<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934
ALLMERICA FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
1-13754 04-3263626
Delaware
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
440 Lincoln Street, Worcester, MA 01653
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
If this Form relates to the If this Form relates to the
registration of a class of debt registration of a class of debt
securities and is effective securities and is to become effective
upon filing pursuant to General simultaneously with the effectiveness
Instruction A(c)(1) please of a concurrent registration
check the following box. [] statement under the Securities Act of
1933 pursuant to General Instruction
A(c)(2) please check the following
box. []
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON WHICH EACH
TITLE OF EACH CLASS TO BE SO REGISTERED CLASS IS TO BE REGISTERED
- ----------------------------------------- -------------------------------------
Common Stock Purchase Rights New York Stock Exchange
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Not Applicable
- --------------------------------------------------------------------------------
(TITLE OF CLASS)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
-------------------------------------------------------
On December 16, 1997, the Board of Directors (the "Board") of
Allmerica Financial Corporation (the "Company") declared a dividend of one
purchase right (a "Right") for every outstanding share of the Company's common
stock, $.01 par value (the "Common Stock"). The Rights will be distributed to
stockholders of record as of the close of business on on December 18, 1995 (the
"Dividend Record Date"). The terms of the Rights are set forth in a Rights
Agreement dated as of December 16, 1997 (the "Rights Agreement") between the
Company and First Chicago Trust Company of New York (the "Rights Agent"). The
Rights Agreement provides for the issuance of one Right for every share of
Common Stock issued and outstanding on the Dividend Record Date and for each
share of Common Stock which is issued or sold after that date and prior to the
"Distribution Date" (as defined below).
Each Right entitles the holder to purchase from the Company one share of
Common Stock at a price of $200 per share, subject to adjustment. The Rights
will expire on December 15, 2007 (the "Expiration Date"), or the earlier
redemption of the Rights, and are not exercisable until the Distribution Date.
No separate Rights certificates will be issued at the present time. Until
the Distribution Date (or earlier redemption or expiration of the Rights), (i)
the Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Dividend Record Date upon transfer or new
issuance of the Company's Common Stock will contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any of the
Company's Common Stock certificates will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
The Rights will separate from the Common Stock and Rights certificates will
be issued on the Distribution Date. Unless otherwise determined by a majority
of the Board then in office, the Distribution Date will occur on the earlier of
(i) the fifteenth business day following the later of the date of a public
announcement that a person, including affiliates or associates of such person
(an "Acquiring Person"), except as described below, has acquired or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding shares
of Common Stock or the date on which an executive officer of the Company has
actual knowledge that an Acquiring Person became such (the "Stock Acquisition
Date") or (ii) the fifteenth business day following commencement of a tender
offer or exchange offer that would result in any person or its affiliates and
associates owning 15% or more of the Company's outstanding Common Stock. After
the Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Company's Common Stock
as of the close of business on the Distribution Date and such separate Rights
Certificates alone will evidence the Rights. The Board of Directors may delay
the distribution of the certificates.
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If, at any time after December 16, 1997, any person or group of affiliated
or associated persons (other than the Company and its affiliates) shall become
an Acquiring Person, each holder of a Right will have the right to receive
shares of the Company's Common Stock (or, in certain circumstances, cash,
property or other securities of the Company) having a market value of two times
the exercise price of the Right. Also, in the event that the Company were
acquired in a merger or other business combination, or more than 25% of its
assets or earning power were sold, each holder of a Right would have the right
to exercise such Right and thereby receive common stock of the acquiring company
with a market value of two times the exercise price of the Right. Following the
occurrence of any of the events described in this paragraph, any Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person shall immediately become null and
void.
