SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A/A
AMENDMENT NO. 2
(File No. 1-7259)
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SOUTHWEST AIRLINES CO.
(Exact name of registrant as specified in its charter)
Texas 74-1563240
(State of Incorporation or organization) (I.R.S. Employer
Identification Number)
P.O. Box 36611
Dallas, Texas 75235-1611
(Address of principal executive offices) (Zip code)
Securities to be registered pursuant to Section 12(b) of the
Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Common Share Rights New York Stock Exchange
Securities to be registered pursuant to Section 12(g) of the Act: None
The purpose of this amendment is to file Exhibit 2
which was inadvertently omitted from Amendment No. 1.
Item 2. Exhibits.
1. Amended and Restated Rights Agreement, dated as of
July 18, 1996, between the Company and Continental Stock
Transfer & Trust Company, as Rights Agent, specifying the
terms of the Rights, which includes the form of Right
Certificate as Exhibit A.
2. Form of Right Certificate (included as Exhibit A
to the Rights Agreement (Exhibit 1 hereto)). Pursuant to
the Rights Agreement, printed Right Certificates will not be
delivered until as soon as practicable after the
Distribution Date.
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.
SOUTHWEST AIRLINES CO.
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Date: August 12, 1996 By: /s/ Gary C. Kelly
Gary C. Kelly
Vice President Finance
and Chief Financial Officer
(Principal Financial and
Accounting Officer)
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EXHIBIT INDEX
Exhibit No.
1.Amended and Restated Rights Agreement, dated as of
July 18, 1996, between the Company and Continental Stock
Transfer & Trust Company, as Rights Agent, specifying the
terms of the Rights, which includes the form of Right
Certificate as Exhibit A.
2.Form of Right Certificate (included as Exhibit A to the
Rights Agreement (Exhibit 1 hereto)). Pursuant to the
Rights Agreement, printed Right Certificates will not be
delivered until as soon as practicable after the
Distribution Date.
AMENDED AND RESTATED
RIGHTS AGREEMENT
between
SOUTHWEST AIRLINES CO.
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY,
as rights agent
Dated as of July 18, 1996
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Section 1. Certain Definitions 2
Section 2. Appointment of Rights Agent 10
Section 3. Issue of Right Certificates 10
Section 4. Form of Right Certificates 13
Section 5. Execution, Authentication and Delivery 14
Section 6. Registration, Registration of Transfer and
Exchange 15
Section 7. Mutilated, Destroyed, Lost and Stolen Right
Certificates 17
Section 8. Exercise of Rights; Purchase Price; Expiration
Date of Rights 18
Section 9. Cancellation and Destruction of Right
Certificates 19
Section 10. Reservation and Availability of Shares 20
Section 11. Record Date 20
Section 12. Adjustment of Purchase Price, Number of Shares
or Number of Rights 21
Section 13. Certificate of Adjusted Purchase Price or
Number of Shares 29
Section 14. Consolidation, Merger or Sale or Transfer of
Assets or Earning Power 30
Section 15. Fractional Rights and Fractional Shares 32
Section 16. Rights of Action 33
Section 17. Agreement of Right Holders 34
Section 18. Right Certificate Holder Not Deemed a
Stockholder 35
Section 19. Concerning the Rights Agent 36
Section 20. Duties of Rights Agent 36
Section 21. Merger or Consolidation or Change of Name of
Rights Agent 39
Section 22. Change of Rights Agent 40
Section 23. Issuance of New Right Certificates 41
Section 24. Redemption 42
Section 25. Mandatory Redemption and Exchange 44
Section 26. Notice of Certain Events 45
Section 27. Securities Laws Registrations 46
Section 28. Notices 47
Section 29. Supplements and Amendments 48
Section 30. Successors 49
Section 31. Benefits of this Agreement 49
Section 32. Severability 49
Section 33. Governing Law 50
Section 34. Counterparts 50
Section 35. Table of Contents and Descriptive Headings 50
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Exhibit A - Right Certificate
AMENDED AND RESTATED
RIGHTS AGREEMENT
This Amended and Restated Rights Agreement, dated as of
July 18, 1996, is between Southwest Airlines Co., a Texas
corporation (the "Company"), and Continental Stock
Transfer & Trust Company, a trust company organized under
the laws of the State of New York, as Rights Agent.
WHEREAS, on July 14, 1986, the Board of Directors of
the Company authorized and declared a dividend of one Right
with respect to each Common Share of the Company outstanding
on July 31, 1986, and further authorized and directed the
issuance of one Right with respect to each Common Share that
shall become outstanding between July 31, 1986 and the
earlier of the Distribution Date, the Redemption Date and
the Final Expiration Date;
WHEREAS, the Company and the Rights Agent are parties
to that certain Rights Agreement, dated as of July 14, 1986,
as amended on December 1, 1990 (such Rights Agreement, as so
amended, being referred to as the "Original Rights
Agreement"), which Original Rights Agreement sets forth the
terms and conditions under which the Rights have been and
are to be distributed, including without limitation those
affecting the exercise thereof, the securities or other
property to be acquired thereby and the purchase price to be
paid therefor;
WHEREAS, Section 28 of the Original Rights Agreement
permits the Company to supplement or amend the Original
Rights Agreement, without the approval of any holders of
Rights, for certain purposes, including extending the Final
Expiration Date;
WHEREAS, pursuant to and in accordance with Section 28
of the Original Rights Agreement, the Board of Directors of
the Company has authorized various supplements and
amendments thereto, none of which adversely affect the
interests of the holders of the Rights, in order, among
other things, to extend the Final Expiration Date; and
WHEREAS, the Company desires to evidence such
supplements and amendments, and the Company further desires
to set forth in a single document the Original Rights
Agreement, as supplemented and amended through the date
hereof, reflecting the initial Purchase Price and the
initial redemption price of the Rights, each as adjusted
through the date hereof;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereto
agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms shall have the meanings
indicated:
"Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of
such Person, shall be the Beneficial Owner of 15% or
more of the Voting Shares of the Company then
outstanding, but shall not include the Company, any
Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company or any
trustee of or fiduciary with respect to any such plan
when acting in such capacity. Notwithstanding the
foregoing, no Person shall become an "Acquiring Person"
as the result of an acquisition of Voting Shares by the
Company which, by reducing the number of shares
outstanding, increases the proportionate number of
shares beneficially owned by such Person to 15% or more
of the Voting Shares of the Company then outstanding;
provided, however, that, if a Person shall become the
Beneficial Owner of 15% or more of the Voting Shares of
the Company then outstanding by reason of share
purchases by the Company and shall, after such share
purchases by the Company and at a time when such Person
is the Beneficial Owner of 15% or more of the Voting
Shares of the Company then outstanding, become the
Beneficial Owner of any additional percentage of the
outstanding Voting Shares of the Company, then such
Person shall be deemed to be an "Acquiring Person".
Notwithstanding the foregoing, if the Board of
Directors of the Company determines in good faith that
a Person who would otherwise be an "Acquiring Person",
as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such
Person divests as promptly as practicable a sufficient
number of Common Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to
the foregoing provisions of this paragraph (a), then
such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement.
"Agreement" shall mean this Amended and Restated
Rights Agreement as hereafter amended from time to
time.
"Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in
Rule 12b-2 of the General Rules and Regulations under
the Exchange Act as in effect on the date of this
Agreement.
A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "own beneficially" any
securities which (without duplication):
(i) such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or
indirectly, within the meaning of either Section 13 or
16 of the Exchange Act;
(ii) such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire
(whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary
agreements with and between underwriters and selling
group members with respect to a bona fide public
offering of securities), or upon the exercise of
conversion rights, exchange rights, rights (other than
these Rights), warrants or options, or otherwise; or
(B) the right to vote pursuant to any agreement,
arrangement or understanding; or
(iii) are beneficially owned, directly or
indirectly, by any other Person with which such Person
or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and
selling group members with respect to a bona fide
public offering of securities) for the purpose of
acquiring, holding, voting or disposing of any
securities of the Company; provided, however, that, for
purposes of each clause of this definition, a Person
shall not be deemed the Beneficial Owner of, or to own
beneficially, securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or
exchange; and provided, further, that, for purposes of
each clause of this definition, a Person shall not be
deemed the Beneficial Owner of, or to own beneficially,
any security as a result of any agreement, arrangement
or understanding to vote such security if such
agreement, arrangement or understanding (1) arises
solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on
Schedule 13D under the Exchange Act (or any comparable
or successor report).
