SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 6, 1997
LIBERTY TECHNOLOGIES, INC.
(Exact name of issuer as specified in charter)
Pennsylvania 0-21274 23-2295708
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation or file Identification
Organization) number) Number)
555 North Lane, Lee Park
Conshohocken, Pennsylvania 19428
(Address of principal executive offices)
(610) 834-0330
(Registrant's telephone number, including area code)
Page 1 of 57
Exhibit Index Appears on Page 8
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Items 1-4. Not Applicable
Item 5. Other Events.
On May 1, 1996, the Board of Directors of Liberty Technologies, Inc., a
Pennsylvania corporation (the "Company"), declared a distribution of one Right
(as defined below) for each outstanding share of Common Stock, par value $.01
per share (the "Company Common Stock"), to stockholders of record at the close
of business on May 17, 1996 (the "Record Date") and for each share of Company
Common Stock issued (including shares distributed from Treasury) by the Company
thereafter and prior to the Distribution Date. Each Right entitles the
registered holder, subject to the terms of the Rights Agreement dated as of May
1, 1996 with StockTrans, Inc., as Rights Agent (the "Rights Agreement") to
purchase from the Company one one-thousandth of a share (a "Unit") of Series A
Preferred Stock, par value $.001 per share (the "Preferred Stock"), at a
Purchase Price of $48.00 per Unit, subject to adjustment (the "Right"). The
Purchase Price is payable in cash or by certified or bank check or money order
payable to the order of the Company.
On October 6, 1997, the Company amended and restated the Rights Agreement
(the "Amended and Restated Rights Agreement"). The Amended and Restated Rights
Agreement exempts from its definition of Acquiring Person (as defined below) any
person that acquires, obtains the right to acquire, or otherwise obtains
beneficial ownership of 15% or more of the then outstanding shares of Company
Common Stock without any intention of changing or influencing control of the
Company provided that such person, as promptly as practicable, divests himself
or itself of a sufficient number of shares of Common Stock so that such person
would no longer own 15% or more of the outstanding shares of Company Common
Stock. The Amended and Restated Rights Agreement also designates L. Mark Newman,
Larry D. Hornbeck, Don V. Ingram, Stephen F. Smith, Stephen A. Wells, Walter
Epstein, Energy Consolidation, Inc., Atalanta Investment Company and Atalanta
Selective Fund Number Six, Limited Partnership as Exempt Persons, so long as
those parties and their affiliates and associates are in compliance with the
Standstill Agreement between the Company and certain of the aforementioned
individuals and entities dated August 18, 1997. In addition, the Amended and
Restated Rights Agreement makes certain minor changes, corrects certain errors,
and provides the independent directors of the Company with some discretion in
determining when the Distribution Date (as defined below) shall occur and the
date until which the Rights may be redeemed. The description and terms of the
Rights are set forth in an Amended and Restated Rights Agreement.
Copies of the Amended and Restated Rights Agreement and the Designation are
available free of charge from the Company. This summary description of the
Amended and Restated Rights Agreement, the Rights and the Preferred Stock does
not purport to be complete and is qualified in its entirety by reference to all
the provisions of the Amended and Restated Rights Agreement and the Designation,
including the definitions therein of certain terms, which Amended and Restated
Rights Agreement and Designation are incorporated herein by reference.
The Amended and Restated Rights Agreement
Pursuant to the terms of the Amended and Restated Rights Agreement, the
Rights initially will attach to all certificates representing shares of
outstanding Company Common Stock, and no
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separate Rights Certificates will be distributed. The Rights will separate from
the Company Common Stock and the "Distribution Date" will occur (i) upon the
earlier of (x) 10 business days following a public announcement (the date of
such announcement being the "Stock Acquisition Date") that a person or group of
affiliated or associated persons (other than the Company, any subsidiary of the
Company or any employee benefit plan of the Company or such subsidiary) (an
"Acquiring Person") has acquired, obtained the right to acquire, or otherwise
obtained beneficial ownership of 15% or more of the then outstanding shares of
Company Common Stock, and (y) 10 business days following the commencement of a
tender offer or exchange offer that would result in an Acquiring Person owning
15% or more of the then outstanding shares of Company Common Stock, or (ii) such
later date as may be determined by action of a majority of the independent
members of the Board of Directors (such determination to be made prior to such
time as any person becomes an Acquiring Person pursuant to (x) or (y) above). As
noted above, the Amended and Restated Rights Agreement exempts from its
definition of Acquiring Person any person that acquires, obtains the right to
acquire, or otherwise obtains beneficial ownership of 15% or more of the then
outstanding shares of Company Common Stock without any intention of changing or
influencing control of the Company provided that such person, as promptly as
practicable, divests himself or itself of a sufficient number of shares of
Common Stock so that such person would no longer own 15% or more of the
outstanding shares of Company Common Stock. Until the Distribution Date, (i) the
Rights will be evidenced by Company Common Stock certificates and will be
transferred with and only with such Company Common Stock certificates, (ii) new
Company Common Stock certificates issued after the Record Date (also including
shares distributed from Treasury) will contain a notation incorporating the
Amended and Restated Rights Agreement by reference and (iii) the surrender for
transfer of any certificates representing outstanding Company Common Stock will
also constitute the transfer of the Rights associated with the Company Common
Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on the tenth anniversary of the Rights Agreement unless
earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Company Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a Person becomes the beneficial owner of 15% or more of the
then outstanding shares of Company Common Stock, (iii) an Acquiring Person
engages in one or more "self-dealing" transactions as set forth in the Amended
and Restated Rights Agreement, or (iv) during such time as there is an Acquiring
Person, an event occurs which results in such Acquiring Person's ownership
interest being increased by more than 1% (e.g., by means of a reverse stock
split or recapitalization), then, in each such case, each holder of a Right will
thereafter have the right to receive, upon exercise, Units of Preferred Stock
(or, in certain circumstances, Company Common Stock, cash, property or other
securities of the Company) having a current market value equal to two times the
exercise price of the Right. The exercise price is the Purchase Price multiplied
by the number of Units of Preferred Stock issuable
Page 3 of 69
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upon exercise of a Right prior to the events described in this paragraph.
Notwithstanding any of the foregoing, following the occurrence of any of the
events set forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Amended and Restated Rights Agreement) were,
beneficially owned by any Acquiring Person will be null and void.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction
and the Company is not the surviving corporation (other than a merger described
in the preceding paragraph), (ii) any Person consolidates or merges with the
Company and all or part of the Company Common Stock is converted or exchanged
for securities, cash or property of any other Person or (iii) 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as described above) shall
thereafter have the right to receive, upon exercise, common stock of the
Acquiring Person having a current market value equal to two times the exercise
price of the Right.
In light of the fact that certain stockholders of the Company currently own
in excess of 15% of the outstanding Company Common Stock, the Amended and
Restated Rights Agreement exempts those stockholders from triggering the
distribution of the Rights ("Exempt Persons") unless they, individually or
together with their affiliates or associates, increase their beneficial
ownership of outstanding Company Common Stock by more than 5% of the then
outstanding shares of Company Common Stock. These stockholders consist of Edison
Venture Fund, L.P., and their affiliates and associates. The Amended and
Restated Rights Agreement also designates L. Mark Newman, Larry D. Hornbeck, Don
V. Ingram, Stephen F. Smith, Stephen A. Wells, Walter Epstein, Energy
Consolidation, Inc., Atalanta Investment Company and Atalanta Selective Fund
Number Six, Limited Partnership as Exempt Persons, so long as those parties and
their affiliates and associates are in compliance with the Standstill Agreement
between the Company and certain of the aforementioned individuals and entities
dated August 18, 1997.
The Purchase Price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.
At any time until (i) ten business days following the Stock Acquisition
Date or (ii) such later date as a majority of the independent members of the
Board of Directors shall determine (such determination to be made prior to the
date specified in (i) above), a majority of the Independent
Page 4 of 69
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Directors may redeem the Rights in whole, but not in part, at a price of $.001
per Right (subject to adjustment in certain events) (the "Redemption Price"),
payable, at the election of such majority of the Independent Directors, in cash
or shares of Company Common Stock. Immediately upon the action of a majority of
the Independent Directors ordering the redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock (or other consideration).
Any of the provisions of the Amended and Restated Rights Agreement may be
amended without the approval of the holders of Company Common Stock at any time
prior to the Distribution Date. After the Distribution Date, the provisions of
the Amended and Restated Rights Agreement may be amended in order to cure any
ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Amended
and Restated Rights Agreement; provided, however, that no amendment to adjust
the time period governing redemption shall be made at such time as the Rights
are not redeemable.
The Preferred Stock
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company.
Each Unit of Preferred Stock will be entitled to dividends at the same rate
per share as dividends declared on the Company Common Stock and shall be
entitled to payment of dividends to the extent dividends are declared on the
Company Common Stock. In the event of liquidation, the holder of a Unit of
Preferred Stock will receive the per share amount paid in respect of a share of
Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock. Each Unit of Preferred Stock will have one vote, voting
together with the Company Common Stock. The rights of holders of the Preferred
Stock to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of the Company Common Stock.
Item 6. Not Applicable.
Page 5 of 69
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Item 7. Exhibits.
4.1 Amended and Restated Rights Agreement, dated as of October 6,
1997, between Liberty Technologies, Inc. and StockTrans, Inc.,
including Form of Series A Rights Certificate (as amended)
(Exhibit A), Form of Designation (Exhibit B), and Form of Summary
of Rights (as amended) (Exhibit C).
Item 8. Not Applicable.
Page 6 of 69
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LIBERTY TECHNOLOGIES, INC.
Date: October 6, 1997 By: /s/ R.Nim Evatt
----------------
R. Nim Evatt
President and Chief Executive Officer
Page 7 of 69
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EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
--- ----------- --------
4.1 Amended and Restated Rights Agreement, dated as of 9
October 6, 1997, between Liberty Technologies,
Inc. and StockTrans, Inc., including Form of
Series A Rights Certificate (as amended) (Exhibit
A), Form of Designation (Exhibit B), and Form of
Summary of Rights (as amended) (Exhibit C).
