof) for the Trading Day immediately prior to the
date of such exercise.
(d) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise of a Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agreement under
Section 18 hereof, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock); and any registered holder of any Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), without
the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Common Stock), may in
his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by
such Rights Certificate in the manner provided in such Rights Certificate and
in this Agreement. Without limiting the foregoing or any remedies available to
the holders of Rights, it is specifically acknowledged that the holders of
Rights would not have an adequate remedy at law for any breach of this
Agreement and shall be entitled to specific performance of the obligations
hereunder and injunctive relief against actual or threatened violations of the
obligations hereunder of any Person subject to this Agreement. Holders of
Rights shall be entitled to recover the reasonable costs and expenses,
including attorneys' fees, incurred by them in any action to enforce the
provisions of this Agreement.
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office or offices of the Rights Agent designated for
such purposes, duly endorsed or accompanied by a proper instrument of
transfer; and
(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 Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwith-
standing any notations of ownership or writing on the Rights Certificate
or the associated Common Stock certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Preferred
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a shareholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 25
hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses and counsel
fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising therefrom, directly or
indirectly.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by
it in connection with its administration of this Agreement in reliance
upon any Rights Certificate or certificate for Common Stock or for other
securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons or otherwise upon the
advice of counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or 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
paper or any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section
21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and
in case at that time any of the Rights Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in
this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates
shall not have been countersigned, the Rights Agent may countersign such
Rights Certificates either in its prior name or in its changed name; and
in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.
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 selected by
it (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the
Rights Agent as to any action taken or omitted by it in good faith and
in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "current market price") be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by the
Chairman of the Board, the Chief Executive Officer, the President or any
Executive Vice President or Vice President, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent;
and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in
the Rights Certificates or be required to verify the same (except as to
its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by the
Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except
its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this
Agreement or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Sections 11 or 13 hereof
or responsible for the manner, method or amount of any such adjustment
or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced
by Right Certifications after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common
Stock or Preferred Stock to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any shares of Common Stock or
Preferred Stock will, when so issued, be validly authorized and issued,
fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as
may reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder
from the Chairman of the Board, the Chief Executive Officer, the
President or any Executive Vice President or Vice President, the
Secretary or any Assistant Secretary of the Company, and to apply to
such officers for advice or instructions in connection with its duties,
and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with
or lend money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, or omission,
default, neglect or misconduct of any such attorneys or agents or for
any loss to the Company resulting from any such act, or omission,
default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder or in the
exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.
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 thirty (30) days' notice in writing mailed to the Company, and to each
transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of thirty (30) days after giving
notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the 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) a corporation
organized and doing business under the laws of the United States or of the
States of Minnesota or New York (or of any other state of the United States so
long as such corporation is authorized to do business as a banking institution
in the States of Minnesota or New York), in good standing, having a principal
office in the States of Minnesota or New York, 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 or (b) an Affiliate controlled by a corporation described in
clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as
if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and mail
a notice thereof in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by the Board to reflect any adjustment or change
in the Purchase Price per share and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in
accordance with the provision of this Agreement. In addition, the Company
may, if deemed necessary or appropriate by the Board, issue Rights
Certificates in connection with the sale of shares of Common Stock following
the Distribution Date.
Section 23. Redemption and Termination.
(a) (i) The Board may, at its option, at any time prior to
the close of business on the earlier of (i) the Flip-In Event, or
(ii) the Final Expiration Date, redeem all but not less than all
the then outstanding Rights at a redemption price of $.001 per
Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof
(such redemption price being hereinafter referred to as the
"Redemption Price"). The redemption of the Rights by the Board
may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish.