The Board may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after December 16, 1997 (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). The Board,
however, may not effect an exchange at any time after any person (other than (i)
the Company, (ii) any subsidiary of the Company, (iii) any employee benefit plan
of the Company or any Subsidiary of the Company or (iv) any entity holding
Common Stock for or pursuant to the terms of any such plan), together with all
affiliates of such Person, becomes the beneficial owner of 50% or more of the
Common Stock then outstanding. Immediately upon the action of the Board
ordering the exchange of any Rights and without any further action and without
any notice, the right to exercise such Rights will terminate and the only right
thereafter of a holder of such Rights will be to receive that number of shares
of Common Stock equal to the number of such Rights held by the holder multiplied
by the Exchange Ratio.
The exercise price of the Rights, and the number of shares of Common Stock
or other securities or property issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of the Common
Stock, (ii) upon the grant to holders of the Common Stock of certain rights or
warrants to subscribe for shares of the Common Stock or convertible securities
at less than the current market price of the Common Stock or (iii) upon the
distribution to holders of the Common Stock of evidences of indebtedness or
assets (excluding cash dividends paid out of the earnings or retained earnings
of the Company and certain other distributions) or of subscription rights or
warrants (other than those referred to above).
At any time prior to the Close of Business on December 15, 2007 or the
earlier redemption of the Rights (the "Expiration Date"), the Company, by a
majority vote of the Board, may redeem the Rights at a redemption price of $.01
per Right (the "Redemption Price"), as described in the Rights Agreement.
Immediately upon the action of the Board
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electing to redeem the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights Agreement may be amended by the Board at any time prior to the
Distribution Date without the approval of the holders of the Rights. From and
after the Distribution Date, the Rights Agreement may be amended by the Board
without the approval of the holders of the Rights in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Rights Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Rights (other than any Acquiring Person or its affiliates and
associates, or their transferees).
The form of Rights Agreement dated as of December 16, 1997 between the
Company and First Chicago Trust Company of New York, as Rights Agent, specifying
the terms of the Rights (including as exhibits the form of Rights Certificate
and the Summary of Rights) is attached hereto as an exhibit. The foregoing
description of the Rights does not purport to be complete and is qualified in
its entirety by reference to the Rights Agreement, which is incorporated herein
by reference.
ITEM 2. EXHIBITS.
--------
1. Rights Agreement dated as of December 16, 1997 ("Rights Agreement")
between the Company and First Chicago Trust Company of New York, as
Rights Agent.
2. Form of Rights Certificate (attached as Exhibit A to the Rights
Agreement). Pursuant to the Rights Agreement, printed Rights
Certificates will not be mailed until the Distribution Date (as
defined in the Rights Agreement).
3. Summary of Rights (attached as Exhibit B to the Rights Agreement).
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
ALLMERICA FINANCIAL CORPORATION
Date: December 17, 1997 By: Edward J. Parry III
------------------------------------------
Vice President and Chief Financial Officer
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EXHIBIT INDEX
The following designated exhibits are filed herewith:
Page Number
-----------
1. Rights Agreement dated as of December 16, 1997
("Rights Agreement") between the Company and
First Chicago Trust Company of New York, as
Rights Agent.
2. Form of Rights Certificate (attached as Exhibit A
to the Rights Agreement). Pursuant to the Rights
Agreement, printed Rights Certificates will not be
mailed until the Distribution Date (as defined in the
Rights Agreement).
3. Summary of Rights (attached as Exhibit B to the
Rights Agreement).