Page 8 of 69
Exhibit 4.1
LIBERTY TECHNOLOGIES, INC.
and
STOCKTRANS, INC.,
Rights Agent
--------------
Amended and Restated Rights Agreement
Dated as of October 6, 1997
Page 9 of 69
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TABLE OF CONTENTS
<TABLE>
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SECTION 1. Certain Definitions...................................................................................................1
SECTION 2. Appointment of Rights Agent...........................................................................................6
SECTION 3. Issue of Rights Certificates..........................................................................................6
SECTION 4. Form of Rights Certificates...........................................................................................8
SECTION 5. Countersignature and Registration.....................................................................................9
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights Certificates: Mutilated,
Destroyed, Lost or Stolen Rights Certificates.......................................................................9
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of Rights........................................................10
SECTION 8. Cancellation and Destruction of Rights Certificates..................................................................12
SECTION 9. Reservation and Availability of Capital Stock........................................................................12
SECTION 10. Preferred Stock Record Date.........................................................................................13
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights..................................................................................................14
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares..........................................................22
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................................................22
SECTION 14. Fractional Rights and Fractional Shares.............................................................................25
SECTION 15. Rights of Action....................................................................................................26
SECTION 16. Agreement of Rights Holders.........................................................................................26
SECTION 17. Rights Certificate Holder Not Deemed a Shareholder..................................................................27
SECTION 18. Concerning the Rights Agent.........................................................................................27
</TABLE>
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SECTION 19. Merger or Consolidation or Change of Name of Rights Agent...........................................................28
SECTION 20. Duties of Rights Agent..............................................................................................28
SECTION 21. Change of Rights Agent..............................................................................................31
SECTION 22. Issuance of New Rights Certificates.................................................................................32
SECTION 23. Redemption and Termination..........................................................................................32
SECTION 24. Notice of Certain Events............................................................................................33
SECTION 25. Notices.............................................................................................................33
SECTION 26. Supplements and Amendments..........................................................................................34
SECTION 27. Successors..........................................................................................................35
SECTION 28. Determinations and Actions by the Board of Directors, etc...........................................................35
SECTION 29. Benefits of this Agreement..........................................................................................35
SECTION 30. Severability........................................................................................................35
SECTION 31. Governing Law.......................................................................................................36
SECTION 32. Counterparts........................................................................................................36
SECTION 33. Descriptive Headings................................................................................................36
SECTION 34. Exchange............................................................................................................36
</TABLE>
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AMENDED AND RESTATED RIGHTS AGREEMENT
AMENDED AND RESTATED RIGHTS AGREEMENT dated as of October 6, 1997 (the
"Agreement"), between LIBERTY TECHNOLOGIES, INC., a Pennsylvania corporation
(the "Company") and STOCKTRANS, INC. (the "Rights Agent").
WHEREAS, effective May 1, 1996 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a distribution of
one right for each share of common stock, par value $.01 per share, of the
Company (the "Company Common Stock") outstanding at the Close of Business (as
hereinafter defined) on May 17, 1996 (the "Record Date"), and has authorized the
issuance of one right (as such number may hereinafter be adjusted pursuant
hereto) for each share of Company Common Stock issued between the Record Date
(whether originally issued or delivered from the Company's treasury) and, except
as otherwise provided in Section 22, the Distribution Date (as hereinafter
defined), each right issued in respect of a share of Company Common Stock
("Right") initially representing the right to purchase, upon the terms and
subject to the conditions hereinafter set forth, one Unit of Series A Junior
Participating Preferred Stock;
WHEREAS, the Company desires to amend the Agreement to, among other things,
provide provisions relating to an inadvertent triggering of the impact of the
Rights and to exempt certain individuals and entities from triggering a
distribution of the Rights, and to restate the Agreement, as thereby amended, in
its entirety;
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" means any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity) that shall be the Beneficial Owner of
15% or more of the shares of Common Stock then outstanding; provided,
however, that the term "Acquiring Person" shall not include an Exempt
Person. Notwithstanding the foregoing, if a majority of the Independent
Directors determines in good faith that a Person who would otherwise be an
Acquiring Person has become such inadvertently (including, without
limitation, because (A) such person was unaware that he or its is the
Beneficial Owner of a percentage of Common Stock that would otherwise cause
such Person to be an Acquiring Person, or (B) such Person was aware of the
percentage of securities of which he or it was the Beneficial Owner but had
no actual knowledge of the consequences of being the Beneficial Owner of
such percentage under this Agreement) and without any intention of changing
or influencing control of the Company, and if such Person, as promptly as
practicable
Page 12 of 69
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after being advised of such determination, divests himself or itself of a
sufficient number of shares of Common Stock so that such Person would no
longer be the Beneficial Owner of that percentage of securities which would
otherwise result in him or it being an Acquiring Person, then such Person
shall not be deemed to be or to have become an Acquiring Person for any
purposes of this Agreement.
(b) "Affiliate" and "Associate" 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 hereof.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3
of the General Rules and Regulations under the Exchange Act (the
"Exchange Act Regulations") as in effect on the date hereof; provided,
however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own", any securities under this subparagraph (i)
as a result of an agreement, arrangement or understanding to vote such
securities if such agreement, arrangement or understanding (A) arises
solely from a revocable proxy given in response to a proxy or consent
solicitation made pursuant to, and in accordance with, the applicable
provisions of the Exchange Act and the Exchange Act Regulations, and
(B) is not reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report);
(ii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such other Person) with
which such Person (or any of such Person's Affiliates or Associates)
has any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (i) of this paragraph (c) of Section 1) or disposing of
such securities; or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of
time or upon the satisfaction of conditions) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or
upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that under this
paragraph (c) a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own", (A) securities tendered pursuant to a tender
or exchange offer made in accordance with Exchange Act Regulations by
such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange, (B)
securities that may be issued upon exercise of Rights at any time
prior to the occurrence of a Triggering Event, or (C) securities that
may be issued upon exercise of Rights from and after the occurrence of
a
Page 13 of 69
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Triggering Event, which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(c) or Section 22 (the "Original Rights") or
pursuant to Section 11(i) in connection with an adjustment made with
respect to any Original Rights.
Notwithstanding the foregoing, an employee, officer or director of the
Company shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," any securities which such Person has the right to acquire from the
Company (whether such right is exercisable immediately or only after the
passage of time or upon the satisfaction of conditions) pursuant to any
stock option plan or other employee benefit plan (the "Underlying
Securities"; the right to acquire the Underlying Securities shall
hereinafter be referred to as a "Company Option"); provided that such
Person has no intention of changing or influencing control of the Company
at the time of the acquisition of the Company Option or at any time during
which such Person has the right to exercise the Company Option; provided,
further, that if, notwithstanding the foregoing proviso, a Person would be
deemed to be an "Acquiring Person" and such Person thereafter becomes the
beneficial owner of one or more additional shares of Company Common Stock
other than pursuant to the exercise of a Company Option, such Person will
immediately and thereafter be deemed the "Beneficial Owner" of, and to
"beneficially own," the Underlying Securities under all Company Options
owned by such Person. An employee, officer, or director of the Company
exercising a Company Option shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," the Underlying Securities; provided that such
Person has no intention of changing or influencing control of the Company
at the time of the acquisition of the Underlying Securities; provided,
further, that if, notwithstanding the foregoing proviso, a Person would be
deemed to be an "Acquiring Person" and such Person thereafter becomes the
beneficial owner of one or more additional shares of Company Common Stock
other than pursuant to the exercise of a Company Option, such Person will
immediately and thereafter be deemed the "Beneficial Owner" of, and to
"beneficially own," the Underlying Securities. Any Person other than an
employee, officer or director of the Company (including a former employee,
officer or director of the Company) exercising a Company Option will not be
deemed the "Beneficial Owner" of, or to "beneficially own," the Underlying
Securities; provided that such Person has no intention of changing or
influencing control of the Company at the time of the acquisition of the
Underlying Securities; and provided, further, that such Person acquires
such Underlying Securities with the intention of effecting their resale
(within five (5) days of so acquiring them) to a Person other than an
Affiliate or an Associate of such Person or to another Person which would
be an Acquiring Person (or an Affiliate or an Associate thereof), and such
Person actually disposes of such Underlying Securities within such five-day
period.
(d) "Business Day" means any day other than a Saturday, Sunday or a
day on which banking institutions in New York City are authorized or
obligated by law or executive order to be closed.
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(e) "Close of Business" on any given date means 5:00 P.M., New York
City time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(f) "Common Stock" of any Person other than the Company means the
capital stock of such Person with the greatest voting power, or, if such
Person shall have no capital stock, the equity securities or other equity
interest having power to control or direct the management of such Person.
(g) "Company Common Stock" has the meaning set forth in the Recital.
(h) "Company Option" has the meaning set forth in Section 1(c).
(i) "Distribution Date" has the meaning set forth in Section 3(a).
(j) "Exempt Person" means:
(i) the Company, any Subsidiary of the Company, any employee
benefit plan or employee stock plan of the Company or of any
Subsidiary of the Company, or any person or entity organized,
appointed, established or holding Company Common Stock for or pursuant
to the terms of any such plan;
(ii) any member of a Fifteen Percent Group; provided, however,
that a Fifteen Percent Group shall immediately and thereafter cease to
be an Exempt Person if such group at any time shall acquire additional
shares resulting in an increase in its aggregate beneficial ownership
of Company Common Stock from time to time outstanding by more than 5%
of the then outstanding shares of Common Stock; and
(iii) any Person who would otherwise become an Acquiring Person
solely by virtue of a reduction in the number of outstanding shares of
Company Common Stock; provided, however, that such Person shall not be
an Exempt Person if, subsequent to such reduction, such Person shall
become the Beneficial Owner of any additional shares of Company Common
Stock; and
(iv) L. Mark Newman, Larry D. Hornbeck, Don V. Ingram, Stephen F.
Smith, Stephen A. Wells, Walter Epstein, Energy Consolidation, Inc.,
Atalanta Investment Company and Atalanta Selective Fund Number Six,
Limited Partnership (the "Standstill Persons"); provided, however,
that if any of the Standstill Persons, or any of their Affiliates or
Associates, violates the terms of that certain Standstill Agreement
dated August 18, 1997 (the "Standstill Agreement") among the Company
and certain of the Standstill Persons, then all of the Standstill
Persons shall immediately and thereafter cease to be Exempt Persons.
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(k) "Expiration Date" has the meaning set forth in Section 7(a).
(l) "Fifteen Percent Group" means (i) any Person who, as of the close
of business on the Record Date, is the beneficial owner of more than 15% of
the outstanding Company Common Stock or (ii) any Affiliate or Associate of
any such Person described in clause (i).
(m) "Independent Director" means a member of the Board of Directors of
the Company who is not an officer or employee of the Company, 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 who either (i) was a member of the Board of Directors of
the Company prior to the date hereof or (ii) subsequently became a director
of the Company and whose election or nomination for election is approved or
recommended by a vote of a majority of the Board of Directors of the
Company, which majority includes a majority of the Independent Directors
then on the Board of Directors.
(n) "Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as
any syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act.
(o) "Preferred Stock" the Series A Junior Participating Preferred
Stock, par value $.001 per share, of the Company having the voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions described
in the Designation set forth as Exhibit B.
(p) "Purchase Price" has the meaning set forth in Section 7(b).
(q) "Record Date" has the meaning set forth in the Recital.
(r) "Right" has the meaning set forth in the Recital.
(s) "Rights Certificate" has the meaning set forth in Section 3(a).
(t) "Rights Dividend Declaration Date" has the meaning set forth in
the Recital.
(u) "Section 11(a)(ii) Event" means any event described in Section
11(a)(ii)(A), (B) or (C).
(v) "Section 13 Event" means any event described in clause (x), (y) or
(z) of Section 13(a).
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(w) "Standstill Agreement" has the meaning set forth in Section 1(j).