(ii) In addition, a majority of the Continuing Directors
may redeem all but not less than all of the then outstanding
Rights at the Redemption Price following the occurrence of a Stock
Acquisition Date but prior to any event described in Section 13(a)
either (x) if each of the following shall have occurred and remain
in effect: (1) a Person who is an Acquiring Person shall have
transferred or otherwise disposed of a number of shares of Common
Stock in a manner satisfactory to the Continuing Directors such
that such Person is thereafter a Beneficial Owner of voting
securities having less than fifteen percent (15%) of the voting
power of the Company, and (2) there is no other Person,
immediately following the occurrence of the event described in
clause (1), who is an Acquiring Person, or (y) in connection with
any transaction not involving an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
(b) In the case of a redemption permitted under Section 23(a)(i),
immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent and without any further action and without
any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the
Redemption Price. In the case of a redemption permitted only under
Section 23(a)(ii), evidence of which shall have been filed with the
Rights Agent, the right to exercise the Rights will terminate and
represent only the right to receive the Redemption Price only after ten
(10) business days following the giving of notice of such redemption to
the holders of such Rights. Within ten (10) days after the action of
the Board of Directors or the Continuing Directors, as the case may be,
ordering any such redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to the Rights Agent and
to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent for the Common Stock. Any
notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the
Redemption Price will be made.
Section 24. Exchange.
(a) The Board may, at its option, at any time after the occurrence
of an Acquisition Event, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become
void pursuant to the provisions of Section 11(a)(ii) hereof) for Common
Stock at an exchange ratio of one share of Common Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio
being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board shall not be empowered to effect such exchange
at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Stock for or pursuant to the
terms of any such plan), together with all Affiliates and Associates of
such Person, becomes the Beneficial Owner of fifty (50%) or more of the
voting power of the Company.
(b) Immediately upon the action of the Board ordering the exchange
of any Rights pursuant to paragraph (a) of this Section 24 and without
any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock equal
to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any
such exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of
the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange shall state
the method by which the exchange of the Common Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Rights (other than Rights which have become
void pursuant to the provisions of Section 11(a)(ii) hereof) held by
each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at
its option, may substitute Preferred Stock (or equivalent preferred
stock, as such term is defined in Section 11(b) hereof) for some or all
of the Common Stock exchangeable for Rights, at the initial rate of one
one-hundredth of a share of Preferred Stock (or equivalent preferred
stock) for each share of Common Stock, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Stock pursuant
to the terms thereof, so that the fraction of a share of Preferred Stock
delivered in lieu of each share of Common Stock shall have the same
voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient shares of
Common Stock or Preferred Stock issued but not outstanding or authorized
but unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all such action
as may be necessary to authorize additional Common Stock or Preferred
Stock for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares
of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common
Stock, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole share of Common Stock. For the
purposes of this paragraph (e), the current market value of a whole
share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events. In case the Company shall
propose, at any time after the Distribution Date, (a) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company),
or (b) to offer to the holders of Preferred Stock rights or warrants to
subscribe for or to purchase any additional shares of Preferred Stock or
shares of stock of any class or any other securities, rights or options, or
(c) to effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), or (d) to effect any consolidation or merger into or with,
or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 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) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any such date is
to be fixed, and such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least twenty (20) days prior to the
record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or
the date of participation therein by the holders of the shares of Preferred
Stock whichever shall be the earlier.
In case any of the events set forth in Section 11(a)(ii) of this
Agreement shall occur, then, in any such case, (i) the Company shall as soon
as practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences
of the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Sheldahl, Inc.
1150 Sheldahl Road
Northfield, Minnesota 55057
Attention: Chief Executive 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:
Norwest Bank Minnesota, N.A.
161 N. Concord Exchange
P.O. Box 738
South St. Paul, Minnesota 55075-0738
Attention: 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.
Section 27. Supplements and Amendments. The Board and the Rights
Agent shall from time to time, if the Board so directs, supplement or amend
this Agreement without the approval of any holders of Rights Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) prior to the Distribution Date, to change or
supplement any of the provisions hereunder which the Board may deem necessary
or desirable or (iv) following the Distribution Date, to change or supplement
any of the provisions hereunder in any manner which the Board may deem
necessary or desirable and which shall not adversely affect the interests of
the holders of Rights Certificates (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person); provided, however, that this
Agreement shall not be supplemented or amended in any way following the
Distribution Date unless such amendment is approved by a majority of the
Continuing Directors whose determination shall be final. Upon the delivery of
a certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or amendment unless
the Rights Agent shall have determined in good faith that such supplement or
amendment would adversely affect its interests under this Agreement. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Stock.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent
and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock).