Notwithstanding anything in this definition to the
contrary, the phrase "then outstanding", when used with
reference to a Person's Beneficial Ownership of
securities of the Company (or to the number of such
securities "beneficially owned"), shall mean the number
of such securities then issued and outstanding together
with the number of such securities not then actually
issued and outstanding which such Person would be
deemed to own beneficially hereunder.
"Business Day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions
in the State of Texas (or the state wherein the
Corporate Trust Office is located) are authorized or
obligated by law or executive order to close.
"Close of Business" on any given date shall mean
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.
"Closing Price", with respect to any security,
shall mean the last sale price, regular way, on a
specific Trading Day or, in case no such sale takes
place on such Trading Day, the average of the closing
bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction
reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or,
if such security is not then listed or admitted to
trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system
with respect to securities listed on the principal
national securities exchange on which such security is
listed or admitted to trading or, if such security is
not then 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 Quotations System or such other system then
in use, or, if on any such Trading Day such security is
not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a
professional market maker making a market in such
security selected by the Board of Directors of the
Company. If such security is not publicly held or so
listed or traded, "Closing Price" shall mean the fair
value per unit of such security as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described and the Closing Price
set forth in a statement filed with the Rights Agent.
"Common Shares" when used with reference to the
Company shall mean shares of capital stock of the
Company which have no preference over any other class
of stock with respect to dividends or assets, which are
not redeemable at the option of the Company and with
respect to which no sinking, purchase or similar fund
is provided and shall initially mean the shares of
Common Stock, par value $1.00 each, of the Company.
"Common Shares" when used with reference to any Person
other than the Company shall, if used with reference to
a corporation, mean the capital stock (or equity inter
est) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately
control such first-mentioned Person and, if used with
reference to any other Person, mean the equity interest
in such Person (or, if the net worth determined in
accordance with generally accepted accounting
principles of another Person (other than an individual)
which controls such first-mentioned Person is greater
than such first-mentioned Person, then such other
Person) with the greatest voting power or managerial
power with respect to the business and affairs of such
Person.
"Company" shall mean Southwest Airlines Co., a
Texas corporation, and its successors.
"Company Order" means a written request or
order signed in the name of the Company by its Chairman
of the Board, a Vice Chairman of the Board, its
President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Rights Agent.
"Corporate Trust Office" means the principal
office of the Rights Agent at which it administers its
corporate trust business, which, in the case of
Continental Stock Transfer & Trust Company shall, until
hereafter changed, be its office at 2 Broadway, New
York, New York 10004.
"Distribution Date" shall mean the earlier of (i)
the Shares Acquisition Date or (ii) the date of
commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company, or any
trustee of or fiduciary with respect to any such plan
when acting in such capacity) of, or the date of the
first public announcement of the intent of any Person
(other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any
Subsidiary of the Company, or any trustee of or
fiduciary with respect to any such plan when acting in
such capacity) to commence, a tender or exchange offer
the consummation of which would result in such Person
becoming an Acquiring Person.
"Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, and any successor statute
thereto.
"Final Expiration Date" shall mean the later of
the Close of Business on July 30, 2006 or the third
anniversary of the Distribution Date.
The terms "holder," "holder of record,"
"registered holder" and "record holder" have the same
meaning and, when used with respect to any Rights from
and after the Distribution Date, mean the Person in
whose name the Right is registered in the Rights
Register.
"Person" shall mean any individual, firm, corporation,
partnership, limited partnership, limited liability
company, trust or other entity, and shall include any
successor (by merger or otherwise) of such entity.
"Purchase Price" shall mean the initial price at
which the holder of a Right may, subject to the terms
and conditions of this Agreement, purchase one Common
Share (which initial price is set forth in Section 8(b)
hereof), as such price shall be adjusted pursuant to
the terms of this Agreement.
"Redemption Date" shall mean the time at which the
Rights are optionally redeemed pursuant to Section 24
hereof or the time at which all of the Rights are
mandatorily redeemed and exchanged pursuant to Section
25 hereof.
"Redemption Price" shall have the meaning
specified in Section 24(b) hereof.
"Right" shall mean one common share purchase right
which initially represents the right of the registered
holder thereof to purchase one Common Share upon the
terms and subject to the conditions herein set forth.
"Right Certificate" shall mean a certificate, in
substantially the form of Exhibit A attached to this
Agreement, evidencing the Rights registered in the name
of the holder thereof.
"Rights Agent" shall mean Continental Stock
Transfer & Trust Company, a trust company organized
under the laws of the State of New York, and any succes
sor thereto appointed in accordance with the terms
hereof, in its capacity as agent for the Company and
the holders of the Rights pursuant to this Agreement.
"Rights Register" and "Rights Registrar" shall
have the meanings specified in Section 6.
"Shares Acquisition Date" shall mean the first
date of public announcement (which for purposes of this
definition shall include without limitation a report
filed pursuant to Section 13(d) or Section 16(a) of the
Exchange Act) by the Company or an Acquiring Person
that an Acquiring Person has become such.
"Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the
outstanding capital stock or other equity interests
having ordinary voting power in the election of
directors or similar officials is owned, directly or
indirectly, by such Person.
"Summary of Rights" shall mean a Summary of Rights
to Purchase Common Shares in substantially the form
attached as Exhibit B to the Original Rights Agreement.
"Trading Day" shall mean a day on which the
principal national securities exchange or the NASDAQ
National Market on which any of the Voting Shares of
the Company are listed or admitted to trading is open
for the transaction of business or, if none of the
Voting Shares of the Company is listed or admitted to
trading on any national stock exchange or the NASDAQ
National Market, a Business Day.
"Voting Shares" shall mean (i) the Common Shares
of the Company and (ii) any other shares of capital
stock of the Company entitled to vote generally in the
election of directors or entitled to vote together with
the Common Shares in respect of any merger or
consolidation of the Company, any sale of all or
substantially all of the Company's assets or any
liquidation, dissolution or winding up of the Company.
Whenever any provision of this Agreement requires a
determination of whether a number of Voting Shares
comprising a specified percentage of such Voting Shares
is, was or will be beneficially owned or has been
voted, tendered, acquired, sold or otherwise disposed
of or a determination of whether a Person has offered
or proposed to acquire a number of Voting Shares
comprising such specified percentage, the number of
Voting Shares comprising such specified percentage of
Voting Shares shall in every such case be deemed to be
the number of Voting Shares comprising the specified
percentage of all the Company's then outstanding Voting
Shares.
"Wholly-Owned Subsidiary" of a Person shall mean
any corporation or other entity all the outstanding
capital stock or other equity interests of which having
ordinary voting power in the election of directors or
similar officials (other than directors' qualifying
shares or similar interests) are owned, directly or
indirectly, by such Person.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance
with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Shares of the Company) in
accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company
may from time to time appoint such co-Rights Agents as it
may deem necessary or desirable upon ten (10) days' prior
written notice to the Rights Agent. The Rights Agent shall
have no duty to supervise, and shall in no event be liable
for, the acts or omissions of any such co-Rights Agent.
Section 3. Issue of Right Certificates. (a) From and
after July 31, 1986 until the Distribution Date, (i) out
standing Rights will be evidenced (subject to the provisions
of paragraph (b) of this Section 3) by the certificates for
outstanding Common Shares of the Company and not by separate
Right Certificates, and (ii) the right to receive Right
Certificates will be transferable only in connection with
the transfer of Common Shares of the Company. As soon as
practicable after the Distribution Date, the Company (or, at
its request and expense, the Rights Agent) will send, by
first-class, insured, postage-prepaid mail, to each record
holder of Common Shares of the Company as of the Close of
Business on the Distribution Date, at the address of such
holder shown on the stock transfer records of the Company, a
Right Certificate evidencing one Right for each Common Share
so held. From and after the Distribution Date, the Rights
will be evidenced solely by such Right Certificates. The
Company will give the Rights Agent prior notice of the
Distribution Date.
(b) On July 31, 1986, or as soon thereafter as
practicable, the Company will send a copy of a Summary of
Rights, by first-class, postage-prepaid mail, to each record
holder of Common Shares of the Company as of the Close of
Business on July 31, 1986, at the address of such holder
shown on the stock transfer records of the Company. With
respect to Common Shares outstanding on July 31, 1986, the
certificates evidencing such Common Shares shall, together
with copies of such Summary of Rights, thereafter also
evidence the outstanding Rights (as such Rights may be
amended or supplemented) distributed with respect thereto
until the earlier of the Distribution Date or the date of
surrender thereof to the Company's transfer agent for
registration of transfer or exchange of Common Shares.