(x) "Standstill Parties" has the meaning set forth in Section 1(j).
(y) "Stock Acquisition Date" means the first date of public
announcement (including, without limitation, the filing of any report
pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.
(z) "Subsidiary" means, with reference to any Person, any other Person
of which an amount of voting securities or equity interests sufficient to
elect at least a majority of the directors or equivalent governing body of
such other Person is beneficially owned, directly or indirectly, by such
Person, or otherwise controlled by such first-mentioned Person.
(aa) "Summary of Rights" has the meaning set forth in Section 3(b).
(bb) "Triggering Event" means any Section 11(a)(ii) Event or any
Section 13 Event.
(cc) "Underlying Securities" has the meaning set forth in Section
1(c).
(dd) "Unit" has the meaning set forth in Section 7(b).
SECTION 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. With
the consent of the Rights Agent, the Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
SECTION 3. Issue of Rights Certificates.
(a) Until (i) the earlier of the Close of Business on the tenth Business
Day after the Stock Acquisition Date, and the Close of Business on the tenth
Business Day after the date that a tender or exchange offer by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan
maintained by the Company or any of its Subsidiaries or any trustee or fiduciary
with respect to such plan acting in such capacity) is first published or sent or
given within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or any
successor rule, if upon consummation thereof such Person would be the Beneficial
Owner of 15% or more of the shares of Company Common Stock then outstanding, or
(ii) such later date as may be determined by action of a majority of the
Independent Directors (such determination to be made prior to either of the
dates specified in (i) above) and of which the Company will give the Rights
Agent prompt written notice (such date as determined pursuant to either (i) or
(ii) above being the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions
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of paragraph (b) of this Section 3) by the certificates for shares of Company
Common Stock registered in the names of the holders of shares of Company Common
Stock as of and subsequent to the Record Date (which certificates for shares of
Company Common Stock shall be deemed also to be certificates for Rights) and not
by separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Company Common Stock
(including a transfer to the Company). As soon as practicable after the
Distribution Date, the Rights Agent will send by first-class, insured, postage
prepaid mail, to each record holder of shares of Company 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 A (the "Rights Certificates"), evidencing one Right for each
share of Company Common Stock so held, subject to adjustment as provided herein.
In the event that an adjustment in the number of Rights per share of Company
Common Stock has been made pursuant to Section 11(p), at the time of
distribution of the Rights Certificates, the Company may make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As promptly as practicable following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Preferred Stock, in a form which
may be appended to certificates that evidence shares of Company Common Stock; in
substantially the form attached hereto as Exhibit C (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of shares of Company
Common Stock as of the Close of Business on the Record Date, at the address of
such holder shown on the records of the Company.
(c) Rights shall, without any further action, be issued in respect of all
shares of Company Common Stock that are issued (including any shares of Company
Common Stock held in treasury) after the Record Date (but prior to the earlier
of the Distribution Date and the Expiration Date), and certificates evidencing
such shares of Company Common Stock issued after the Record Date 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 Liberty Technologies, Inc. (the "Company")
and StockTrans, Inc. (the "Rights Agent") originally dated
as of May 1, 1996, and as amended to date the "Rights
Agreement), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the
principal office of the stock transfer administration office
of the Rights Agent. Under certain circumstances; as set
forth in the Rights Agreement, such Rights will be evidenced
by separate
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certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt
of a written request therefor. Under certain circumstances
set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person or
any Affiliate or Associate thereof (as such terms are
defined in the Rights Agreement), whether currently held by
or on behalf of such Person or by any subsequent holder, may
become null and void."
With respect to certificates evidencing shares of Company Common Stock (whether
or not such certificates include the foregoing legend or have appended to them
the Summary of Rights), until the earlier of the Distribution Date and the
Expiration Date, the Rights associated with the shares of Company Common Stock
evidenced by such certificates shall be evidenced by such certificates alone and
registered holders of the shares of Company Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock evidenced by such certificates.
SECTION 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase,
assignment and certificate to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or any rule or regulation thereunder 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, 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 Units of Preferred Stock as shall be set forth therein at the
price set forth therein, but the amount and type of securities, cash or other
assets that may be acquired upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that represents Rights
beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and that receives such Rights pursuant to
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either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or such Associate or Affiliate) or to any Person with
whom such Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding either the transferred Rights,
shares of Company Common Stock or the Company or (B) a transfer that a majority
of the Independent Directors has determined to be part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of Section
7(e) shall, upon the written direction of a majority of the Independent
Directors, contain (to the extent feasible) the following legend:
"The Rights represented by this Rights Certificate are
or were beneficially owned by a Person who was or became
an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement."
SECTION 5. Countersignature and Registration.
(a) Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, the President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates bearing the manual
or facsimile signatures of the individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
countersignature of such Rights Certificates or did not hold such offices at the
date of such Rights Certificates. No Rights Certificate shall be entitled to any
benefit under this Agreement or be valid for any purpose unless there appears on
such Rights Certificate a countersignature duly executed by the Rights Agent by
manual signature of an authorized signatory, and such countersignature upon any
Rights Certificate shall be conclusive evidence, and the only evidence, that
such Rights Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its office designated for surrender of Rights Certificates upon
exercise or transfer, books for registration and registration of transfer of the
Rights Certificates issued hereunder. Such books shall show the name and address
of each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates: Mutilated, Destroyed, Lost or Stolen Rights Certificates.
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(a) Subject to the provisions of Sections 4(b), 7(e) and 14, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase a like
number of Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) 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 or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and executed the certificate set forth in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) of the
Rights represented by such Rights Certificate or Affiliates or Associates
thereof as the Company shall reasonably request; whereupon the Rights Agent
shall, subject to the provisions of Section 4(b), Section 7(e) and Section 14,
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) If a Rights Certificate shall be mutilated, lost, stolen or destroyed,
upon request by the registered holder of the Rights represented thereby and upon
payment to the Company and the Rights Agent of all reasonable expenses incident
thereto, there shall be issued, in exchange for and upon cancellation of the
mutilated Rights Certificate, or in substitution for the lost, stolen or
destroyed Rights Certificate, a new Rights Certificate, in substantially the
form of the prior Rights Certificate, of like tenor and evidencing the
equivalent number of Rights, but, in the case of loss, theft or destruction,
only upon receipt of evidence satisfactory to the Company and the Rights Agent
of such loss, theft or destruction of such Rights Certificate and, if requested
by the Company or the Rights Agent, indemnity also satisfactory to it.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(a) Prior to the earlier of (i) the Close of Business on the tenth
anniversary hereof (the "Final Expiration Date"), and (ii) the time at which the
Rights are redeemed as provided in Section 23 (the earlier of (i) and (ii) being
the "Expiration Date"), the registered holder of any Rights Certificate may,
subject to the provisions of Sections 7(e) and 9(c), exercise the Rights
evidenced thereby in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the aggregate Purchase Price
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(as hereinafter defined) for the number of Units of Preferred Stock (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) for which such surrendered Rights are then exercisable.
(b) The purchase price for each one one-thousandth of a share (each such
one one-thousandth of a share being a "Unit") of Preferred Stock upon exercise
of Rights shall be $48.00, subject to adjustment from time to time as provided
in Sections 11 and 13(a) (such purchase price, as so adjusted, being the
"Purchase Price"), and shall be payable in accordance with paragraph (c) below.
(c) As promptly as practicable following the occurrence of the Distribution
Date, the Company shall deposit with a corporation in good standing organized
under the laws of the United States or any State of the United States, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority (such
institution being the "Depositary Agent") certificates evidencing the shares of
Preferred Stock that may be acquired upon exercise of the Rights and shall cause
such Depositary Agent to enter into an agreement pursuant to which the
Depositary Agent shall issue receipts evidencing interests in the shares of
Preferred Stock so deposited. Upon receipt of a Rights Certificate evidencing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price for the Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) to
be purchased thereby as set forth below and an amount equal to any applicable
transfer tax or evidence satisfactory to the Company of payment of such tax, the
Rights Agent shall, subject to Section 20(k), thereupon promptly (i) requisition
from the Depositary Agent depositary receipts evidencing such number of Units of
Preferred Stock as are to be purchased and the Company will direct the
Depositary Agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14, (iii) after receipt of such depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or
upon the order of the registered holder of such Rights Certificate. In the event
that the Company is obligated to issue Company Common Stock, other securities of
the Company, pay cash and/or distribute other property pursuant to Section
11(a), the Company will make all arrangements necessary so that such Company
Common Stock, other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) may be made in cash or by certified or bank check or money order payable
to the order of the Company.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
the Rights remaining unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of,
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the registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, subject to the provisions of Section
14.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and that receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or any such Associate or Affiliate) or to any Person with
whom the Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights, shares
of Company Common Stock or the Company or (B) a transfer that a majority of the
Independent Directors has determined to be part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this
Section 7(e), shall be null and void without any further action, and no holder
of such Rights shall have any rights whatsoever with respect to such Rights,
whether under any provision of this Agreement or otherwise. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
and Section 4(b) are complied with, but shall have no liability to any holder of
Rights or any other Person as a result of its failure to make any determination
under this Section 7(e) or such Section 4(b) with respect to an Acquiring Person
or its Affiliates, Associates or transferees.
(f) Notwithstanding anything in this Agreement or any Rights Certificate to
the contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise by such registered holder unless such registered holder
shall have (i) completed and executed the certificate following the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
evidenced by 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
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights
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Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. Reservation and Availability of Capital Stock.
(a) The Company shall at all times prior to the Expiration Date cause to be
reserved and kept available, out of its authorized and unissued shares of
Preferred Stock, the number of shares of Preferred Stock that, as provided in
this Agreement, will be sufficient to permit the exercise in full of all
outstanding Rights. Upon the occurrence of any events resulting in an increase
in the aggregate number of shares of Preferred Stock (or other equity securities
of the Company) issuable upon exercise of all outstanding Rights above the
number then reserved, the Company shall make appropriate increases in the number
of shares so reserved.
(b) If the shares of Preferred Stock to be issued and delivered upon the
exercise of the Rights may be listed on any national securities exchange, the
Company shall during the period from the Distribution Date through the
Expiration Date use its best efforts to cause all securities 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 (i) as soon as practicable
following the occurrence of a Section 11 (a)(ii) Event and a determination by
the Company in accordance with Section 11(a)(iii) of the consideration to be
delivered by the Company upon exercise of the Rights or, if so required by law,
as soon as practicable following the Distribution Date (such date being the
"Registration Date"), to file a registration statement on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities that may be acquired upon exercise of the Rights (the
"Registration Statement"), (ii) to cause the Registration Statement to become
effective as soon as practicable after such filing, (iii) to cause the
Registration Statement to continue to be effective (and to include a prospectus
complying with the requirements of the Securities Act) until the earlier of (A)
the date as of which the Rights are no longer exercisable for the securities
covered by the Registration Statement, and (B) the Expiration Date and (iv) to
take as soon as practicable following the Registration Date such action as may
be required to ensure that any acquisition of securities upon exercise of the
Rights complies with any applicable state securities or "blue sky" laws.