Section 30. Administration of Agreement. The Board (or, as provided
for herein, the Continuing Directors) shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board or the Company or as may be necessary or
advisable in the administration of this Agreement, including without
limitation the right and power to interpret the Agreement and to make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such acts, interpretations and determinations done or made by
the Board in good faith shall be final, conclusive and binding on the Company,
the Rights Agent and the holders of the Rights. Accordingly, the Board and
the Continuing Directors (as the case may be) shall not be liable to the
holders of Rights Certificates or any other party for any determination made,
action taken, or action omitted to be taken pursuant to the terms of this
Agreement, if such determination, action or omitted action was made or taken
in good faith.
Section 31. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 32. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Minnesota and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested as of the day and year first above written.
SHELDAHL
Attest:
By /s/ Gerald E. Magnuson By /s/ James E. Donaghy
Its Secretary Its Chief Executive Officer
NORWEST BANK MINNESOTA, N.A.
Attest:
By /s/ Nancy Roseny By /s/ Barbara M. Novak
Its Assistant Vice President Its Assistant Vice President
<PAGE>
Exhibit A
FORM OF
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
SHELDAHL, INC.
Pursuant to Section 302A.401 of the Minnesota
Business Corporation Law
We, James E. Donaghy, President, and Gerald E. Magnuson, Secretary, of
Sheldahl, Inc., a corporation organized and existing under the Minnesota
Business Corporation Act, in accordance with the provisions of Section
302A.401 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Articles of Incorporation of the said Corporation, the said Board of
Directors on June 16, 1996 adopted the following resolution creating a series
of One Hundred Fifty Thousand (150,000) shares of preferred stock designated
as Series A Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of this Corporation in accordance with the provisions of its
Articles of Incorporation, a series of preferred stock of the Corporation be,
and it hereby is, created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof, are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock," par value $1.00
per share, and the number of shares constituting such series shall be 150,000.
Such number of shares may be increased or decreased by resolution of the Board
of Directors; provided that no decrease shall reduce the number of shares of
Series A Junior Participating Preferred Stock to a number less than that of
the shares then outstanding plus the number of shares issuable upon exercise
of outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
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 now or hereafter ranking prior and
superior to the shares of Series A Junior Participating Preferred Stock with
respect to dividends, the holders of shares of Series A Junior Participating
Preferred Stock, in preference to the holders of shares of Common Stock, par
value $.25 per share (the "Common Stock"), of the Corporation and 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 last 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
Junior Participating Preferred Stock, in an amount per whole share (rounded to
the nearest cent), subject to the provision for adjustment hereinafter set
forth, equal to 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions, other than a dividend payable
in shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Junior Participating Preferred Stock.
In the event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision (by
stock split or otherwise) or combination (by reverse stock split or otherwise)
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the amount to which holders of shares of
Series A Junior Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event
(and rounding the result to the nearest whole number); and provided further
that if at any time after July 8, 1996 the Corporation shall issue any shares
of its capital stock in a reclassification or change of the outstanding shares
of Common Stock (including any such reclassification or change in connection
with a merger in which the Corporation is the surviving corporation), then in
such event the amount to which holders of Series A Junior Participating
Preferred Stock are entitled shall be appropriately adjusted to reflect such
reclassification or change.
(B) The Corporation shall declare a dividend or distribution on the
Series A Junior Participating Preferred Stock as provided in paragraph (A)
above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock).
(C) The holders of shares of Series A Junior Participating Preferred
Stock shall not be entitled to receive any dividends or other distributions
except as provided herein.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Each share of Series A Junior Participating Preferred Stock shall
entitle the holder thereof to one hundred (100) votes, subject to adjustment
in the manner set forth in Section 2(A), on all matters on which holders of
the Common Stock or stockholders generally are entitled to vote.