Until the Distribution Date (or, if earlier, the Redemption
Date or Final Expiration Date), the surrender for
registration of transfer or exchange of any certificate for
Common Shares outstanding as of the Close of Business on
July 31, 1986, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the surrender
for registration of transfer or exchange of the outstanding
Rights associated with the Common Shares represented
thereby.
(c) The Company agrees that, at any time after
July 31, 1986 and prior to the Distribution Date (or, if
earlier, the Redemption Date or Final Expiration Date) at
which it issues any of its Common Shares upon original issue
or out of treasury, it will concurrently distribute to the
holder of such Common Shares one Right for each such Common
Share, which Right shall be subject to the terms and
provisions of this Agreement and will evidence the right to
purchase the same number of Common Shares at the same
Purchase Price as the Rights then outstanding.
(d) Certificates for Common Shares issued after
July 31, 1986 but prior to the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date,
whether upon registration of transfer or exchange of Common
Shares outstanding on July 31, 1986 or upon original issue
or out of treasury thereafter, shall have impressed on,
printed on, written on or otherwise affixed to them the
following legend (or, in lieu thereof, the legend set forth
in Section 3(d) of the Original Rights Agreement):
This certificate also evidences and entitles the
holder hereof to certain Rights as set forth in an
Amended and Restated Rights Agreement between Southwest
Airlines Co. and Continental Stock Transfer & Trust
Company, dated as of July 18, 1996 (the "Rights
Agreement"), the terms of which are hereby incorporated
herein by reference and copies of which are on file at
the principal place of business and the registered
office of Southwest Airlines Co. Under certain
circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate.
Southwest Airlines Co. will mail to the holder of this
certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. As
described in the Rights Agreement, Rights issued to or
acquired by any Acquiring Person or any Affiliate or
Associate thereof (each as defined in the Rights
Agreement) shall, under certain circumstances, become
null and void.
With respect to certificates containing either such legend,
until the Distribution Date, outstanding Rights associated
with the Common Shares represented by such certificates
shall be evidenced by such certificates alone, and the
surrender of any such certificate for registration of
transfer or exchange of the Common Shares evidenced thereby
shall also constitute surrender for registration of transfer
or exchange of outstanding Rights (as such Rights may be
amended or supplemented) associated with the Common Shares
represented thereby.
(e) If the Company purchases or acquires any of its
Common Shares after July 31, 1986, but prior to the Distri
bution Date, any Rights associated with such Common Shares
shall be deemed cancelled and retired so that the Company
shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. The Right
Certificates (and the forms of election to purchase Common
Shares (or other securities) and of assignment to be printed
on the reverse thereof) shall in form and substance be
substantially the same as 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 with any rule or
regulation made pursuant thereto or with any rule or regu
lation of any stock exchange on which the Rights may from
time to time be listed or as may be necessary to conform to
usage. The Right Certificates shall be in a machine
printable format. Subject to the provisions of Section 23
hereof, the Right Certificates, whenever issued, shall be
dated as of the date of authentication thereof, but, regard
less of any adjustments of the Purchase Price or the number
of Common Shares (or other securities) as to which a Right
is exercisable (whether pursuant to this Agreement or any
future amendments or supplements to this Agreement), or
both, occurring after July 18, 1996 and prior to the date of
such authentication, such Right Certificates may, on their
face, without invalidating or otherwise affecting any such
adjustment, expressly entitle the holders thereof to pur
chase such number of Common Shares at the Purchase Price per
one Common Share as to which a Right would be exercisable if
the Distribution Date were July 18, 1996; no adjustment of
the Purchase Price or the number of Common Shares (or other
securities) as to which a Right is exercisable, or both,
effected prior to or subsequent to the date of authenti
cation of any Right Certificate shall be invalidated or
otherwise affected by the fact that such adjustment is not
expressly reflected on the face or in the provisions of such
Right Certificate.
Pending the preparation of definitive Right Certifi
cates, the Company may execute, and upon Company Order the
Rights Agent shall authenticate and send, by first-class,
insured, postage-prepaid mail, to each record holder of
Common Shares of the Company as of the Close of Business on
the Distribution Date, temporary Right Certificates which
are printed, lithographed, typewritten, mimeographed or
otherwise produced substantially of the tenor of the
definitive Right Certificates in lieu of which they are
issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing
such Right Certificates may determine, as evidenced by their
execution of such Right Certificates.
If temporary Right Certificates are issued, the Company
will cause definitive Right Certificates to be prepared
without unreasonable delay. After the preparation of
definitive Right Certificates, the temporary Right Certifi
cates shall be exchangeable for definitive Right Certifi
cates, upon surrender of the temporary Right Certificates at
the Corporate Trust Office of the Rights Agent, without
charge to the holder. Upon surrender for cancellation of
any one or more temporary Right Certificates, the Company
shall execute and the Rights Agent shall authenticate and
deliver in exchange therefor one or more definitive Right
Certificates, evidencing a like number of Rights. Until so
exchanged, the temporary Right Certificates shall in all
respects be entitled to the same benefits under this Agree
ment as definitive Right Certificates.
Section 5. Execution, Authentication and Delivery.
The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, a Vice Chairman of the
Board, its President or one of its Vice Presidents, attested
by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Right Certificates
may be manual or facsimile.
Right Certificates bearing the manual or facsimile
signatures of individuals who were at any time the proper
officers of the Company shall bind the Company, notwith
standing that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery
of such Right Certificates or did not hold such offices at
the date of authentication of such Right Certificates.
At any time and from time to time after the execution
and delivery of this Agreement and prior to the Distribution
Date, the Company may deliver Right Certificates executed by
the Company to the Rights Agent for authentication, together
with a Company Order for the authentication and delivery of
such Right Certificates; and the Rights Agent in accordance
with such Company Order shall authenticate and deliver such
Right Certificates as in this Agreement provided and not
otherwise.
No Right Certificate shall be entitled to any benefit
under this Agreement or be valid or obligatory for any
purpose unless there appears on such Right Certificate a
certificate of authentication substantially in the form
provided for herein executed by an authorized signatory of
the Rights Agent, which need not be the same authorized
signatory for all of the Right Certificates, by manual
signature, and such certificate upon any Right Certificate
shall be conclusive evidence, and the only evidence, that
such Right Certificate has been duly authenticated and
delivered hereunder.
Section 6. Registration, Registration of Transfer and
Exchange. From and after the Distribution Date and prior to
the earlier of the Redemption Date and the Final Expiration
Date, the Company shall cause to be kept at the Corporate
Trust Office registry books (the "Rights Register") in
which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of
Right Certificates and of transfers of Rights. The Rights
Agent is hereby appointed the registrar and transfer agent
(the "Rights Registrar") for the purpose of registering
Right Certificates and transfers of Rights as herein
provided, and the Rights Agent agrees to maintain such
Rights Register in accordance with such regulations so long
as it continues to be designated as Rights Registrar
hereunder.
Upon surrender to the Rights Agent for registration of
transfer of any Right Certificate, the Company shall exe
cute, and the Rights Agent shall authenticate and deliver,
in the name of the designated transferee or transferees, one
or more new Right Certificates evidencing a like number of
Rights.
At the option of the holder, Right Certificates may be
exchanged for other Right Certificates upon surrender of the
Right Certificates to be exchanged to the Rights Agent.
Whenever any Right Certificates are so surrendered for
exchange, the Company shall execute, and the Rights Agent
shall authenticate and deliver, the Right Certificates which
the holder making the exchange is entitled to receive.
All Right Certificates issued upon any registration of
transfer or exchange of Right Certificates shall be the
valid obligations of the Company, evidencing the same
Rights, and entitled to the same benefits under this Agree
ment, as the Right Certificates surrendered upon such
registration of transfer or exchange.
Every Right Certificate presented or surrendered for
registration of transfer or exchange shall (if so required
by the Company or the Rights Agent) be duly endorsed, or
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Rights Registrar duly
executed, by the holder thereof or his attorney duly author
ized in writing.
No service charge shall be made for any registration of
transfer or exchange of Right Certificates, but the Company
may require payment by the holder of a sum sufficient to
cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or
exchange of Right Certificates, other than exchanges not
involving any transfer.
The provisions of this Section 6 shall be subject to
the provisions of Section 15.
Section 7. Mutilated, Destroyed, Lost and Stolen Right
Certificates. If any mutilated Right Certificate is surren
dered to the Rights Agent, the Company shall execute and the
Rights Agent shall authenticate and deliver in exchange
therefor a new Right Certificate of like tenor, for a like
number of Rights and bearing a registration number not con
temporaneously outstanding.