(d) The Company shall take such action as may be necessary to ensure that
all shares of Preferred Stock (and, following the occurrence of a Triggering
Event, any other securities that may be delivered upon exercise of Rights) shall
be, at the time of delivery of the certificates or depositary receipts for such
securities, duly and validly authorized and issued and fully paid and
non-assessable.
(e) The Company shall pay any documentary, stamp or transfer tax imposed in
connection with the issuance or delivery of the Rights Certificates or upon the
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exercise of Rights; provided, however, that the Company shall not be required to
pay any such tax imposed in connection with the issuance or delivery of Units of
Preferred Stock, or any certificates or depositary receipts for such Units of
Preferred Stock (or, following the occurrence of a Triggering Event, any other
securities, cash or assets, as the case may be) to any person other than the
registered holder of the Rights Certificates evidencing the Rights surrendered
for exercise. The Company shall not be required to issue or deliver any
certificates or depositary receipts for Units of Preferred Stock (or, following
the occurrence of a Triggering Event, any other securities, cash or assets, as
the case may be) to, or in a name other than that of, the registered holder upon
the exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
SECTION 10. Preferred Stock Record Date. Each Person in whose name any
certificate for Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Units of
Preferred Stock (or, following the occurrence of a Triggering Event, other
securities) evidenced thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or, following the occurrence of a Triggering Event,
other securities) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or, following the occurrence of a Triggering Event, other
securities) transfer books of the Company are open and, further provided,
however, that if delivery of Units of Preferred Stock is delayed pursuant to
Section 9(c), such Persons shall be deemed to have become the record holders of
such Units of Preferred Stock only when such Units first become deliverable.
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 securities for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of securities 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 shares of Preferred Stock, (C)
combine the outstanding shares of Preferred Stock into a smaller number of
shares, or (D) issue any shares of its capital
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stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of Preferred
Stock or capital stock, as the case may be, issuable on such date upon exercise
of the Rights, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such Right had
been exercised immediately prior to such date, such holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs that would
require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section
11(a)(ii).
(ii) In the event:
(A) any Acquiring Person or any Associate or Affiliate of any
Acquiring Person, at any time after the date hereof, directly or
indirectly, (1) shall merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving corporation of
such merger or combination and Company Common Stock shall remain
outstanding and unchanged, (2) shall, in one transaction or a series of
transactions, transfer any assets to the Company or to any of its
Subsidiaries in exchange (in whole or in part) for shares of Company Common
Stock, for other equity securities of the Company or any such Subsidiary,
or for securities exercisable for or convertible into shares of equity
securities of the Company or any of its Subsidiaries (whether Company
Common Stock or otherwise) or otherwise obtain from the Company or any of
its Subsidiaries, with or without consideration, any additional shares of
such equity securities or securities exercisable for or convertible into
such equity securities (other than pursuant to a pro rata distribution to
all holders of Company Common Stock), (3) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose of, in
one transaction or a series of transactions, to, from or with the Company
or any of its Subsidiaries or any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity, assets (including securities) on
terms and conditions less favorable to the Company or such Subsidiary or
plan than those that could have been obtained in arm's-length negotiations
with an unaffiliated third party, other than pursuant to a transaction set
forth in Section 13(a), (4) shall sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the Company or
any of the Company's Subsidiaries or any employee benefit plan maintained
by the Company or any of its Subsidiaries or any trustee or fiduciary with
respect to such plan acting in such capacity (other than transactions, if
any, consistent with those engaged in, as of the date hereof, by the
Company and such Acquiring Person or such Associate or Affiliate), assets
(including securities) having an
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aggregate fair market value of more than $5 million, other than pursuant to
a transaction set forth in Section 13(a), (5) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose of, in
one transaction or a series of transactions, to, from or with the Company
or any of its Subsidiaries or any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity, any material trademark or material
service mark, other than pursuant to a transaction set forth in Section
13(a), (6) shall receive, or any designee, agent or representative of such
Acquiring Person or any Affiliate or Associate of such Acquiring Person
shall receive, any compensation from the Company or any of its Subsidiaries
other than compensation for full-time employment as a regular employee at
rates in accordance with the Company's (or its Subsidiaries') past
practices, or (7) shall receive the benefit, directly or indirectly (except
proportionately as a holder of Company Common Stock or as required by law
or governmental regulation), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax advantage
provided by the Company or any of its Subsidiaries or any employee benefit
plan maintained by the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity; or
(B) any Person shall become an Acquiring Person, other than pursuant
to any transaction set forth in Section 13(a); or
(C) during such time as there is an Acquiring Person, there shall be
any reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries, other than a
transaction or transactions to which the provisions of Section 13(a) apply
(whether or not with or into or otherwise involving an Acquiring Person),
which has the effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries that is directly or
indirectly beneficially owned by any Acquiring Person or any Associate or
Affiliate of any Acquiring Person;
then, immediately upon the date of the occurrence of an event described in
Section 11 (a)(ii)(A)-(C) (a "Section 11(a)(ii) 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 the right to receive, upon exercise thereof
at the then current Purchase Price in accordance with the terms of this
Agreement, in lieu of the number of Units of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a Section 11
(a)(ii) Event, such number of Units of Preferred Stock as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of Units of Preferred Stock for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event (such product thereafter
being, for all purposes of this Agreement other than Section 13, the "Purchase
Price"), and (y) dividing that product by 50% of the then current market price
(determined pursuant to Section
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11(d) hereof) per Unit of Preferred Stock on the date of such first occurrence
(such Units of Preferred Stock being the "Adjustment Shares").
(iii) In the event that the number of shares of Preferred Stock that are
authorized by the Company's Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii) of this Section 11(a), the Company, by the vote of a
majority of the Independent Directors, shall: (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") over (2) the Purchase Price (such excess being the "Spread"),
and (B) with respect to each Right, make adequate provision to substitute for
such Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) Company Common Stock or other equity
securities of the Company (including, without limitation, shares, or units of
shares, of preferred stock (such other shares being "preferred stock
equivalents")), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by a majority of the
Independent Directors, after receiving advice from a nationally recognized
investment banking firm; provided, however, that if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above within 30
days following the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to herein as the
"Section 11(a)(iii) Trigger Date"), then the Company shall be obligated to
deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, Units of Preferred Stock (to the extent
available) and then, if necessary, cash, which Units of Preferred Stock and/or
cash shall have an aggregate value equal to the Spread. To the extent that the
Company determines that some action need be taken pursuant to the first sentence
of this Section 11(a)(iii), the Company shall provide, subject to Section 7(e),
that such action shall apply uniformly to all outstanding Rights. For purposes
of this Section 11(a)(iii), the value of a Unit of Preferred Stock shall be the
current market price (as determined pursuant to Section 11(d) hereof) per Unit
of Preferred Stock on the Section 11(a)(iii) Trigger Date and the value of any
preferred stock equivalent shall be deemed to have the same value as the
Preferred Stock on such date.
(b) In case the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within 45 days after such
record date) shares of Preferred Stock (or shares having substantially the same
rights, privileges and preferences as 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
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immediately prior to such record date by a fraction, the numerator of which
shall be the sum of the number of shares of Preferred Stock outstanding on such
record date plus the number of shares of Preferred Stock that the aggregate
offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible). In case such subscription price may
be paid by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by a majority of the Independent Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights, shares of Preferred Stock owned by
or held for the account of the Company or any Subsidiary 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 shares 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 shares of Preferred Stock, but including any
dividend payable in stock other than Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock on
such record date less the fair market value (as determined in good faith by a
majority of the Independent Directors, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holder of the Rights) of the cash, assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants distributable in
respect of 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 share
of Preferred Stock. Such adjustments shall be made successively whenever such a
record date is fixed, and in the event that such distribution is not so made,
the Purchase Price shall be adjusted to be the Purchase Price which would have
been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current market
price" per share of Company Common Stock or Common Stock on any date shall be
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deemed to be the average of the daily closing prices per share of such shares
for the 10 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that if prior to the
expiration of such requisite ten Trading Day-period the issuer announces either
(A) a dividend or distribution on such shares payable in such shares or
securities convertible into such shares (other than the Rights), or (B) any
subdivision, combination or reclassification of such shares, then, following the
ex-dividend date for such dividend or the record date for such subdivision, as
the case may be, the "current market price" shall be properly adjusted to take
into account such event. The closing price for each day shall be, if the shares
are listed and admitted to trading on a national securities exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which such
shares are listed or admitted to trading or, if such shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in
use, or, if on any such date such shares 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 such shares selected by a majority
of the Independent Directors. If on any such date no market maker is making a
market in such shares, the fair value of such shares on such date as determined
in good faith by a majority of the Independent Directors shall be used. If such
shares are 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 a
majority of the Independent Directors, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. The term "Trading Day" shall mean, if such shares are listed or
admitted to trading on any national securities exchange, a day on which the
principal national securities exchange on which such shares are listed or
admitted to trading is open for the transaction of business or, if such shares
are not so listed or admitted, a Business Day.
(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 Company Common Stock in clause (i) of this Section 11(d)
(other than the fourth sentence thereof). If the current market price per share
of Preferred Stock cannot be determined in the manner provided above or if the
Preferred Stock is not publicly held or listed or traded in a manner described
in clause (i) of this Section 11(d), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to 1,000 (as
such amount may be appropriately adjusted for such events as stock splits, stock
dividends and recapitalizations with respect to Company Common Stock occurring
after the date of this Agreement) multiplied by the current market price per
share of Company Common Stock. If neither Company Common Stock nor Preferred
Stock is publicly held or so listed or traded, "current market price" per share
of the Preferred Stock shall mean the fair value per share as determined in good
faith by a majority of the Independent Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent
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and the holders of the Rights. For all purposes of this Agreement, the "current
market price" of a Unit of Preferred Stock shall be equal to the "current market
price" of one share of Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one-thousandth of a share of Company Common Stock or
Common Stock or other share or hundred-thousandth of a share of Preferred Stock,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction that mandates such
adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii) or
13(a) the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock other than Preferred Stock, thereafter the
number of such other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a), (b), (c), (d), (e),
(g), (h), (i), (j), (k), (l) and (m), and the provisions of Sections 7, 9, 10,
13 and 14 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 Units of Preferred Stock
(or other securities or amount of cash or combination thereof) that may be
acquired 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 Units of Preferred
Stock (calculated to the nearest hundred-thousandth of a Unit) obtained by (i)
multiplying (x) the number of Units of Preferred Stock covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of
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Units of Preferred Stock that may be acquired 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 Units 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 hundred-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least 10 days later
than the date of such 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, the additional Rights to which such holders
shall be entitled as a result of such adjustment, or, at the option of the
Company, shall cause to be distributed to such holders of record in substitution
and replacement for the Rights Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates to be so distributed shall
be issued, executed and countersigned in the manner provided for 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 Units 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 Unit and the number of Units of Preferred Stock that 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 par value of the number of Units 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 such fully paid and nonassessable number
of Units of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date of that
number of Units of Preferred Stock and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of Units of Preferred Stock and shares of other capital stock or
securities of the
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Company, if any, issuable upon such exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares (fractional or otherwise)
or securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment a majority of the Independent
Directors 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 that 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 holders or shall reduce the taxes payable by such
holders.