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EXHIBIT 1
---------
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ALLMERICA FINANCIAL CORPORATION
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK
as Rights Agent
---------------
Rights Agreement
Dated as of December 16, 1997
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<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Section Page
<S> <C>
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 6
Section 3. Issue of Rights Certificates 6
Section 4. Form of Rights Certificates 8
Section 5. Countersignature and Registration 8
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
Destroyed, Lost or Stolen Rights Certificates 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights 10
Section 8. Cancellation and Destruction of Rights Certificates 12
Section 9. Reservation and Availability of Shares of Common Stock; Other Covenants. 12
Section 10. Common Stock Record Date; Etc. 14
Section 11. Antidilution Adjustments 14
Section 12. Certificate of Adjustments 23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 23
Section 14. Fractional Rights and Fractional Shares 25
Section 15. Rights of Action 26
Section 16. Agreement of Rights Holders 26
Section 17. Rights Certificate Holder Not Deemed a Stockholder 27
Section 18. Concerning the Rights Agent 28
Section 19. Merger or Consolidation or Change of Name of Rights Agent 28
</TABLE>
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<TABLE>
<S> <C>
Section 20. Duties of Rights Agent 29
Section 21. Change of Rights Agent 31
Section 22. Issuance of New Rights Certificates 32
Section 23. Redemption and Termination 33
Section 24. Exchange 33
Section 25. Notice of Proposed Actions 34
Section 26. Notices 35
Section 27. Supplements and Amendments 36
Section 28. Successors 36
Section 29. Determinations and Actions by the Board; etc. 37
Section 30. Benefits of this Agreement 37
Section 31. Severability 37
Section 32. Governing Law 37
Section 33. Counterparts 38
Section 34. Descriptive Headings 38
</TABLE>
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RIGHTS AGREEMENT
----------------
This Agreement dated as of December 16, 1997 is between Allmerica Financial
Corporation, a Delaware corporation (the "Company"), and First Chicago Trust
Company of New York, a New York trust company, with a principal office located
at 14 Wall Street, New York, New York 10005 (the "Rights Agent").
W I T N E S S E T H:
-------------------
WHEREAS, on December 16, 1997 the Board of Directors of the Company (the
"Board") authorized the issuance of rights (collectively, the "Rights," and
individually a "Right"), each Right being a right to purchase, on the terms and
subject to the provisions of this Agreement, one share of the Company's Common
Stock; and
WHEREAS, on December 16, 1997 (the "Declaration Date") the Board (a)
authorized and declared a dividend distribution of one Right for every share of
Common Stock of the Company outstanding at the Close of Business on December 29,
1997 (the "Dividend Record Date"), and (b) authorized the issuance of, and
agreed to issue, one Right (as such number may be adjusted in accordance with
Section 11(i) or 11(p) hereof) for every share of Common Stock of the Company
issued between the Dividend Record Date and the Distribution Date (as
hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto hereby agree as follows:
Section 1. Certain Definitions.
-------------------
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates of such Person, shall be the Beneficial Owner of 15% or more of
the shares of Common Stock then outstanding, but shall not include (i) the
Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of
the Company or of any Subsidiary of the Company, (iv) any Person organized,
appointed, or established by the Company or a Subsidiary of the Company pursuant
to the terms of any plan described in clause (iii) above or (v) any such Person
who has reported to or is required to report such ownership (but less than 15%)
on Schedule 13G under the Exchange Act (or any comparable or successor report)
or on Schedule 13D under the Exchange Act (or any comparable or successor
report) which Schedule 13D does not state any intention to or reserve the right
to control or influence the management or policies of the Company or engage in
any of the actions specified in Item 4 of such Schedule (other than the
disposition of the Common Stock) and, within 10 Business Days of being requested
by the Company to advise it regarding the same, certifies to the Company that
such
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Person acquired shares of Common Stock in excess of 14.9% inadvertently or
without knowledge of the terms of the Rights and who, together with all
Affiliates and Associates, thereafter does not acquire additional shares of
Common Stock while the Beneficial Owner of 15% or more of the shares of Common
Stock then outstanding, provided, however, that if the Person requested to so
-------- -------
certify fails to do so within 10 Business Days, then such Person shall become an
Acquiring Person immediately after such 10 Business Day Period.
(b) "Act" shall mean the Securities Act of 1933 (or any successor act), as
amended and as may from time to time be in effect.