If there shall be delivered to the Company and the
Rights Agent (i) evidence to their satisfaction of the
destruction, loss or theft of a Right Certificate and (ii)
such security or indemnity, if any, as may be required by
them to save each of them and any agent of either of them
harmless, then, in the absence of notice to the Company or
the Rights Agent that such Right Certificate has been
acquired by a bona fide purchaser, the Company shall execute
and upon its request the Rights Agent shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Right
Certificate, a new Right Certificate of like tenor, for a
like number of Rights and bearing a registration number not
contemporaneously outstanding.
Upon the issuance of any new Right Certificate under
this Section, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights
Agent) connected therewith.
Every new Right Certificate issued pursuant to this
Section in lieu of any destroyed, lost or stolen Right
Certificate shall constitute an additional contractual
obligation of the Company, whether or not the destroyed,
lost or stolen Right Certificate shall be at any time
enforceable by anyone, and shall be entitled to all the
benefits of this Agreement equally and proportionately with
any and all other Right Certificates duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and rem
edies with respect to the replacement or payment of muti
lated, destroyed, lost or stolen Right Certificates.
Section 8. Exercise of Rights; Purchase Price; Expira
tion Date of Rights. (a) The registered holder of any Right
Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on
the reverse side thereof duly executed, to the Rights Agent
at its Corporate Trust Office, together with payment of the
Purchase Price for each Common Share (or other securities)
as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on the Final
Expiration Date, (ii) the time on the Redemption Date such
Rights are optionally redeemed as provided in Section 24
hereof or (iii) the time at which such Rights are
mandatorily redeemed and exchanged as provided in Section 25
hereof.
(b) The Purchase Price for each Common Share
pursuant to the exercise of a Right shall initially be
sixteen dollars and sixty-seven cents ($16.67), shall be
subject to adjustment from time to time as provided in
Sections 12 and 14 hereof and shall be payable in lawful
money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Right Certificate repre
senting exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the
Purchase Price for the securities to be purchased and an
amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance
with Section 10 in cash, or by certified check or cashier's
check payable to the order of the Company, the Rights Agent
shall thereupon promptly (i) requisition from any transfer
agent of the Common Shares (or other securities), or make
available, if the Rights Agent is such a transfer agent,
certificates for such number of Common Shares (or other
securities) as are to be purchased and registered in such
name or names as may be designated by the registered holder
of such Right Certificate, and the Company hereby
irrevocably authorizes its transfer agent to comply with all
such requests, (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 15 hereof,
(iii) after receipt of such certificates registered in such
name or names as may be designated by such holder, cause the
same to be delivered to or upon the order of the registered
holder of such Right Certificate and (iv) when appropriate,
after receipt, deliver such cash to or upon the order of
such holder.
(d) If the registered holder of the Right Certif
icate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equal to
the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to
the provisions of Section 15 hereof.
Section 9. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the
purpose of exercise, transfer or exchange shall, if surren
dered to the Company or to any of its other agents, be
delivered to the Rights Agent for such purpose and for
cancellation or, if surrendered to the Rights Agent for such
purpose, shall be cancelled by it. No Right Certificates
shall be authenticated in lieu of or in exchange for any
Right Certificates cancelled as provided in this Section
except as expressly permitted by any of the provisions of
this Agreement. The Company shall deliver to the Rights
Agent for cancellation, and the Rights Agent shall so
cancel, any other Right Certificate purchased or acquired by
the Company. The Rights Agent shall destroy all cancelled
Right Certificates and shall deliver a certificate of
destruction thereof to the Company, or shall, pursuant to a
Company Order, deliver all cancelled Right Certificates to
the Company.
Section 10. Reservation and Availability of Shares.
The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and
unissued Common Shares or any Common Shares held in its
treasury, the number of Common Shares that will be
sufficient to permit the exercise in full of all outstanding
Rights.
The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all Common
Shares of the Company issued upon exercise of Rights shall
(subject to payment of the Purchase Price) be duly
authorized, validly issued, fully paid and nonassessable.
The Company further covenants and agrees that it will
pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect
of the issuance or delivery of the Right Certificates or of
any Common Shares of the Company upon the exercise of
Rights. The Company shall not, however, be required (i) to
pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a Person other
than, or in respect of the issuance or delivery of certifi
cates for Common Shares of the Company in a name other than
that of, the registered holder of the Right Certificate
evidencing Rights surrendered for transfer or exercise or
(ii) to issue or deliver any certificates for Common Shares
of the Company upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surren
der thereof) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 11. Record Date. Each Person in whose name
any certificate for Common Shares of the Company is issued
upon the exercise of, or upon mandatory redemption and
exchange of, Rights shall for all purposes be deemed to have
become the holder of record of the Common Shares represented
thereby on, and such certificate shall be dated, (i) in the
case of the exercise of Rights, the date upon which the
Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made, or (ii) in the case of
the mandatory redemption and exchange of Rights, the date of
such mandatory redemption and exchange; provided, however,
that, if the date of such surrender and payment or mandatory
redemption and exchange is a date upon which the transfer
books of the Company for its Common Shares are closed, such
Person shall be deemed to have become the record holder of
such shares on, and such certificate shall be dated, the
next succeeding Business Day on which such transfer books of
the Company are open.
Section 12. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number
and kind of shares of capital stock of the Company covered
by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this
Section 12.
(a) (i) If the Company shall at any time after
the date of this Agreement (A) pay a dividend on the Common
Shares payable in Common Shares, (B) subdivide the
outstanding Common Shares, (C) combine the outstanding
Common Shares into a smaller number of Common Shares or (D)
issue any shares of its capital stock in a reclassification
of the Common Shares (including any such reclassification in
connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except
as otherwise provided in this Section 12(a), the Purchase
Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right
exercised thereafter shall be entitled to receive, upon
payment of the Purchase Price for the number of Common
Shares for which a Right was exercisable immediately prior
to such date, the aggregate number and kind of shares of
capital stock which, if such Right had been duly exercised
immediately prior to such date (and at a time when the
Common Shares transfer books of the Company were open), such
holder would have acquired upon such exercise and been
entitled to receive upon payment or effectuation of such
dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. If an event
occurs which would require an adjustment under both
Section 12(a)(i) and Section 12(a)(ii), the adjustment
provided for in this Section 12(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required
pursuant to Section 12(a)(ii).
(ii) Subject to action of the Board of Directors
of the Company pursuant to Section 25 of this Agreement, if
any Person shall become an Acquiring Person prior to the
Final Expiration Date, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at
a price equal to the then current Purchase Price multiplied
by the number of Common Shares for which a Right is then
exercisable, in accordance with the terms of this Agreement,
such number of Common Shares of the Company as shall equal
the result obtained by (x) multiplying the then current
Purchase Price by the number of Common Shares for which a
Right is then exercisable and dividing that product by (y)
50% of the then current per share market price of the
Company's Common Shares (determined pursuant to Section
12(d)) on the date such Person became an Acquiring Person.
If any Person shall become an Acquiring Person and the
Rights shall then be outstanding, the Company shall not take
any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
Notwithstanding any other provision of this Agreement,
from and after the time any Person shall become an Acquiring
Person, any Rights that are or were acquired or beneficially
owned by any such Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) shall be null and void
and any holder of such Rights shall thereafter have no right
to exercise such Rights under any provision of this
Agreement. No Right Certificate shall be issued pursuant to
this Agreement that represents Rights beneficially owned by
an Acquiring Person whose Rights would be null and void
pursuant to the preceding sentence or by any Associate or
Affiliate thereof; no Right Certificate shall be issued at
any time upon the transfer of any Rights to an Acquiring
Person whose Rights would be null and void pursuant to the
preceding sentence or to any Associate or Affiliate thereof
or to any nominee (acting in its capacity as such) of such
Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be null and void
pursuant to the preceding sentence or to any Associate or
Affiliate thereof or to any nominee (acting in its capacity
as such) of such Acquiring Person, Associate or Affiliate
shall be cancelled.
(iii) If on or after the Distribution Date there shall
not be sufficient Common Shares issued but not outstanding,
or authorized but unissued, to permit the exercise in full
of all outstanding Rights in accordance with the foregoing
subparagraph (ii), the Company agrees to take all such
action as is within its power, including without limitation
appropriate action by its Board of Directors, as may be
necessary to amend the Company's articles of incorporation
to authorize additional Common Shares for issuance upon
exercise of the Rights.