(n) The Company shall not, at any time after the Distribution Date, (i)
consolidate with any other Person (other than a Subsidiary of the Company in a
transaction that complies with Section 11(o) hereof), (ii) merge with or into
any other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or permit a
Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company and/or any of its Subsidiaries
in one or more transactions each of which complies with Section 11(o) hereof),
if (x) at the time of or immediately after such consolidation, merger or sale
there are any rights, warrants or other instruments or securities outstanding or
agreements in effect that would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
Person which constitutes, or would constitute, the "Principal Party" for
purposes of Section 13(a) shall have distributed or otherwise transferred to its
shareholders or other persons holding an equity interest in such Person, Rights
previously owned by such Person or any of its Affiliates and Associates;
provided, however, that this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not, except as permitted
by Section 23 or Section 26, take (or permit any Subsidiary to take) any action
if at the time such action is taken it is reasonably foreseeable that such
action will diminish substantially or otherwise eliminate the benefits intended
to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Rights Dividend Declaration
Date and prior to
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the Distribution Date (i) declare a dividend on the outstanding shares of
Company Common Stock payable in shares of Company Common Stock, (ii) subdivide
the outstanding shares of Company Common Stock, (iii) combine the outstanding
shares of Company Common Stock into a smaller number of shares, or (iv) issue
any shares of its capital stock in a reclassification of Company Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each share of Company Common Stock then
outstanding, or issued or delivered thereafter but prior to the Distribution
Date, shall be proportionately adjusted so that the number of Rights thereafter
associated with each share of Company Common Stock following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each share of Company Common Stock immediately prior to such event by a
fraction, the numerator of which shall be the total number of shares of Company
Common Stock outstanding immediately prior to the occurrence of the event and
the denominator of which shall be the total number of shares of Company Common
Stock outstanding immediately following the occurrence of such event.
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Preferred Stock
and the Company Common Stock, a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate evidencing shares of Company
Common Stock) in accordance with Section 25. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly, either (x) the Company shall consolidate with, or merge with and
into, any other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Company Common Stock shall be
converted 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) to any
Person or Persons (other than the Company or any of its Subsidiaries in one or
more transactions
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each of which complies with Section 11(o) hereof), 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) (any such event being a
"Section 13 Event"), then, and in each such case, proper provision shall be made
so that: (i) each holder of a Right, except as provided in Section 7(e), shall
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price, such number of validly authorized and issued, fully paid
and nonassessable shares of Common Stock of the Principal Party (as such term is
hereinafter defined), which shares shall not be subject to any liens,
encumbrances, rights of first refusal, transfer restrictions or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of Units of Preferred Stock for which a
Right is exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such Units for which
a Right would be exercisable hereunder but for the occurrence of such Section
11(a)(ii) Event by the Purchase Price which would be in effect hereunder but for
such first occurrence) and (2) dividing that product (which, following the first
occurrence of a Section 13 Event, shall be the "Purchase Price" for all purposes
of this Agreement) by 50% of the current market price (determined pursuant to
Section 11(d) hereof) per share of the Common Stock of such Principal Party on
the date of consummation of such Section 13 Event; (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to the reservation of a sufficient number of shares of its Common Stock)
in connection with the consummation of any such transaction as may be necessary
to ensure that the provisions of this Agreement shall thereafter be applicable
to its shares of Common Stock thereafter deliverable upon the exercise of the
Rights; and (v) the provisions of Section 11(a)(ii) shall be of no further
effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" means:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), (A) the Person that is the issuer of
any securities into which shares of Company Common Stock are converted in
such merger or consolidation, or, if there is more than one such issuer,
the issuer of Common Stock that has the highest aggregate current market
price (determined pursuant to Section 11(d) hereof) and (B) if no
securities are so issued, the Person that is the other party to such merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and
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(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
largest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or
earning power transferred pursuant to such transaction or transactions or
if the Person receiving the largest portion of the assets or earning power
cannot be determined, whichever Person the Common Stock of which has the
highest aggregate current market price (determined pursuant to Section
11(d) hereof); provided, however, that in any such case, (1) if the Common
Stock of such Person is not at such time and has not been continuously over
the preceding 12-month period registered under Section 12 of the Exchange
Act ("Registered Common Stock"), or such Person is not a corporation, and
such Person is a direct or indirect Subsidiary of another Person that has
Registered Common Stock outstanding, "Principal Party" shall refer to such
other Person: (2) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is a
direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common Stock
outstanding, "Principal Party" shall refer to the ultimate parent entity of
such first-mentioned Person; (3) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such
Person is directly or indirectly controlled by more than one Person, and
one or more of such other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever of such other Persons is the
issuer of the Registered Common Stock having the highest aggregate current
market price (determined pursuant to Section 11(d) hereof); and (4) if the
Common Stock of such Person is not Registered Common Stock or such Person
is not a corporation, and such Person is directly or indirectly controlled
by more than one Person, and none of such other Persons have Registered
Common Stock outstanding, "Principal Party" shall refer to whichever
ultimate parent entity is the corporation having the greatest shareholders
equity or, if no such ultimate parent entity is a corporation, shall refer
to whichever ultimate parent entity is the entity having the greatest net
assets.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock that have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that the Principal Party will:
(i) (ii) file on an appropriate form, as soon as practicable following
the execution of such agreement, a registration statement under the
Securities Act with respect to the Common Stock that may be acquired upon
exercise of the Rights, (B) cause such registration statement to remain
effective (and to include a prospectus complying with the requirements of
the Securities Act) until the Expiration Date, and (C) as soon as
practicable following the execution of such agreement, take such action as
may be required to ensure that
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any acquisition of such Common Stock upon the exercise of the Rights
complies with any applicable state security or "blue sky" laws; and
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
(d) In case the Principal Party that is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or By-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current market price
per share (determined pursuant to Section 11(d) hereof) or securities
exercisable for, or convertible into Common Stock of such Principal Party at
less than such then current market price (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special payment, tax or
similar provisions in connection with the issuance of the Common Stock of such
Principal Party pursuant to the provisions of this Section 13; then, in such
event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived or amended, or
that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
SECTION 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the Persons to which such fractional
Rights would otherwise be issuable, an amount in cash equal to such fraction of
the market value of a whole Right. For purposes of this Section 14(a), the
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, if the Rights are listed or admitted to trading on a national securities
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
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admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market as reported by 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 a majority of the
Independent Directors. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by a majority of the Independent Directors shall be used and such
determination shall be described in a statement filed with the Rights Agent and
the holders of the Rights.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates that evidence such fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of such fractional shares of Preferred Stock
that are not integral multiples of one one-thousandth of a share, 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 then current market price of a share of Preferred Stock on the day of
exercise, determined in accordance with Section 11(d).
(c) The holder of a Right by the acceptance of the Rights expressly waives
his or her 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, other than rights of action vested in the Rights Agent pursuant to
Section 18, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates evidencing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate evidencing shares of Company 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 a certificate evidencing shares of Company Common
Stock), may, in his or her own behalf and for his or her own benefit, enforce,
and may institute and maintain any suit, action or proceeding against the
Company or any other Person to enforce, or otherwise act in respect of, his or
her 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.
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SECTION 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents to 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 Company 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 of the Rights Agent designated for such purposes duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f), 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 Company
Common Stock certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Rights Certificates or the associated Company 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, subject to the last sentence of Section 7(e), shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as promptly as
practicable.
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 number of shares of Preferred
Stock or any other securities of the Company that may at any time be issuable on
the exercise of the Rights evidenced 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, except as provided in Section 24, to receive notice
of meetings or other actions affecting shareholders, 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.
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SECTION 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses, including reasonable fees and
disbursements of its counsel, incurred in connection with the execution and
administration of this Agreement and the exercise and performance of its duties
hereunder. The Company shall indemnify the Rights Agent for, and hold it
harmless against, any loss, liability, or expense, incurred without gross
negligence, bad faith or wilful 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 hereunder.
(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 Preferred 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 have been signed and/or executed or
made by the proper Person or Persons.
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or shareholder services businesses of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any document or any further act on
the part of any of the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights Certificates
shall have been countersigned but not 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.
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(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 (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 specified herein) 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,
any Vice President, the Treasurer, any Assistant Treasurer, the Secretary
or any Assistant Secretary of the Company and delivered to the Rights
Agent; provided, however, that so long as any Person is an Acquiring Person
hereunder, such certificate shall be signed and delivered by a majority of
the Independent Directors; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it
under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or wilful 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 have any responsibility for the
validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or for the validity or execution
of any Rights Certificate (except its
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countersignature thereof); nor shall it be responsible for any breach by
the Company of any covenant or failure by the Company to satisfy conditions
contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section 11
or Section 13 or 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
Rights Certificates after receipt by the Rights Agent of the certificate
describing any such adjustment contemplated by Section 12); nor shall it by
any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Preferred Stock or any
other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Preferred Stock or any other
securities will, when so issued, be validly authorized and issued, fully
paid and nonassessable.
(f) The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such
further acts, instruments and assurances as may reasonably be required by
the Rights Agent for the performance by the Rights Agent of its duties
under this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Secretary, any Assistant Secretary, the Treasurer or
any Assistant Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer; provided, however, that
so long as any Person is an Acquiring Person hereunder, the Rights Agent
shall accept such instructions and advice only from a majority of the
Independent Directors and shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with such
instructions of the majority of the Independent Directors. Any application
by the Rights Agent for written instructions from the Company may, at the
option of the Rights Agent, set forth in writing any action proposed to be
taken or omitted by the Rights Agent under this Rights Agreement and the
date on and/or after which such action shall be taken or such omission
shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the
date any such officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case
of an omission), the Rights Agent shall have received written instructions
in response to such application specifying the action to be taken or
omitted.
(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
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interested, or contract with or lend money to the Company or otherwise act
as fully and freely as though it were not the 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.
(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 or in the exercise of its rights
hereunder if the Rights Agent shall have reasonable grounds for believing
that repayment of such funds or adequate indemnification against such risk
or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed, not signed or indicates an affirmative response
to clause 1 and/or 2 thereof, the Rights Agent shall not take any further
action with respect to such requested exercise or transfer without first
consulting with the Company. If such certificate has been completed and
signed and shows a negative response to clauses 1 and 2 of such
certificate, unless previously instructed otherwise in writing by the
Company (which instructions may impose on the Rights Agent additional
ministerial responsibilities, but no discretionary responsibilities), the
Rights Agent may assume without further inquiry that the Rights Certificate
is not owned by a person described in Section 4(b) or Section 7(e) and
shall not be charged with any knowledge to the contrary.