(B) Except as otherwise provided herein or by applicable law, the
holders of shares of Series A Junior Participating 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) Except as set forth herein or by applicable law, holders of Series A
Junior Participating Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any
corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of Series A
Junior Participating Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the
Series A Junior Participating Preferred Stock and all such parity stock
on which dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock, or any
shares of stock ranking on a parity with the Series A Junior
Participating Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of 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 Junior
Participating 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 or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or
winding up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
Stock unless, prior thereto, the holders of shares of Series A Junior
Participating Preferred Stock shall have received $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 (the "Liquidation
Preference"). Following the payment of the full amount of the Liquidation
Preference, no additional distributions shall be made to the holders of shares
of Series A Junior Participating Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the
Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock dividends
and recapitalization with respect to the Common Stock) (such number in clause
(ii) being herein referred to as the "Adjustment Number"). Following the
payment of the full amount of the Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series A Junior Preferred
Stock and Common Stock, respectively, holders of Series A Junior Participating
Preferred Stock and holders of shares of Common Stock shall proportionately
share in the remaining assets in the ratio of the Adjustment Number (per share
of Preferred Stock) to 1 (per share of Common Stock).
(B) In the event there are not sufficient assets available to permit
payment in full of the Liquidation Preference and the liquidation preferences
of all other series of preferred stock, if any, which rank on a parity with
the Series A Junior Participating Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event there
are not sufficient assets available to permit payment in full of the Common
Adjustment, then such remaining assets shall be distributed ratably to the
holders of Common Stock.
(C) In the event the Corporation shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock 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 Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger etc. In case the Corporation shall
enter into any consolidation, merger combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares
of Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of shares
of Common Stock, then in each such case the amount set forth in the preceding
sentence with respect to the exchange or change of shares of Series A Junior
Participating Preferred Stock shall be adjusted by multiplying such amount by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's preferred stock
which may hereafter be authorized as to the payment of dividends and the
distribution of assets, unless the terms of any such series shall provide
otherwise.
Section 10. Amendment. The Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A Junior
Participating Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of two-thirds (2/3) or more of the outstanding
shares of Series A Junior Participating Preferred Stock, voting separately as
a class.
Section 11. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in liquidating distributions and to have the
benefit of all other rights of holders of Series A Junior Participating
Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this ____ day of
June, 1996.
Attest:
/s/ Gerald E. Magnuson /s/ James E. Donaghy, President
<PAGE>
Exhibit B
[Form of Rights Certificate]
Certificate No. R-
Rights
NOT EXERCISABLE AFTER June 16, 2006, OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT REFERRED TO HEREIN. UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]
<PAGE>
RIGHTS CERTIFICATE
SHELDAHL, INC.
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 June 16, 1996 (the "Rights Agreement"),
between Sheldahl, Inc., a Minnesota corporation (the "Company"), and Norwest
Bank Minnesota, N.A. (the "Rights Agent"), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Minneapolis, Minnesota time) on June 16,
2006 at the office or offices of the Rights Agent designated for such purpose,
or its successors as Rights Agent, one one-hundredth of a fully paid,
non-assessable share of Series A Junior Participating Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of One Hundred Seventy
and No/100 Dollars ($170.00) per one one-hundredth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Exercise duly executed. The number of Rights evidenced by
this Rights Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share set forth
above, are the number and Purchase Price as of June 16, 1996, based on the
Preferred Stock as constituted at such date.
If the Rights evidenced by this Rights Certificate are beneficially
owned by (i) an Acquiring Person or an Affiliate or Associate of any such
Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person or Associate or Affiliate of such
Acquiring Person except as provided in Section 4(b) of the Rights Agreement,
or (iii) under certain circumstances, a transferee of persons who became an
Acquiring Person or Affiliate or Associate of such Acquiring Person following
such transfer, such Rights shall become null and void upon the occurrence of a
Flip-In Event described in Section 11(a)(ii) of the Rights Agreement and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred Stock or other securities which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain
events.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under certain circumstances specified in such
Rights Agreement. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent and are also available upon written
request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Preferred Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered shall
have entitled such holder to purchase. If this Rights Certificate shall be
exercised (other than pursuant to Section 11(a)(ii) of the Rights Agreement)
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. If this Rights Certificate shall be exercised in whole or in part
pursuant to Section 11(a)(ii) of the Rights Agreement, the holder shall be
entitled to receive this Rights Certificate duly marked to indicate that such
exercise has occurred as set forth in the Rights Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a
redemption price of $.001 per Right.
No fractional shares of Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting shareholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by this
Rights Certificate shall have been exercised as provided in the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated:
ATTEST: SHELDAHL, INC.
______________________ By_____________________________
Title: Title:
Countersigned:
NORWEST BANK MINNESOTA, N.A.