(b) If the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of
Common Shares entitling them (for a period expiring within
45 calendar days after such record date) to subscribe for or
purchase Common Shares or securities convertible into or
exchangeable for Common Shares at a price per Common Share
(together with any additional consideration required upon
conversion or exchange in the case of a security convertible
into or exchangeable for Common Shares), less than the
current per share market price of the Common Shares
(determined pursuant to Section 12(d)) on such record date,
the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of Common Shares
outstanding on such record date plus the number of Common
Shares which the aggregate offering price of the total
number of Common Shares so to be offered (together with the
aggregate of any additional consideration required upon
conversion or exchange in the case of any convertible or
exchangeable securities so to be offered) would purchase at
such current per share market price and the denominator of
which shall be the number of Common Shares outstanding on
such record date plus the number of additional Common Shares
to be offered for subscription or purchase (or into or for
which the convertible or exchangeable securities so to be
offered are initially convertible or exchangeable);
provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right. In case all or
part of such subscription or purchase price may be paid in a
form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a
statement filed with the Rights Agent. Common Shares owned
by or held for the account of the Company or any of its
Subsidiaries shall not be deemed outstanding for the purpose
of any computation described in this Section 12(b). The
adjustment described in this Section 12(b) shall be made
successively whenever such a record date is fixed; and, if
none of such rights, options or warrants is 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) If the Company shall fix a record date for the
making of a distribution to all holders of the Common Shares
(including any such distribution made in connection with a
consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebt
edness or assets (other than a regular quarterly cash
dividend or a dividend payable in Common Shares) or
subscription rights or warrants (excluding those referred to
in Section 12(b)), the Purchase Price to be in effect after
such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the then
current per share market price of the Common Shares
(determined pursuant to Section 12(d)) on such record date,
less the fair market value (as determined in good faith by
the Board of Directors of the Company, whose determination
shall be described in a statement filed with the Rights
Agent) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription
rights or warrants applicable to one Common Share and the
denominator of which shall be such current per share market
price of the Common Shares; provided, however, that in no
event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the
shares of capital stock of the Company to be issued upon the
exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and, if
such distribution is not so made, the Purchase Price shall
again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the
"current per share market price" of the Common Shares on any
date shall be deemed to be the average of the daily Closing
Prices per share of such Common Shares for the 30
consecutive Trading Days immediately prior to such date;
provided, however, that, if the issuer of such Common Shares
shall announce (A) a dividend or distribution on such Common
Shares payable in such Common Shares or securities convert
ible into such Common Shares or (B) any subdivision, combi
nation or reclassification of such Common Shares, and the
ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassifi
cation, shall occur during such period of 30 Trading Days,
then, and in each such case, the current per share market
price of the Common Shares shall be appropriately adjusted
to reflect the current market price per Common Share equiva
lent.
(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided;
however, that any adjustments which by reason of this
Section 12(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Section 12 shall be made to the
nearest cent or to the nearest one ten-thousandth of a
Common Share or of any other share or security, as the case
may be, and references herein to the "number of Common
Shares" (or similar phrases) shall be construed to include
fractions of one Common Share. Notwithstanding the first
sentence of this Section 12(e), any adjustment required by
this Section 12 shall be made no later than the earlier of
(i) three years from the date of the transaction which
requires such adjustment or (ii) the thirtieth day preceding
the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 12(a), the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock
of the Company other than Common Shares, thereafter the
number of such other shares so receivable upon exercise of
any Right shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the shares contained in
this Section 12, and the provisions of this Agreement,
including without limitation Sections 8, 10, 11 and 14, with
respect to the Common Shares shall apply on like terms to
any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall, whether or not the Right Certificate
evidencing such Rights reflects such adjusted Purchase
Price, evidence the right to purchase, at the adjusted
Purchase Price, the number of Common Shares purchasable from
time to time hereunder upon exercise of the Rights, all
subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its
election as provided in Section 12(i), upon each adjustment
of the Purchase Price pursuant to Section 12(b) or 12(c),
each Right outstanding immediately prior to the making of
such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price per one Common
Share, that number of Common Shares obtained by (i) multi
plying (x) the number of shares 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 outstanding in lieu of any adjustment in the number
of Common Shares purchasable upon the exercise of a Right.
Each Right outstanding after such adjustment of the number
of Rights shall be exercisable for the number of Common
Shares for which a Right was exercisable immediately prior
to such adjustment of the Purchase Price. Each Right held
of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the
nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect immedi
ately after adjustment of the Purchase Price. The Company
shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at
least 10 days later than the date of the public announce
ment. Until such record date, however, any adjustment in
the number of Common Shares for which a Right shall be
exercisable made as required by this Agreement shall remain
in effect. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this
Section 12(i), the Company shall, as promptly as practi
cable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidenc
ing, subject to Section 15 hereof, the additional Rights to
which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof,
if required by the Company, new Right Certificates evidenc
ing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distri
buted shall be issued, executed and authenticated in the
manner provided for herein and shall be registered in the
names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of Common Shares issuable upon
the exercise of the Rights, the Right Certificates
theretofore and thereafter issued may continue to express
the Purchase Price and the number of Common Shares which
were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the amount of
consideration per Common Share determined by the Board of
Directors of the Company to be capital, or below the par
value, if any, per Common Share issuable upon exercise of
the Rights, the Company agrees to take such corporate
action as is within its power, including without limitation
appropriate action by its Board of Directors, and which is,
in the opinion of its counsel, necessary in order that the
Company may validly and legally issue fully paid and
nonassessable Common Shares at such adjusted Purchase Price.
(l) In any case in which this Section 12 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 the Common Shares or other capital stock or
securities of the Company, if any, issuable upon such
exercise over and above the Common Shares or other capital
stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect
prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to
receive such additional securities upon the occurrence of
the event requiring such adjustment.
(m) Anything in this Section 12 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 12, as and to
the extent that it in its sole discretion shall determine to
be advisable in order that any combination or subdivision of
the Common Shares, issuance wholly for cash of any of the
Common Shares at less than the current per share market
price, issuance wholly for cash of Common Shares or
securities which by their terms are convertible into or
exchangeable for Common Shares, dividends on Common Shares
payable in Common Shares or issuance of rights, options or
warrants referred to in subsection (b) of this Section 12,
hereafter effected by the Company to holders of its Common
Shares shall not be taxable to such shareholders.
Section 13. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as pro
vided in Section 12 or 14 hereof, the Company shall (i)
promptly prepare a certificate setting forth such adjust
ment, and a brief statement of the facts accounting for such
adjustment, (ii) promptly file with the Rights Agent and
with each transfer agent for the Common Shares of the
Company a copy of such certificate and (iii) mail a brief
summary thereof to each holder of record of a Right Certifi
cate in accordance with Section 28 hereof.
Section 14. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. If, directly or indirectly, (a)
the Company shall consolidate with, or merge with and into,
any other Person, (b) any Person shall merge with and into
the Company and the Company shall be the continuing or
surviving corporation of such merger and, in connection with
any such merger, all or part of the Common Shares of the
Company shall be changed into or exchanged for stock or
other securities of any other Person (or the Company) or
cash or any other property, or (c) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall
sell or otherwise transfer), in one or a series of two or
more transactions, assets of the Company or its Subsidiaries
which constitute more than 50% of the assets or which
produce more than 50% of the earning power of the Company
and its Subsidiaries (taken as a whole) to any Person or any
Affiliate or Associate of such Person other than the Company
or one or more of its Wholly-Owned Subsidiaries, then, and
in each such case, the Company agrees that, as a condition
to engaging in any such transaction, it will make or cause
to be made proper provision so that (i) each holder of a
Right (except as otherwise provided herein) shall thereafter
have the right to receive, upon the exercise thereof in
accordance with the terms of this Agreement, such number of
Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) or, if
such other Person is a Subsidiary of another Person, of the
Person or Persons (other than individuals) which ultimately
control such first-mentioned Person, as shall be equal to
the result obtained by (X) multiplying the then current
Purchase Price by the number of Common Shares for which a
Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 12(a)(ii))
and dividing that product by (Y) 50% of the current per
share market price of the Common Shares of such other Person
(determined pursuant to Section 12(d)) on the date of
consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Shares shall
thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company", as used herein, shall
thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including without limitation
the reservation of a sufficient number of shares of its
Common Shares in accordance with Section 10) in connection
with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to its Common
Shares thereafter deliverable upon the exercise of the
Rights. The Company shall not enter into any transaction of
the kind referred to in this Section 14 if at the time of
such transaction there are outstanding any rights, warrants,
instruments or securities or any agreement or arrangements
which, as a result of the consummation of such transaction,
would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights. The Company
shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such issuer
shall have executed and delivered to the Rights Agent an
agreement supplemental to this Agreement complying with the
provisions of this Section 14. The provisions of this
Section 14 shall similarly apply to successive mergers or
consolidations or sales or other transfers. For the pur
poses of this Section 14, 50% of the assets of the Company
and its Subsidiaries shall be determined by reference to the
book value of such assets as set forth in the most recent
consolidated balance sheet of the Company and its
Subsidiaries (which need not be audited) and 50% of the
earning power of the Company and its Subsidiaries shall be
determined by reference to the mathematical average of the
operating income resulting from the continuing operations of
the Company and its Subsidiaries for the two most recent
full fiscal years as set forth in the consolidated and
consolidating financial statements of the Company and its
Subsidiaries for such years; provided, however, that, if the
Company has, during such period, engaged in one or more
transactions to which purchase accounting is applicable,
such determination shall be made by reference to the pro
forma operating income of the Company and its Subsidiaries
giving effect to such transactions as if they had occurred
at the commencement of such two-year period. For purposes of
this Section 14 and Section 26, a share exchange of the type
permitted by Part Five of the Texas Business Corporation Act
shall be deemed to be a merger.