SECTION 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' prior notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' prior notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each transfer agent of the
Preferred Stock and the Company Common Stock, by registered or certified mail,
and to the holders of the Rights Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his or her Rights
Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the
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Company or by such a court, shall be (a) a corporation organized and doing
business under the laws of the United States or any state of the United States
in good standing, shall be authorized to do business as a banking institution in
the State of New York or the Commonwealth of Pennsylvania, shall be authorized
under such laws to exercise corporate trust or stock transfer powers, shall be
subject to supervision or examination by federal or state authorities and shall
have at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100,000,000 or (b) an Affiliate of a corporation described
in clause (a). 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 Preferred Stock and the Company Common 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.
SECTION 22. Issuance of New Rights Certificates. Notwithstanding any of the
provisions of this Agreement or 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 a majority of the Independent Directors to reflect any adjustment
or change made in accordance with the provisions of this Agreement in the
Purchase Price or the number or kind or class of shares or other securities or
property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Company Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (a) shall
with respect to shares of Company Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by a
majority of the Independent Directors, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 23. Redemption and Termination.
(a) Subject to Section 30, the Company may, at its option, by action of a
majority of the Independent Directors, at any time prior to (i) the Close of
Business on the tenth Business Day following the Stock Acquisition Date, or (ii)
such later date as a majority of the
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Independent Directors shall determine(such determination to be made prior to the
date specified in (i) above) and of which the Company will give the Rights Agent
prompt written notice, but in no event later than the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption
price of $.001 per Right, as such amount may be appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being the "Redemption Price"), and the
Company may, at its option, by action of a majority of the Independent
Directors, pay the Redemption Price either in shares of Company Common Stock
(based on the "current market price" as defined in Section 11(d), of the shares
of Company Common Stock at the time of redemption) or cash.
(b) Immediately upon the action of a majority of the Independent Directors
ordering the redemption of the Rights, evidence of which shall be filed with the
Rights Agent, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of a majority of the Independent Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for Company
Common Stock. Any notice that is mailed in the manner herein provided shall be
deemed given whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
SECTION 24. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders of
Preferred Stock or to make any other distribution to the holders of Preferred
Stock (other than a regular quarterly cash dividend out of earnings or retained
earnings of the Company), (ii) to offer to the holders of Preferred Stock rights
or warrants to subscribe for or to purchase any additional shares of Preferred
Stock or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred Stock (other than
a reclassification involving only the subdivision of outstanding shares of
Preferred Stock), (iv) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale or other transfer),
in one 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
Persons (other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), or (v) to effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 25, a notice of such proposed
action, which shall specify the record date for the purposes
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of such stock dividend, distribution of rights or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered by
clause (i) or (ii) above at least 20 days prior to the record date for
determining holders of the shares of Preferred Stock for purposes of such
action, and in the case of any such other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Preferred Stock whichever shall be the earlier;
provided, however, that no such notice shall be required pursuant to this
Section 24, if any Subsidiary of the Company effects a consolidation or merger
with or into, or effects a sale or other transfer of assets or earnings power
to, any other Subsidiary of the Company.
(b) In case any of the events set forth in Section 11(a)(ii) 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 25, 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).
SECTION 25. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company, at
its address at:
555 North Lane
Conshohocken, PA 19428
Attention: Chief Executive Officer
Fax: (610) 834-0346
and if to the Rights Agent, at its address at:
StockTrans, Inc.
7 East Lancaster Avenue
Ardmore, PA 19003
Attention: President
Fax: (610) 649-7302
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
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SECTION 26. Supplements and Amendments. Prior to the Distribution Date and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates evidencing
shares of Company Common Stock. From and after the Distribution Date and subject
to the penultimate sentence of this Section 26, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein that may
be defective or inconsistent with any other provisions herein, (iii) to shorten
or lengthen any time period hereunder, or (iv) to change or supplement the
provisions hereunder in any manner that the Company may deem necessary or
desirable and that shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); provided, however, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) subject to Section 30, a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable, or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company or, so
long as any Person is an Acquiring Person hereunder, from the majority of the
Independent Directors that states that the proposed supplement or amendment is
in compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment, subject to the Right Agent's right to apply to
counsel chosen by the Right Agent and the Right Agent being reasonably assured
that such supplement or amendment is in no way detrimental to the Right Agent's
right or interest. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made that changes the Redemption
Price, the Purchase Price, the Expiration Date or the number of Units of
Preferred Stock for which a Right is exercisable without the approval of a
majority of the Independent Directors. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Company Common Stock.
SECTION 27. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
SECTION 28. Determinations and Actions by the Board of Directors, etc. For
all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, the Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted
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to the Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power (i) to interpret the provisions of this Agreement, and (ii) to make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board or by a majority of the
Independent Directors in good faith shall (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties, and (y) not subject the Board or any member thereof to any liability to
the holders of the Rights.
SECTION 29. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of shares of Company 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 shares of Company Common Stock).
SECTION 30. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and a majority of the
Independent Directors determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, the right
of redemption set forth in Section 23 hereof shall be reinstated and shall not
expire until the Close of Business on the tenth Business Day following the date
of such determination by a majority of the Independent Directors.
SECTION 31. Governing Law. This Agreement each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Pennsylvania applicable to contracts
executed in and to be performed entirely in such Commonwealth.
SECTION 32. Counterparts. This Agreement may be executed (including by
facsimile) in one or more counterparts and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
Page 48 of 69
<PAGE>
SECTION 33. Descriptive Headings. The headings contained in this Agreement
are for descriptive purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 34. Exchange.
(a) The Company may at any time after the Distribution Date, upon
resolution of a majority of the Independent Directors, exchange all or part of
the then outstanding exercisable Rights (which shall not include Rights that
have become void pursuant to Section 7(e) hereof) for Units of Preferred Stock
at an exchange ratio specified in the following sentence, as appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof. Subject to such adjustment, upon such
resolution each Right may be exchanged for that number of Units of Preferred
Stock obtained by dividing the Adjustment Spread (as defined below) by the then
current market price (determined pursuant to Section 11(d) hereof) per Unit of
Preferred Stock on the earlier of (i) the date on which any Person becomes an
Acquiring Person and (ii) the date on which a tender or exchange offer by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan maintained by the Company or any of its Subsidiaries or any trustee
or fiduciary with respect to such plan acting in such capacity) is first
published or sent or given within the meaning of Rule 14d-4(a) of the Exchange
Act Regulations or any successor rule, if upon consummation thereof such Person
would be the Beneficial Owner of 10% or more of the shares of Company Common
Stock then outstanding (such exchange ratio being the "Exchange Ratio"). The
"Adjustment Spread" shall equal (x) the aggregate market price on the date of
such event of the number of Adjustment Shares determined pursuant to Section
11(a)(ii), minus (y) the Purchase Price.
(b) Immediately upon the action of a majority of the Independent Directors
ordering the exchange of any Rights pursuant to Section 34(a) 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 Units of Preferred 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 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 Units of Preferred 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 7(e)
hereof) held by each holder of Rights.
(c) In the event that the number of shares of Preferred Stock that are
authorized by the Company's Certificate of Incorporation but not outstanding or
reserved for
Page 49 of 69
<PAGE>
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit any exchange of Rights as contemplated in accordance with this Section
34, the Company shall take all such action as may be necessary to authorize
additional shares of Preferred Stock for issuance upon exchange of the Rights or
make adequate provision to substitute (1) cash, (2) Company Common Stock or
other equity securities of the Company, (3) debt securities of the Company, (4)
other assets, or (5) any combination of the foregoing, having an aggregate value
equal to the Adjustment Spread, where such aggregate value has been determined
by a majority of the Independent Directors.
(d) The Company shall not be required to issue fractions of Units of
Preferred Stock or to distribute certificates that evidence fractional Units. In
lieu of fractional Units, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exchanged as herein provided an
amount in cash equal to the same fraction of the current market price
(determined pursuant to Section 11(d) hereof) of one Unit of Preferred Stock.
Page 50 of 69
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
ATTEST: LIBERTY TECHNOLOGIES, INC.
By: /s/ James D. Rosener By: /s/ Daniel Clare
------------------------------- ------------------------
Name: James D. Rosener Name: Daniel Clare
Title: Secretary Title: Vice President
ATTEST: STOCKTRANS, INC.
By /s/ Lisa Klevence By: /s/ Jonathan Miller
------------------------------- ------------------------
Name: Lisa Klevence Name: Jonathan Miller
Title: Vice President - Operations Title: President
Page 51 of 69
<PAGE>
EXHIBIT A
Form of Series A Rights Certificate
Certificate No. A-__ ___________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE AMENDED AND
RESTATED RIGHTS AGREEMENT REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE AMENDED
AND RESTATED RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN THE
AMENDED AND RESTATED RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING
PERSONS (AS DEFINED IN THE AMENDED AND RESTATED RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE AMENDED AND RESTATED RIGHTS
AGREEMENT REFERRED TO BELOW). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(E) OF THE AMENDED AND RESTATED RIGHTS AGREEMENT.]*
Series A Rights Certificate
LIBERTY TECHNOLOGIES, INC.
This certifies that _____________, or registered assigns, is the registered
holder of the number of Rights set forth above, each of which entitles the
registered holder thereof, subject to the terms and conditions of the Amended
and Restated Rights Agreement dated as of October 6, 1997 (the "Amended and
Restated Rights Agreement"; terms defined therein are used herein with the same
meaning unless otherwise defined herein) between LIBERTY TECHNOLOGIES, INC., a
Pennsylvania corporation (the "Company"), and STOCKTRANS, INC., as Rights Agent
(which term shall include any successor Rights Agent under the Amended and
Restated Rights Agreement), to purchase from the Company at any time after the
Distribution Date and prior to the Expiration Date
- --------
*The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
Page 52 of 69
<PAGE>
at the office of the Rights Agent, one one-thousandth of one fully paid and
nonassessable share of Series A Junior Participating Preferred Stock, par value
$.001 per share (the "Preferred Stock"), of the Company at the Purchase Price
initially of $48.00 per one one-thousandth share (each such one one-thousandth
of a share being a "Unit") of Preferred Stock, upon presentation and surrender
of this Rights Certificate with the Election to Purchase and related certificate
duly executed. The number of Rights evidenced by this Rights Certificate (and
the number of Units that may be purchased upon exercise thereof) set forth
above, and the Purchase Price per Unit set forth above shall be subject to
adjustment in certain events as provided in the Amended and Restated Rights
Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced
by this Rights Certificate are beneficially owned by an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person or, under certain
circumstances described in the Amended and Restated Rights Agreement, a
transferee of any such Acquiring Person, Associate or Affiliate, such Rights
shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11(a)(ii)
Event.
In certain circumstances described in the Amended and Restated Rights
Agreement, the rights evidenced hereby may entitle the registered holder thereof
to purchase capital stock of an entity other than the Company or receive common
stock, cash or other assets, all as provided in the Amended and Restated Rights
Agreement.