By_____________________
Authorized Signature
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED ____________________________________ hereby sells,
assigns and transfers unto
_____________________________________________________
___________________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) this Rights Certificate
[ ] is
or
[ ] is not
being sold, assigned and transferred by or on behalf of a Person who is or was
an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as
such terms are defined in the Rights Agreement); and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Rights Certificate from any person who
is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _________________
_______________________________
Signature
Signature Medallion Guaranteed:
NOTICE
The signature to the foregoing 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.
<PAGE>
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to
exercise Rights represented by the
Rights Certificate.)
To: Sheldahl, Inc.:
The undersigned hereby irrevocably elects to exercise ____________
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon
the exercise of the Rights) and requests that certificates for such shares be
issued in the name of:
(Please print name and address)
(Please insert social security
or other identifying number)
The Rights Certificate indicating the balance, if any, of such Rights
which may still be exercised pursuant to Section 11(a)(ii) of the Rights
Agreement shall be returned to the undersigned unless such person requests
that the Rights Certificate be registered in the name of and delivered to:
(complete only if Rights Certificate is to be registered in a name other than
the undersigned)
(Please print name and address)
(Please insert social security
or other identifying number)
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate
[ ] are
or
[ ] 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); and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Rights evidenced by this Rights Certificate from any person who
is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _________________
________________________________
Signature
Signature Medallion Guaranteed:
NOTICE
The signature to the foregoing Election to Exercise 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.
<PAGE>
EXHIBIT C
SUMMARY OF SHAREHOLDER RIGHTS PLAN
On June 16, 1996 the Board of Directors of Sheldahl, Inc.(the "Company")
adopted a shareholder rights plan by declaring a dividend of one Right for
each outstanding share of the Company's Common Stock, par value $.25 per share
(the "Common Stock"), to the Company's shareholders of record at the close of
business on July 8, 1996 (the "Record Date"). Except as set forth below, each
Right entitles the registered holder to purchase from the Company one
one-hundredth (1/100) of a share of Series A Junior Participating Preferred
Stock, par value $1.00 per share (the "Preferred Stock"), at a price of $170
per one one-hundredth of a share (the "Purchase Price"). The terms of the
Rights are set forth in a Rights Agreement dated as of June 16, 1996 (the
"Rights Agreement") between the Company and Norwest Bank Minnesota, N.A., as
Rights Agent.
Initially, the Rights will be attached implicitly to all Common Stock
certificates representing shares then outstanding, and no separate Right
certificates will be distributed. Until the earlier to occur of ten days
following (i) a public announcement that, without the prior consent of the
Board of Directors, a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire, beneficial
ownership of voting securities having 15% or more of the voting power of the
Company (the "Stock Acquisition Date"), or (ii) the commencement of (or a
public announcement of an intention to make) a tender offer or exchange offer
which would result in any person or group and related persons having
beneficial ownership of voting securities having 15% or more of the voting
power of the Company (the earlier of such dates referred to in (i) and (ii)
above being called the "Distribution Date"), the Rights will be evidenced,
with respect to any of the Common Stock certificates outstanding as of the
Record Date, by such Common Stock certificates.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with Common Stock certificates. From
as soon as practicable after the Record Date and until the Distribution Date
(or earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date upon transfer or new issuance of the
Common Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration
of the Rights), the surrender for transfer of any certificates for Common
Stock outstanding as of the Record Date will also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of the Common Stock as of the close of business on the Distribution
Date, and the separate Rights Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on June 16, 2006, unless earlier redeemed by the Company as
described below.
In the event that any person becomes the beneficial owner of 15% or more
of the voting power of the Company, ten (10) days thereafter (the "Flip-In
Event") each holder of a Right will thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price of the Right, Common Stock
(or, in certain circumstances, a combination of cash, other property, Common
Stock or other securities) which has a value of two times the Purchase Price
of the Right (such right being called the "Flip-In Right"). In the event that
the Company is acquired in a merger or other business combination transaction
where the Company is not the surviving corporation or in the event that 50% or
more of its assets or earning power is sold, proper provision shall be made so
that each holder of a Right will thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price of the Right, common
stock of the acquiring entity which has a value of two times the Purchase
Price of the Right (such right being called the "Flip-Over Right"). The
holder of a Right will continue to have the Flip-Over Right whether or not
such holder exercises the Flip-In Right. Upon the occurrence of the Flip-In
Event, any Rights that are or were at any time owned by an Acquiring Person
shall become null and void insofar as they relate to the Flip-In Right.