Section 15. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue or distribute
Right Certificates which evidence fractional Rights. If, on
the Distribution Date or thereafter, as a result of any
adjustment effected pursuant to Section 12(i) or otherwise
hereunder, a Person would otherwise be entitled to receive a
Right Certificate evidencing a fractional Right, the Company
shall, in lieu thereof, pay or cause to be paid to such
Person an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purpose of
this Section 15(a), the current market value of a whole
Right shall be the Closing Price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue frac
tions of Common Shares upon exercise of the Rights or to
distribute certificates or scrip which evidence fractional
Common Shares. If, on the Distribution Date or thereafter,
as a result of any adjustment effected hereunder in the
number of Common Shares as to which a Right has become
exercisable, a Person would otherwise be entitled to receive
a fractional Common Share, the Company shall, in lieu
thereof, pay to such Person at the time such Right is
exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Common
Share. For purposes of this Section 15(b), the current
market value of a Common Share shall be the Closing Price of
a Common Share for the Trading Day immediately prior to the
date of such exercise.
(c) Should any adjustment contemplated by Sec
tion 12(a)(ii) or any mandatory redemption and exchange
contemplated by Section 25 occur, the Company shall not be
required to issue fractions of Common Shares upon exercise
of the Rights or to distribute certificates or scrip which
evidence fractional Common Shares. If after any such
adjustment or mandatory redemption and exchange, a Person
would otherwise be entitled to receive a fractional Common
Share of the Company upon exercise of any Right or upon
mandatory redemption and exchange as contemplated by Section
25, the Company shall, in lieu thereof, pay to such Person
at the time such Right is exercised as herein provided or
upon such mandatory redemption and exchange an amount in
cash equal to the same fraction of the current market value
of one Common Share. For purposes of this Section 15(c),
the current market value of a Common Share shall be the
Closing Price of a Common Share for the Trading Day immedi
ately prior to the date of such exercise or the date of such
mandatory redemption and exchange.
(d) The holder of a Right by the acceptance thereof
expressly waives his right to receive any fractional Rights
or any fractional shares upon exercise or mandatory
redemption and exchange of a Right (except as provided
above).
Section 16. Rights of Action. (a) All rights of
action in respect of the obligations and duties owed to the
holders of the Rights under this Agreement are vested in the
registered holders of the Rights; and, without the consent
of the Rights Agent or of the holder of any other Rights,
any registered holder of any Rights may, in his own behalf
and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding, judicial or other
wise, against the Company to enforce, or otherwise to act in
respect of, such holder's right to exercise such Rights in
the manner provided in the Right Certificate evidencing such
Rights and in this Agreement. Without limiting the forego
ing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of
this Agreement and will be entitled to specific performance
of the obligations under, and injunctive relief against
actual or threatened violations of, the obligations of any
Person subject to this Agreement.
(b) Except as otherwise provided in the final
paragraph of Section 7 hereof, no right or remedy herein
conferred upon or reserved to the registered holder of
Rights is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
employment of any right or remedy, whether hereunder or
otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
(c) No delay or omission of any registered holder of
Rights to exercise any right or remedy accruing hereunder
shall impair any such right or remedy or constitute a waiver
of any default hereunder or an acquiescence therein. Every
right and remedy given hereunder or by law to such holders
may be exercised from time to time, and as often as may be
deemed expedient, by such holders.
Section 17. Agreement of Right Holders. Every holder
of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder
of a Right that:
(a) prior to the Distribution Date, the Rights
will be transferable only in connection with the
transfer of the Common Shares of the Company;
(b) after the Distribution Date, the Right
Certificates will be transferable only on the Rights
Register if surrendered at the Corporate Trust Office
duly endorsed or accompanied by a proper instrument of
transfer; and
(c) the Company and the Rights Agent may deem and
treat the person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated
Common Shares certificate) is registered as the
absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the associated
Common Shares certificate made by anyone other than the
Company or the Rights Agent) for all purposes, and
neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 18. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right (whether or
not then evidenced by a Right Certificate) shall be entitled
to vote, receive dividends or be deemed for any purpose the
holder of Common Shares of the Company or any other
securities of the Company which may at any time be issuable
on the exercise (or mandatory redemption and exchange) of
the Rights represented thereby, nor shall anything contained
herein or in any Right Certificate be construed to confer
upon any such holder, as such, any of the rights of a
stockholder of the Company, including without limitation any
right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, to
give or withhold consent to any corporate action, to receive
notice of meetings or other actions affecting stockholders
(except as provided in Section 26) or to receive dividends
or subscription rights, until the Right or Rights evidenced
by such Right Certificate shall have been exercised (or
mandatorily redeemed and exchanged) in accordance with the
provisions hereof.
Section 19. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to
time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and expenses and other disbursements
incurred in the administration and execution of this
Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss,
liability or expense, incurred without negligence, bad faith
or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any
claim of liability in the premises.
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 Right Certificate or
certificate for Common Shares of the Company or other
securities of the Company, Company Order, instrument of
assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be
genuine and to be executed by the proper person or persons
and, where necessary, verified or acknowledged, or otherwise
upon the advice of its counsel as set forth in Section 20
hereof.
The provisions of this Section 19 shall survive the
expiration of the Rights and the termination of 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 Right Certificates, by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of
its selection (who may be legal counsel for the Company),
and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under
this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board,
any Vice Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the
Company or any other Person only for its own negligence, bad
faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals con
tained in this Agreement or in the Right Certificates
(except its authentication thereof) or be required to verify
the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not have any responsibility
with respect to the validity of this Agreement or the
execution and delivery hereof (except the due execution
hereof by the Rights Agent) or with respect to the validity
or execution of any Right Certificate (except its authentica
tion thereof); nor shall it be responsible for any breach by
the Company of any covenant or condition contained in this
Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the
Rights (including the Rights becoming void pursuant to
Section 12(a)(ii) hereof) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof)
provided for in Sections 3, 12, 14, 24 and 25, or the
ascertainment of the existence of facts that would require
any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after
actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or
reservation of any Common Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any
Common Shares will, when issued, be duly authorized, validly
issued, fully paid and nonassessable; nor shall the Rights
Agent be responsible for the legality of the terms hereof in
its capacity as an administrative agent.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of
its duties hereunder from any one of the Chairman of the
Board, any Vice Chairman of the Board, the President, any
Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company, and to
apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for
any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or
deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which
the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as
though it were not Rights Agent under this Agreement.
Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company.
(i) The Rights Agent may execute and exercise any of
the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss of the Company
resulting from any such act, default, neglect or misconduct
provided reasonable care was exercised in the selection and
continued employment thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its
rights or powers, if it 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.
Section 21. Merger or Consolidation or Change of Name
of Rights Agent. Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust business of
the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on
the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 22. If at the
time such successor Rights Agent shall succeed to the agency
created by this Agreement any of the Right Certificates
shall have been authenticated but not delivered, any such
successor Rights Agent may adopt the authentication of the
predecessor Rights Agent and deliver such Right Certificates
so authenticated, and, if at that time any of the Right
Certificates shall not have been authenticated, any succes
sor Rights Agent may authenticate such Right Certificates
either in the name of the predecessor Rights Agent or in the
name of the successor Rights Agent; and in all such cases
such Right Certificates shall have the full force provided
in the Right Certificates and in this Agreement.