This Rights Certificate is subject to all the terms and conditions of the
Amended and Restated Rights Agreement, which terms and conditions are hereby
incorporated herein by reference and made a part hereof and to which Amended and
Restated Rights Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Rights Agent, the Company and the holders of the Rights Certificates. Copies
of the Amended and Restated Rights Agreement are on file at the principal office
of the Company and are available from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing an aggregate number of Rights equal to the aggregate number
of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Amended and Restated Rights Agreement, the
Rights evidenced by this Certificate may be redeemed by the Company under
certain circumstances at its option at a redemption price of $.001 per Right,
payable at the Company's option in cash or in
Page 53 of 69
<PAGE>
common stock of the Company, subject to adjustment in certain events as provided
in the Amended and Restated Rights Agreement.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock), but in lieu
thereof a cash payment will be made, as provided in the Amended and Restated
Rights Agreement.
No holder of this Rights Certificate, as such, shall he entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Stock or
of any other securities which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Amended and Restated Rights
Agreement or herein be constituted 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 Amended and Restated Rights Agreement), or to receive dividends
or subscription rights, or otherwise, until the Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Amended and Restated
Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _____ __, 199_/200_.
ATTEST: LIBERTY TECHNOLOGIES, INC.
By_________________________ By______________________________
Name: Name:
Title: Title:
Countersigned:
STOCKTRANS, INC.,
as Rights Agent
By_________________________
Name:
Title:
Page 54 of 69
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate)
FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- -------------------------------------------------------------------------------,
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________ Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _________ __, 199_/200_
------------------------------
Signature
Signature Guaranteed:
Page 55 of 69
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
[ ] (1) this Rights Certificate is is not being sold, assigned and transferred
by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined pursuant to
the Amended and Restated Rights Agreement); and
[ ] (2) after due inquiry and to the best knowledge of the undersigned, it did
did not acquire the Rights evidenced by this Rights Certificate from any Person
who is, was or subsequently became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: _____________ __, 199_/200_ ____________________
Signature
Signature Guaranteed:
------------------------------
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member in the Securities Transfer Agents
Medallion Program, the Stock Exchange Medallion Program or the New York Stock
Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Amended and Restated Rights Agreement) and, in the case of an
Assignment, will affix a legend. to that effect on any Rights Certificates
issued in exchange for this Rights Certificate.
Page 56 of 69
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate.)
To: LIBERTY TECHNOLOGIES, INC.
The undersigned hereby irrevocably elects to exercise ________ Rights
represented by this Rights Certificate to purchase the Units of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property which may be issuable upon the
exercise of the Rights) and requests that certificates for such Units be issued
in the name of and delivered to:
- -------------------------------
(Please print name and address)
- -------------------------------
Please insert social security
or other identifying number: __________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall he registered in the name of and delivered to:
- ------------------------------
(Please print name and address)
- ------------------------------
Please insert social security
or other identifying number: _________________
Dated: ______ __, 199_/200_
------------------------------
Signature
Signature Guaranteed:
Page 57 of 69
<PAGE>
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
[ ] (1) the Rights evidenced by this Rights Certificate are are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Amended and Restated Rights Agreement); and
[ ] (2) after due inquiry and to the best knowledge of the undersigned,
the undersigned did did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: _____ ___, 199_/200_ __________________________
Signature
Signature Guaranteed:
------------------------------
NOTICE
The signature in the foregoing Election to Purchase and Certificate must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by a member in the Securities Transfer Agents
Medallion Program, the Stock Exchange Medallion Program or the New York Stock
Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
Page 58 of 69
<PAGE>
EXHIBIT B
DESIGNATION OF THE VOTING POWERS, DESIGNATIONS
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF THE
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
--------------------------------
Pursuant to Section 1522 of the
Business Corporation Law of
the Commonwealth of Pennsylvania
--------------------------------
I, R. Nim Evatt, President of Liberty Technologies, Inc., a corporation
organized and existing under the Business Corporation Law of the Commonwealth of
Pennsylvania (the "Corporation"), DO HEREBY CERTIFY:
that, pursuant to authority conferred upon the Board of Directors of the
Corporation by its Articles of Incorporation (the "Articles"), and, pursuant to
the provisions of Section 1522 of the Business Corporation Law of the
Commonwealth of Pennsylvania, such Board of Directors, at a duly called meeting
held on May 1, 1996, at which a quorum was present and acted throughout, adopted
the following resolutions, which resolutions remain in full force and effect on
the date hereof creating a series of 10,000 shares of Preferred Stock having a
par value of $.001 per share, designated as Series A Junior Participating
Preferred Stock (the "Series A Preferred Stock") out of the class shares of
preferred stock of the par value of $.001 per share (the "Preferred Stock"):
RESOLVED, that pursuant to the authority vested in the Board of Directors
in accordance with the provisions of the Articles, the Board of Directors does
hereby create, authorize and provide for the issuance of the Series A Preferred
Stock having the voting powers, designation, relative, participating, optional
and other special rights, preferences, and qualifications, limitations and
restrictions thereof that are set forth as follows:
Section 35. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall be 10,000.
Page 59 of 69
<PAGE>
Section 36. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
of any other series of Preferred Stock or any other shares of preferred stock of
the Corporation ranking prior and superior to the shares of Series A Preferred
Stock with respect to dividends, each holder of one one-thousandth (1/1000) of a
share (a "Unit") of Series A Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors out of funds legally available for
that purpose, (i) dividends payable in cash when and if declared by the Board of
Directors of the Corporation in respect of the common stock (each such date
being a "Dividend Payment Date") commencing on the first Dividend Payment Date
after the first issuance of such Unit of Series A Preferred Stock, in an amount
per Unit (rounded to the nearest cent) equal to, subject to the provision for
adjustment hereinafter set forth, the aggregate per share amount of all cash
dividends declared on shares of the common stock since the immediately preceding
Dividend Payment Date, or, with respect to the first Dividend Payment Date,
since the first issuance of a Unit of Series A Preferred Stock, and (ii) subject
to the provision for adjustment hereinafter set forth, distributions (payable in
kind) on each Dividend Payment Date in an amount per Unit equal to the aggregate
per share amount of all noncash 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 shares of
common stock since the immediately preceding Dividend Payment Date, or with
respect to the first Dividend Payment Date, since the first issuance of a Unit
of Series A Preferred Stock. In the event that the Corporation shall at any time
after May 1, 1996 (the "Rights Declaration Date"), (i) declare any dividend on
outstanding shares of common stock payable in shares of common stock, (ii)
subdivide outstanding shares of common stock or (iii) combine outstanding shares
of common stock into a smaller number of shares, then in each such case the
amount to which the holder of a Unit of Series A Preferred Stock was entitled
immediately prior to such event pursuant to the next preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which shall
be the number of shares of common stock that are outstanding immediately after
such event and the denominator of which shall be the number of shares of common
stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on Units of
Series A Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the shares of common stock (other than a
dividend payable in shares of common stock).
Section 37. Voting Rights. The holders of Units of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each Unit of Series A Preferred Stock shall entitle the holder thereof to
one vote on all matters submitted to a vote of the holders of Common Stock
of the Corporation. In the event the Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock or
Page 60 of 69
<PAGE>
(iii) combine the outstanding shares of Common Stock into a smaller number
of shares, then in each such case the number of votes per Unit to which
holders of Units of Series A Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a
fraction the numerator of which shall be the number of shares of Common
Stock outstanding immediately after such event and the denominator of which
shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
Units of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
holders of Common Stock of the Corporation.
(C) Except as set forth herein, holders of Units of Series A Preferred
Stock shall have no special voting rights and their consents shall not be
required (except to the extent they are entitled to vote with holders of
shares of Common Stock as set forth herein) for taking any corporate
action.
Section 38. Certain Restrictions.
(A) Whenever any dividends or distributions payable, on Units of Series A
Preferred Stock as provided in Section 2 have not been paid in full, thereafter
and until all such accrued and unpaid dividends and distributions, whether or
not declared, on outstanding Units of Series A Preferred Stock shall have been
paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or repurchase or otherwise acquire for consideration, any shares of
junior stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of parity stock, except dividends paid ratably on Units of
Series A Preferred Stock and shares of all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of such Units and all such shares are then entitled;
(iii) redeem or repurchase or otherwise acquire for consideration
shares of any parity stock; provided, however, that the Corporation may at
any time redeem, repurchase or otherwise acquire shares of any such parity
stock in exchange for shares of any junior stock;
(iv) repurchase or otherwise acquire for consideration (other than
shares of junior stock) any Units of Series A Preferred Stock, except in
accordance with a repurchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such Units on the
same terms.
(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
Page 61 of 69
<PAGE>
Corporation could, under paragraph (A) of this Section 4, repurchase or
otherwise acquire such shares at such time and in such manner.
Section 39. Reacquired Shares. Any Units of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
Units shall, upon their cancellation, become authorized but unissued Units of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 40. Liquidation, Dissolution or Winding Up.
(A) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, no distribution shall be made (i) to the holders of
shares of junior stock unless the holders of Units of Series A Preferred Stock
shall have received, subject to adjustment as hereinafter provided in paragraph
(B), the amount, per Unit, equal to the aggregate per share amount to be
distributed to holders of shares of common stock, or (ii) to the holders of
shares of parity stock, unless simultaneously therewith distributions are made
ratably on Units of Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of Units of Series
A Preferred Stock are entitled under clause (i) of this sentence and to which
the holders of shares of such parity stock are entitled, in each case upon such
liquidation, dissolution or winding up.
(B) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of common stock
payable in shares of common stock, (ii) subdivide outstanding shares of common
stock, or (iii) combine outstanding shares of common stock into a smaller number
of shares, then in each such case the aggregate amount to which holders of Units
of Series A Preferred Stock were entitled immediately prior to such event
pursuant to clause (i)(b) of paragraph (A) of this Section 6 shall be adjusted
by multiplying such amount by a fraction the numerator of which shall be the
number of shares of common stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of common stock
that were outstanding immediately prior to such event.
Section 41. 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 converted into other stock or
securities, cash and/or any other property, then in any such case Units of
Series A Preferred Stock shall at the same time be similarly exchanged for or
converted into an amount per Unit (subject to the provision for adjustment
hereinafter set forth) equal to 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 converted or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on outstanding shares of common stock payable in shares of common
stock, (ii) subdivide
Page 62 of 69
<PAGE>
outstanding shares of common stock, or (iii) combine outstanding common stock
into a smaller number of shares, then in each such case the amount set forth in
the immediately preceding sentence with respect to the exchange or conversion of
Units of Series A Preferred Stock shall be adjusted by multiplying such amount
by a fraction the numerator of which shall be the number of shares of common
stock that are outstanding immediately after such event and the denominator of
which shall be the number of shares of common stock that were outstanding
immediately prior to such event.
Section 42. Redemption. The Units of Series A Preferred Stock shall not be
redeemable.
Section 43. Ranking. The Units of Series A Preferred Stock shall rank
junior to all other series of the Preferred Stock and to any other class of
preferred stock that hereafter may be issued by the Corporation as to the
payment of dividends and the distribution of assets, unless the terms of any
such series or class shall provide otherwise.