(c) "Affiliate," with respect to any Person, shall mean any other Person
who is, or who would be deemed to be, an "affiliate" or an "associate" of such
Person within the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act, as such Rule is in
effect on the Declaration Date.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own" or have "Beneficial Ownership" of, any securities:
(i) which such Person or any of such Person's Affiliates has
"beneficial ownership" of within the meaning of Rule 13d-3 of the General
Rules and Regulations under the Exchange Act, as such Rule is in effect on
the Declaration Date;
(ii) which such Person or any of such Person's Affiliates has,
directly or indirectly, the right to acquire (whether such right is
exercisable immediately or after the passage of time) pursuant to any
agreement, arrangement or understanding (whether or not in writing) or upon
the exercise of conversion, exchange or other rights, warrants or options,
or otherwise;
(iii) which such Person or any of such Person's Affiliates has,
directly or indirectly, the right to vote or dispose of, including pursuant
to any agreement, arrangement or understanding (whether or not in writing);
provided, however, that a Person shall not be deemed the "Beneficial Owner"
-------- -------
of, or to "beneficially own," any security for purposes of this Section
1(d)(iii) as a result of an agreement, arrangement or understanding to vote
such security if such agreement, arrangement or understanding: (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable proxy solicitation rules and regulations promulgated under the
Exchange Act or (B) is made in connection with, or is to otherwise
participate in, a proxy or consent solicitation made, or to be made,
pursuant to, and in accordance with, the applicable proxy solicitation
rules and regulations promulgated under the Exchange Act, in either case
described in clause (A) or (B) above, whether or not such agreement,
arrangement or understanding is also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report); or
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(iv) which are beneficially owned, directly or indirectly, by any
other Person or any Affiliate thereof with which such Person or any of such
Person's Affiliates has any agreement, arrangement or understanding
(whether or not in writing), for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy or in connection with a proxy or
consent solicitation described in clause (A) or (B) of the proviso to
Section 1(d)(iii) hereof) or disposing of any securities of the Company;
provided, however, that for purposes of this Section 1(d) a Person shall not be
- -------- -------
deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Common Stock Event, or (C) securities issuable
upon exercise of Rights which were held by a Person or its Affiliates prior to
the Distribution Date as long as such Person is not responsible for the
occurrence of the Common Stock Event giving rise to the Distribution Date; and
provided, further, however, that nothing in this Section 1(d) shall cause a
- -------- ------- -------
Person engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
person's participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.
(e) "Board" shall have the meaning set forth in the preamble to this
Agreement.
(f) "Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in The Commonwealth of Massachusetts or the
city in which the principal office of the Rights Agent is located are authorized
or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M., Boston,
Massachusetts time, on such date; provided, however, that if such date is not a
-------- -------
Business Day it shall mean 5:00 P.M., Boston, Massachusetts time, on the next
succeeding Business Day.
(h) "Closing Price" shall have the meaning set forth in Section 11(d)
hereof.
(i) "Common Stock" shall mean the Common Stock, with a par value of $.01
per share, of the Company, except that "Common Stock" when used with respect to
any Person other than the Company shall mean either (i) the common stock (or
other capital stock or shares of beneficial interest) of such Person with the
greatest voting power, or (ii) the equity securities or other equity interests
having power to control or direct the management and affairs of such Person, or
(iii) if such Person is a Subsidiary of another Person, the Person (A) who
ultimately controls such Person who is the Subsidiary and (B) which has
outstanding such common stock (or such other capital stock, equity securities or
interests).
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(j) "Common Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii) hereof.
(k) "Common Stock Event" shall mean the occurrence of any event described
in (i) Section 11(a)(ii) hereof or (ii) clause (a), (b) or (c) of the first
sentence of Section 13 hereof.
(l) "Company" shall have the meaning set forth in the preamble to this
Agreement.
(m) "Current Market Price" shall have the meaning set forth in Section
11(d) hereof.
(n) "Current Value" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(o) "Declaration Date" shall have the meaning set forth in the preamble to
this Agreement.
(p) "Directors" shall mean the members of the Board.