If at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall
have been authenticated but not delivered, the Rights Agent
may adopt the authentication under its prior name and
deliver Right Certificates so authenticated; and, in case at
that time any of the Right Certificates shall not have been
authenticated, the Rights Agent may authenticate such Right
Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall
have the full force provided in the Right Certificates and
in this Agreement.
Section 22. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon 30 days' notice in
writing to the Company. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent for
the Common Shares of the Company by registered or certified
mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If
the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or
by the registered holder of a Right Certificate (or, prior
to the Distribution Date, of Common Shares), then the Rights
Agent or any registered holder of a Right Certificate (or,
prior to the Distribution Date, of Common Shares) may apply
to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of
the United States or of any state of the United States,
which is authorized under such laws to exercise corporate
trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus
of at least $500 million. 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 for the
Common Shares of the Company, and mail a notice thereof in
writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 22,
however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights
Agent, as the case may be.
Section 23. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or
of the Rights to the contrary, the Company may, at its
option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price per
share and the number or kind or class of shares or other
securities purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 24. Redemption. (a) The Rights may be
redeemed by action of the Board of Directors of the Company
pursuant to paragraph (b) of this Section 24, or may be
redeemed and exchanged by action of the Board of Directors
of the Company pursuant to Section 25 herein, but shall not
be redeemed in any other manner.
(b) The Board of Directors of the Company may, at its
option, at any time prior to the Shares Acquisition Date
redeem all but not less than all the then outstanding Rights
at a redemption price of one and eleven hundredths of one
cent ($0.0111) per Right then outstanding, appropriately
adjusted to reflect any adjustment in the number of Rights
outstanding pursuant to Section 12(i) herein (such
redemption price being hereinafter referred to as the
"Redemption Price"); provided, however, that, if, subsequent
to such time, the beneficial ownership of Voting Shares of
the Company by such Acquiring Person shall be reduced below
10% of the outstanding Voting Shares of the Company as a
result of a transaction or series of transactions not
involving the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any of its
Subsidiaries or any trustee of or fiduciary with respect to
any such plan when acting in such capacity, then the Board
of Directors of the Company may, again, at its option, at
any time prior to the next Shares Acquisition Date redeem
all but not less than all of the then outstanding Rights at
the Redemption Price. Any such redemption of the Rights by
the Board of Directors may be made effective at such time,
on such basis and with such conditions as the Board of
Directors in its sole discretion may establish.
(c) The right of the registered holders of Right
Certificates to exercise the Rights evidenced thereby or, if
the Distribution Date has not theretofore occurred, the
inchoate right of the registered holders of Rights to
exercise the same shall, without notice to such holders or
to the Rights Agent and without further action, terminate
and be of no further force or effect effective as of the
time of adoption by the Board of Directors of the Company of
a resolution authorizing and directing the redemption of the
Rights pursuant to paragraph (b) of this Section 24 (or,
alternatively, if the Board of Directors qualified such
action as to time, basis or conditions, then at such time,
on such basis and with such conditions as the Board of
Directors may have established pursuant to such paragraph
(b)); thereafter, the only right of the holders of Rights
shall be to receive the Redemption Price. The Company shall
promptly give public notice of any redemption resolution
pursuant to paragraph (b) of this Section 24; provided,
however, that the failure to give, or any defect in, any
such notice shall not affect the validity of such
redemption. Within 10 days after the adoption of any
redemption resolution pursuant to paragraph (b) of this
Section 24, the Company shall give notice of such redemption
to the holders of the then outstanding Rights by mailing
such notice to all such holders at their last addresses as
they appear upon the Rights Register or, prior to the
Distribution Date, on the registry books of the transfer
agents for the Common Shares. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of
redemption shall state the method by which the payment of
the Redemption Price will be made.
(d) Neither the Company nor any of its Affiliates or
Associates may acquire (other than, in the case of such
Affiliates and Associates, in their capacity as holders of
Common Shares of the Company), redeem or purchase for value
any Rights at any time in any manner other than as specif
ically set forth in this Section 24 or in Section 25 herein,
and other than in connection with the purchase of Common
Shares prior to the Distribution Date.
Section 25. Mandatory Redemption and Exchange. (a)
The Board of Directors of the Company may, at its option, at
any time after any Person becomes an Acquiring Person, issue
Common Shares of the Company in mandatory redemption of, and
in exchange for, all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have
become null and void pursuant to the provisions of Section
12(a)(ii) hereof) at an exchange ratio of one Common Share
for each Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after
the date hereof. Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such
redemption and exchange at any time after any Person (other
than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any such
Subsidiary, or any trustee of or fiduciary with respect to
any such plan when acting in such capacity), together with
all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Voting Shares then
outstanding.
(b) Immediately upon the action of the Board of
Directors of the Company ordering the mandatory redemption
and exchange of any Rights pursuant to subsection (a) of
this Section 25 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 such number of Common Shares as
is provided in paragraph (a) of this Section 25. The
Company shall promptly give public notice of any such
redemption and exchange; provided, however, that the failure
to give, or any defect in, such notice shall not affect the
validity of such redemption and exchange. The Company
promptly shall mail a notice of any such redemption and
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 mandatory
redemption and exchange shall state the method by which the
redemption and exchange of the Common Shares for Rights will
be effected and, in the event of any partial redemption and
exchange, the number of Rights which will be redeemed and
exchanged. Any partial redemption and exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become null and void pursuant to the
provisions of Section 12(a)(ii) hereof) held by each holder
of Rights.
Section 26. Notice of Certain Events. If the Company
shall, on or after the Distribution Date, propose (a) to pay
any dividend or other distribution payable in stock of any
class of the Company or any Subsidiary of the Company to the
holders of its Common Shares, (b) to distribute to the
holders of its Common Shares rights, options or warrants to
subscribe for or to purchase any additional Common Shares or
shares of stock of any class or any other securities, rights
or options, (c) to make any other distribution to the
holders of its Common Shares (other than a regular quarterly
cash dividend), (d) to effect any reclassification of its
Common Shares (other than a reclassification involving only
the subdivision of outstanding Common Shares), (e) to effect
any consolidation or merger into or with, or to effect any
sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one
or more transactions, of more than 50% of the assets or
earning power of the Company and its Subsidiaries (de
termined as provided in Section 14 herein) to, any other
Person (other than the Company or a Wholly-Owned Subsidiary
or Wholly-Owned Subsidiaries), (f) to effect the
liquidation, dissolution or winding up of the Company or (g)
if the Rights have theretofore become exercisable with
respect to Common Shares pursuant to Section 12(a)(ii)
herein, to declare or pay any dividend or other distribution
on the Common Shares payable in Common Shares or in stock of
any other class of the Company or any Subsidiary of the
Company or to effect a subdivision or combination of the
Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares) then, in each such
case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 28 hereof, notice of
such proposed action, which shall specify the date of
authorization by the Board of Directors of the Company of,
and record date for, such stock dividend or such
distribution of rights, options or warrants or the date on
which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, winding up, subdivision
or combination is to take place and the date of partic
ipation therein by the holders of the Common Shares of the
Company, if any such date is to be fixed. Such notice shall
be so given in the case of any action covered by clause (a),
(b), (c) or (g) above at least 20 days prior to the record
date for determining holders of the Common Shares of the
Company 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 Common Shares of the Company,
whichever shall be the earlier.
If any of the events set forth in Section 12(a)(ii) of
this Agreement shall occur, then, in any such case, the
Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 28
hereof, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to
holders of Rights under Section 12(a)(ii) hereof.
The Company agrees to give the Rights Agent prompt
written notice of any event or ownership known to the
Company which would prohibit the exercise or transfer of the
Right Certificates. Further, the Company shall give to the
Trustee a copy of each notice that it may give to any holder
hereunder, no later than the time the Company gives such
notice to such holder.
Section 27. Securities Laws Registrations. To the
extent legally required, the Company agrees that it will
prepare and file, no later than the Distribution Date, and
will use its best efforts to cause to be declared effective,
a registration statement under the Securities Act of 1933,
as amended, registering the offering, sale and delivery of
the Common Shares issuable upon exercise of the Rights, and
the Company will, thereafter, use its best efforts to
maintain such registration statement (or another)
continuously in effect so long as any Rights remain
outstanding and exercisable with respect to Common Shares.