Section 44. Amendment. The Articles, including, without limitation, this
resolution, shall not hereafter be amended, either directly or indirectly, or
through merger or consolidation with another corporation in any manner that
would alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding Units of Series A Preferred
Stock, voting separately as a class.
Section 45. Fractional Shares. The Series A Preferred Stock may be issued
in Units or other fractions of a share, which Units or fractions shall entitle
the holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Preferred Stock.
Section 46. Certain Definitions. As used herein with respect to the Series
A Preferred Stock, the following terms shall have the following meanings:
(A) The term "Common Stock" means the class of common stock designated
as the Common Stock, par value $.01 per share, of the Corporation at the
date hereof or any other class of stock resulting from successive changes
or reclassification of the common stock.
(B) The term "junior stock" (i) as used in Section 4 means the common
stock and any other class or series of capital stock of the Corporation
hereafter authorized or issued over which the Series A Preferred Stock has
preference or priority as to the payment of dividends and (ii) as used in
Section 6, shall mean the common stock and any other class or series of
capital stock of the Corporation over which the Series A Preferred Stock
has preference or priority in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
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(C) The term "parity stock" (i) as used in Section 4, means any class
or series of stock of the Corporation hereafter authorized or issued
ranking pari passu with the Series A Preferred Stock as to dividends and
(ii) as used in Section 6, shall mean any class or series of capital stock
ranking pari passu with the Series A Preferred Stock in the distribution of
assets on any liquidation, dissolution or winding up.
IN WITNESS WHEREOF, Liberty Technologies, Inc. has caused these Articles to
be signed by its President, and attested by its Secretary as of the _____ day of
May, 1996.
LIBERTY TECHNOLOGIES, INC.
By: _______________________________
R. Nim Evatt, President
Attest:
By: _________________________
James D. Rosener,
Secretary
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EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On May 1, 1996, the Board of Directors of Liberty Technologies, Inc., a
Pennsylvania corporation (the "Company"), declared a distribution of one Right
(as defined below) for each outstanding share of Common Stock, par value $.01
per share (the "Company Common Stock"), to stockholders of record at the close
of business on May 17, 1996 (the "Record Date") and for each share of Company
Common Stock issued (including shares distributed from Treasury) by the Company
thereafter and prior to the Distribution Date. Each Right entitles the
registered holder, subject to the terms of the Rights Agreement dated as of May
1, 1996 with StockTrans, Inc., as Rights Agent (the "Rights Agreement") to
purchase from the Company one one-thousandth of a share (a "Unit") of Series A
Preferred Stock, par value $.001 per share (the "Preferred Stock"), at a
Purchase Price of $48.00 per Unit, subject to adjustment (the "Right"). The
Purchase Price is payable in cash or by certified or bank check or money order
payable to the order of the Company.
On October 6, 1997, the Company amended and restated the Rights Agreement
(the "Amended and Restated Rights Agreement"). The Amended and Restated Rights
Agreement exempts from its definition of Acquiring Person (as defined below) any
person that acquires, obtains the right to acquire, or otherwise obtains
beneficial ownership of 15% or more of the then outstanding shares of Company
Common Stock without any intention of changing or influencing control of the
Company provided that such person, as promptly as practicable, divests himself
or itself of a sufficient number of shares of Common Stock so that such person
would no longer own 15% or more of the outstanding shares of Company Common
Stock. The Amended and Restated Rights Agreement also designates L. Mark Newman,
Larry D. Hornbeck, Don V. Ingram, Stephen F. Smith, Stephen A. Wells, Walter
Epstein, Energy Consolidation, Inc., Atalanta Investment Company and Atalanta
Selective Fund Number Six, Limited Partnership as Exempt Persons, so long as
those parties and their affiliates and associates are in compliance with the
Standstill Agreement between the Company and certain of the aforementioned
individuals and entities dated August 18, 1997. In addition, the Amended and
Restated Rights Agreement makes certain minor changes, corrects certain errors,
and provides the independent directors of the Company with some discretion in
determining when the Distribution Date (as defined below) shall occur and the
date until which the Rights may be redeemed. The description and terms of the
Rights are set forth in an Amended and Restated Rights Agreement.
Copies of the Amended and Restated Rights Agreement and the Designation for
the Preferred Stock have been filed with the Securities and Exchange Commission
as exhibits to a Current Report on Form 8-K dated October 6, 1997 (the "Form
8-K"). Copies of the Amended and Restated Rights Agreement and the Designation
are available free of charge from the Company.
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This summary description of the Amended and Restated Rights Agreement, the
Rights and the Preferred Stock does not purport to be complete and is qualified
in its entirety by reference to all the provisions of the Amended and Restated
Rights Agreement and the Designation, including the definitions therein of
certain terms, which Amended and Restated Rights Agreement and Designation are
incorporated herein by reference.
The Amended and Restated Rights Agreement
Pursuant to the terms of the Amended and Restated Rights Agreement, the
Rights initially will attach to all certificates representing shares of
outstanding Company Common Stock, and no separate Rights Certificates will be
distributed. The Rights will separate from the Company Common Stock and the
"Distribution Date" will occur (i) upon the earlier of (x) 10 business days
following a public announcement (the date of such announcement being the "Stock
Acquisition Date") that a person or group of affiliated or associated persons
(other than the Company, any subsidiary of the Company or any employee benefit
plan of the Company or such subsidiary) (an "Acquiring Person") has acquired,
obtained the right to acquire, or otherwise obtained beneficial ownership of 15%
or more of the then outstanding shares of Company Common Stock, and (y) 10
business days following the commencement of a tender offer or exchange offer
that would result in an Acquiring Person owning 15% or more of the then
outstanding shares of Company Common Stock, or (ii) such later date as may be
determined by action of a majority of the independent members of the Board of
Directors (such determination to be made prior to such time as any person
becomes an Acquiring Person pursuant to (x) or (y) above). As noted above, the
Amended and Restated Rights Agreement exempts from its definition of Acquiring
Person any person that acquires, obtains the right to acquire, or otherwise
obtains beneficial ownership of 15% or more of the then outstanding shares of
Company Common Stock without any intention of changing or influencing control of
the Company provided that such person, as promptly as practicable, divests
himself or itself of a sufficient number of shares of Common Stock so that such
person would no longer own 15% or more of the outstanding shares of Company
Common Stock. Until the Distribution Date, (i) the Rights will be evidenced by
Company Common Stock certificates and will be transferred with and only with
such Company Common Stock certificates, (ii) new Company Common Stock
certificates issued after the Record Date (also including shares distributed
from Treasury) will contain a notation incorporating the Amended and Restated
Rights Agreement by reference and (iii) the surrender for transfer of any
certificates representing outstanding Company Common Stock will also constitute
the transfer of the Rights associated with the Company Common Stock represented
by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on the tenth anniversary of the Rights Agreement unless
earlier redeemed by the Company as described below.
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<PAGE>
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Company Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a Person becomes the beneficial owner of 15% or more of the
then outstanding shares of Company Common Stock, (iii) an Acquiring Person
engages in one or more "self-dealing" transactions as set forth in the Amended
and Restated Rights Agreement, or (iv) during such time as there is an Acquiring
Person, an event occurs which results in such Acquiring Person's ownership
interest being increased by more than 1% (e.g., by means of a reverse stock
split or recapitalization), then, in each such case, each holder of a Right will
thereafter have the right to receive, upon exercise, Units of Preferred Stock
(or, in certain circumstances, Company Common Stock, cash, property or other
securities of the Company) having a current market value equal to two times the
exercise price of the Right. The exercise price is the Purchase Price multiplied
by the number of Units of Preferred Stock issuable upon exercise of a Right
prior to the events described in this paragraph. Notwithstanding any of the
foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in the
Amended and Restated Rights Agreement) were, beneficially owned by any Acquiring
Person will be null and void.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction
and the Company is not the surviving corporation (other than a merger described
in the preceding paragraph), (ii) any Person consolidates or merges with the
Company and all or part of the Company Common Stock is converted or exchanged
for securities, cash or property of any other Person or (iii) 50% or more of the
Company's assets or earning power is sold or transferred, each holder of a Right
(except Rights which previously have been voided as described above) shall
thereafter have the right to receive, upon exercise, common stock of the
Acquiring Person having a current market value equal to two times the exercise
price of the Right.
In light of the fact that certain stockholders of the Company currently own
in excess of 15% of the outstanding Company Common Stock, the Amended and
Restated Rights Agreement exempts those stockholders from triggering the
distribution of the Rights ("Exempt Persons") unless they, individually or
together with their affiliates or associates, increase their beneficial
ownership of outstanding Company Common Stock by more than 5% of the then
outstanding shares of Company Common Stock. These stockholders consist of Edison
Venture Fund, L.P., and their affiliates and associates. The Amended and
Restated Rights Agreement also designates L. Mark Newman, Larry D. Hornbeck, Don
V. Ingram, Stephen F. Smith, Stephen A. Wells, Walter Epstein, Energy
Consolidation, Inc., Atalanta Investment Company and Atalanta Selective Fund
Number Six, Limited Partnership as Exempt Persons, so long as those parties and
their affiliates and associates are in compliance with the Standstill Agreement
between the Company and certain of the aforementioned individuals and entities
dated August 18, 1997.
Page 67 of 69
<PAGE>
The Purchase Price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.
At any time until (i) ten business days following the Stock Acquisition
Date or (ii) such later date as a majority of the independent members of the
Board of Directors shall determine (such determination to be made prior to the
date specified in (i) above), a majority of the Independent Directors may redeem
the Rights in whole, but not in part, at a price of $.001 per Right (subject to
adjustment in certain events) (the "Redemption Price"), payable, at the election
of such majority of the Independent Directors, in cash or shares of Company
Common Stock. Immediately upon the action of a majority of the Independent
Directors ordering the redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock (or other consideration).
Any of the provisions of the Amended and Restated Rights Agreement may be
amended without the approval of the holders of Company Common Stock at any time
prior to the Distribution Date. After the Distribution Date, the provisions of
the Amended and Restated Rights Agreement may be amended in order to cure any
ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or to shorten or lengthen any time period under the Amended
and Restated Rights Agreement; provided, however, that no amendment to adjust
the time period governing redemption shall be made at such time as the Rights
are not redeemable.
The Preferred Stock
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<PAGE>
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company.
Each Unit of Preferred Stock will be entitled to dividends at the same rate
per share as dividends declared on the Company Common Stock and shall be
entitled to payment of dividends to the extent dividends are declared on the
Company Common Stock. In the event of liquidation, the holder of a Unit of
Preferred Stock will receive the per share amount paid in respect of a share of
Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock. Each Unit of Preferred Stock will have one vote, voting
together with the Company Common Stock. The rights of holders of the Preferred
Stock to dividends, liquidation and voting, and in the event of mergers and
consolidations, are protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of the Company Common Stock.
Page 69 of 69