For example, at a Purchase Price of $170 per Right, if any person
becomes the beneficial owner of 15% or more of the voting power of the
Company, ten (10) days thereafter each Right other than a Right owned by such
15% beneficial owner would entitle its holder to purchase $340 worth of the
Company's Common Stock (or other consideration, as noted above) for $170.
Assuming that the Common Stock had a per share value of $20 at such time, the
holder of each Right would effectively be entitled to purchase 17 shares of
Common Stock for $170.
Similarly, assuming, following the Stock Acquisition Date, the
occurrence of a business combination with another entity in which the
Company's Common Stock is converted or exchanged, or a sale of 50% or more of
the Company's assets or earning power, each Right would entitle its holder to
purchase $340 worth of the acquiring entity's stock for $170.
The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event
of a stock dividend on, or a subdivision, combination or reclassification of
the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15% or more of the voting power
of the Company and prior to the acquisition by such person or group of 50% or
more of the voting power of the Company, the Board of Directors of the Company
may exchange the Rights (other than Rights owned by such person or group which
have become void), in whole or in part, at an exchange ratio of one share of
Common Stock, or one one-hundredth of a share of Preferred Stock (or of a
share of a class or series of the Company's preferred stock having equivalent
rights, preferences and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractions of shares will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Stock on the last trading date prior to the date of exercise.
At any time prior to the earlier to occur of (i) the tenth day after the
Stock Acquisition Date, or (ii) the expiration of the Rights, the Company may
redeem the Rights in whole, but not in part, at a price of $.001 per Right
(the "Redemption Price"), which redemption shall be effective at such time as
the Board of Directors shall establish. Additionally, the Continuing
Directors may, following the Stock Acquisition Date, redeem the then
outstanding Rights in whole, but not in part, at the Redemption Price provided
that either (a) the Acquiring Person reduces his beneficial ownership to less
than 15% of the voting power of the Company in a manner which is satisfactory
to the Continuing Directors and there are no other Acquiring Persons, or (b)
such redemption is incidental to a merger or other business combination
transaction or series of transactions involving the Company but not involving
an Acquiring Person or any person who was an Acquiring Person. The redemption
of Rights described in the preceding sentence shall be effective only after
ten (10) business days prior notice. Upon the effective date of the
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption
Price.
The Preferred Stock purchasable upon exercise of the Rights will be
nonredeemable. Each share of Preferred Stock will have a preferential
quarterly dividend in an amount equal to 100 times the dividend declared on
each share of Common Stock. In the event of liquidation, the holders of
Preferred Stock will receive a preferred liquidation payment of $100 per whole
share of Preferred Stock. Each whole share of Preferred Stock will have 100
votes, voting together with the Common Stock. In the event of any merger,
consolidation or other transaction in which Common Stock are exchanged, each
share of Preferred Stock will be entitled to receive 100 times the amount and
type of consideration received per share of Common Stock. The rights of the
Preferred Stock as to dividends and liquidations, and in the event of mergers
and consolidations, are protected by customary anti-dilution provisions.
Fractional shares of Preferred Stock in integral multiples of one
one-hundredth of a share of Preferred Stock will be issued unless the Company
elects to distribute depositary receipts in lieu of such fractional shares.
In lieu of fractional shares other than fractions that are multiples of one
one-hundredth of a share, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise.
Until a Right is exercised, it will not entitle the holder to any rights
as a shareholder of the Company (other than those as an existing shareholder),
including, without limitation, the right to vote or to receive dividends.
The terms of the Rights may be amended by the Board of Directors of the
Company (i) prior to the Distribution Date in any manner, and (ii) on or after
the Distribution Date to cure any ambiguity, to correct or supplement any
provision of the Rights Agreement which may be defective or inconsistent with
any other provisions, or in any manner not adversely affecting the interests
of the holders of the Rights.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. 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.
<PAGE>