Should the Rights become exercisable with respect to
securities of the Company or one of its Subsidiaries other
than Common Shares, the Company agrees that it will, to the
extent legally required, promptly thereafter prepare and
file, or cause to be prepared and filed, and will use its
best efforts to cause to be declared effective, a registra
tion statement under such Act registering the offering, sale
and delivery of such other securities and the Company will,
thereafter, use its best efforts to maintain such registra
tion statement (or another) continuously in effect so long
as any outstanding Rights are exercisable with respect to
such securities. The Company further agrees to use its best
efforts, from and after the Distribution Date, to qualify or
register for sale the Common Shares or other securities of
the Company or one of its Subsidiaries issuable upon
exercise of the Rights under the securities or "blue sky"
laws (to the extent legally required thereunder) of all
jurisdictions in which registered holders of Right
Certificates reside determined by reference to the Rights
Register.
Section 28. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by
the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Southwest Airlines Co.
P.O. Box 36611
Dallas, Texas 75235-1611
Attention: General Counsel
Subject to the provisions of Section 22 hereof, any notice
or demand authorized by this Agreement to be given or made
by the Company or by the holder of any Right Certificate to
or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Company)
as follows:
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Attention: Corporate Trust Department
Notices or demands authorized by this Agreement to be given
or made by the Company or the Rights Agent to the holder of
any Right Certificate shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the Rights
Register or, prior to the Distribution Date, on the stock
transfer records for the Common Shares of the Company.
Section 29. Supplements and Amendments. The Company
may from time to time supplement or amend this Agreement
(which supplement or amendment shall be evidenced by a
writing signed by the Company and the Rights Agent) without
the approval of any holders of Rights (whether or not
evidenced by Right Certificates) in order to cure any
ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any other
provisions herein, to make any other provisions in regard to
matters or questions arising hereunder, or to add, delete,
modify or otherwise amend any provision, which the Company
may deem necessary or desirable, including without
limitation extending the Final Expiration Date and, provided
that at the time of such amendment or supplement the
Distribution Date has not occurred, the period during which
the Rights may be redeemed; provided, however, that, from
and after such time as any Person becomes an Acquiring
Person, any such amendment or supplement shall not
materially and adversely affect the interests of the holders
of the Rights. Without limiting the foregoing, the Board of
Directors of the Company may by resolution adopted at any
time prior to such time as any Person becomes an Acquiring
Person amend this Agreement to lower the thresholds set
forth in the definitions of Acquiring Person and
Distribution Date herein from 15% to a percentage not less
than the greater of (i) the sum of .001% and the largest
percentage of the outstanding Voting Shares then known to
the Company to be beneficially owned by any Person (other
than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of
the Company, or any trustee of or fiduciary with respect to
any such plan when acting in such capacity), and (ii) 10%.
Upon the delivery of a certificate from any officer of the
Company specified in Section 20(b) stating that a proposed
supplement or amendment complies with the terms of this
Section, the Rights Agent shall execute such supplement or
amendment. Notwithstanding any other provision hereof, the
Rights Agent's consent must be obtained regarding any
amendment or supplement pursuant to this Section 29 which
alters the Rights Agent's rights or duties.
Section 30. Successors. All the covenants and provi
sions 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 31. Benefits of this Agreement. Nothing in
this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable
right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the
Rights (and, prior to the Distribution Date, the Common
Shares).
Section 32. 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, provi
sions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 33. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Texas and for
all purposes shall be governed by and construed in
accordance with the laws of such State applicable to con
tracts to be made and performed entirely within such State;
provided, however, that the rights and obligations of the
Rights Agent shall be governed by and construed in
accordance with the laws of the State of New York.
Section 34. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together consti
tute but one and the same instrument.
Section 35. Table of Contents and Descriptive
Headings. The Table of Contents and the descriptive head
ings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate
seals to be hereunto affixed and attested, all as of the day
and year first above written.
SOUTHWEST AIRLINES CO.
Attest:
<TABLE>
<S>
<C> <C>
By /s/Colleen C. Barrett By /s/Herbert D. Kelleher
Colleen C. Barrett Herbert D. Kelleher
Secretary Chairman of the Board, President
and Chief Executive Officer
</TABLE>
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
As Rights Agent
Attest:
<TABLE>
<S>
<C> <C>
By /s/William F. Seegraber By /s/Steven G. Nelson
</TABLE>
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER JULY 30, 2006 OR
EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.0111 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED
BY ACQUIRING PERSONS (AS DEFINED IN
SECTION 1 OF THE RIGHTS AGREEMENT) OR
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID.
Right Certificate
SOUTHWEST AIRLINES CO.
This certifies that _____________________________, or
registered assigns, is the registered owner of the number of
Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of
the Amended and Restated Rights Agreement, dated as of
July 18, 1996 (the "Rights Agreement"), between Southwest
Airlines Co., a Texas corporation (the "Company"), and
Continental Stock Transfer & Trust Company (the "Rights
Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 p.m., New York City time, on
July 30, 2006, at the Corporate Trust Office of the Rights
Agent (or at the office of its successor as Rights Agent),
one fully paid non-assessable share of the Common Stock (the
"Common Shares") of the Company, at a purchase price of
$16.67 per Common Share (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with
the Form of Election to Purchase duly executed. The number
of Rights evidenced by this Right Certificate (and the
number of Common Shares which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth
above, are the number and Purchase Price as of July 18,
1996, based on the Common Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase
Price and the number of Common Shares which may be purchased
upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon
that happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which
terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full
description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights
Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at
the principal place of business and the registered office of
the Company and the Corporate Trust Office of the Rights
Agent.
This Right Certificate, with or without other Right
Certificates, upon surrender at the Corporate Trust Office
of the Rights Agent, may be exchanged for another Right
Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like
aggregate number of Common Shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (i) may be redeemed by
the Company at a redemption price of $.0111 per Right or
(ii) may be exchanged by the Company in whole or in part for
Common Shares.
No fractional Common Shares will be issued upon the
exercise of any Right or Rights evidenced hereby, but in
lieu thereof a cash payment will be made, as provided in the
Rights Agreement.
No holder of this Right Certificate shall be entitled
to vote or receive dividends or be deemed for any purpose
the holder of the Common Shares or of any other securities
of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder
hereof, as such, any of the rights of a stockholder of the
Company, including without limitation, any right to vote for
the election of directors or upon any matter submitted to
stockholders at any meeting thereof, to give or withhold
consent to any corporate action, to receive notice of
meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends
or subscription rights, until the Right or Rights evidenced
by this Right Certificate shall have been exercised as
provided in the Rights Agreement.
This Right Certificate shall not be entitled to any
benefit under the Rights Agreement or be valid or obligatory
for any purpose until it shall have been authenticated by an
authorized signatory of the Rights Agent.
WITNESS the facsimile signatures of the proper officers
of the Company and its corporate seal.
Dated as of ___________________, ____.
ATTEST: SOUTHWEST AIRLINES CO.
[SEAL]
By:
Secretary President
Authentication:
This is one of the Right Certificates referred to in the
within-mentioned Rights Agreement.
CONTINENTAL STOCK TRANSFER &
TRUST COMPANY, as Rights Agent
By:
Authorized Signatory
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate)
FOR VALUE RECEIVED,
hereby sells, assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint
Attorney, to transfer the within Right Certificate on the
books of the within-named Company, with full power of
substitution.
Dated as of ___________________, ____.
Signature
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker,
dealer, savings institution or other eligible institution
participating in a signature guarantee medallion program
recognized by the Securities Transfer Association, Inc.
____________________________________________________________
__________________
[To be executed if statement is correct]
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially
owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
Signature
____________________________________________________________
__________________
[Form of Reverse Side of Right Certificate -- continued]
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
TO SOUTHWEST AIRLINES CO.:
The undersigned hereby irrevocably elects to exercise
_____________ Rights represented by this Right Certificate
to purchase the Common Shares (or other securities) issuable
upon the exercise of such Rights and requests that
certificates for such Common Shares (or other securities) be
issued in the name of:
Please insert social security
or other identifying number:
(Please print name and address)
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate
for the balance remaining of such Rights shall be registered
in the name of and delivered to:
Please insert social security
or other identifying number:
(Please print name and address)
Dated as of ___________________, ____.
Signature
[Form of Reverse Side of Right Certificate -- continued]
Signature Guaranteed:
Signatures must be guaranteed by a bank, broker,
dealer, savings institution or other eligible institution
participating in a signature guarantee medallion program
recognized by the Securities Transfer Association, Inc.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[To be executed if statement is correct]
The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially
owned by an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement).
Signature
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
NOTICE
The signature in the foregoing Form of Assignment or
Form of Election to Purchase must conform to the name as
written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as
the case may be, is not completed, the Company and the
Rights Agent will deem the beneficial owner of the Rights
evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