(q) "Disqualified Transferee" shall mean any Person who is a direct or
indirect transferee of any Right from an Acquiring Person or an Affiliate of an
Acquiring Person and became such a transferee (x) after the occurrence of a
Common Stock Event or (y) prior to or concurrently with the Acquiring Person
becoming such and received such Right pursuant to a transfer (whether or not for
value) (A) from the Acquiring Person to holders of its Common Stock or other
equity securities or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement, or understanding (whether or not in writing)
regarding the transferred Right, or (B) which a majority of the Board reasonably
determines is part of a plan, arrangement, or understanding (whether or not in
writing) which has as a primary purpose or effect, the avoidance of Section 7(e)
hereof.
(r) "Distribution Date" shall mean the date which is the later of (A) the
earlier of (x) the 15th Business Day following the Stock Acquisition Date or (y)
the 15th Business Day following the Offer Commencement Date or (B) such
specified or unspecified date thereafter which is on or after the Dividend
Record Date, as may be determined by a majority of the Board.
(s) "Dividend Record Date" shall have the meaning set forth in the
preamble to this Agreement.
(t) "Excess Amount" shall have the meaning set forth in Section 11(a)(iii)
hereof.
(u) "Exchange Act" shall mean the Securities Exchange Act of 1934 (or any
successor act), as in effect on the Declaration Date.
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(v) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
(w) "Expiration Date" shall have the meaning set forth in Section 7(a)
hereof.
(x) "Offer Commencement Date" shall mean the date of the commencement by
any Person, other than the Company, a Subsidiary of the Company, or any employee
benefit plan of the Company or of any Subsidiary of the Company or any Person
organized, appointed, or established by the Company or such Subsidiary pursuant
to the terms of any such plan, of a tender or exchange offer (including when
such offer is first published or sent or given within the meaning of Rule 14d-
2(a) of the General Rules and Regulations under the Exchange Act) if upon
consummation thereof the Person and Affiliates thereof would be the Beneficial
Owner of 15% or more of the then outstanding shares of Common Stock (including
any such date which is after the date of this Agreement and prior to the
issuance of the Rights on the Dividend Record Date or thereafter).
(y) "Officers' Certificate" has the meaning set forth in Section 20(b)
hereof.
(z) "Other Consideration" has the meaning set forth in Section 6(a)
hereof.
(aa) "Person" shall mean a company, corporation, association, partnership,
joint venture, trust, organization, business, entity or individual.
(bb) "Purchase Price" shall have the meaning set forth in Section 7(b)
hereof.
(cc) "Redemption Price" shall have the meaning set forth in Section 23
hereof.
(dd) "Rights" shall have the meaning set forth in the preamble to this
Agreement.
(ee) "Rights Agent" shall have the meaning set forth in the preamble of
this Agreement subject to the appointment of a successor Rights Agent pursuant
to Section 21 hereof.
(ff) "Rights Certificates" shall have the meaning set forth in Section 3(a)
hereof.
(gg) "Stock Acquisition Date" shall mean the later of (i) the date of the
first public announcement by an Acquiring Person or the Company that an
Acquiring Person has become such (including the first date on which any filing
with any governmental authority disclosing that an Acquiring Person has become
such becomes available to the public), or (ii) the date on which an executive
officer of the Company has actual knowledge that an Acquiring Person has become
such.
(hh) "Subsidiary" shall mean, as of any date, any Person of which the
Company (or other specified parent) owns directly, or indirectly through a
Subsidiary or Subsidiaries, at
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least a majority of the outstanding capital stock (or other shares of beneficial
interest) entitled to vote generally, or holds directly, or indirectly through a
Subsidiary or Subsidiaries, at least a majority of partnership or similar
interests, or is a general partner or of which the Company (or other specified
parent) owns voting securities sufficient to elect at least a majority of the
directors of such Person.
(ii) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii) hereof.
(jj) "Summary of Rights" shall have the meaning set forth in Section 3(b)
hereof.
(kk) "Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is
open for the transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a day which is a
Business Day.
Section 2. Appointment of Rights Agent.
---------------------------
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time, upon prior written
notice to the Rights Agent, appoint such Co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Rights Certificates.
----------------------------
(a) Until the Distribution Date, (i) the Rights will be evidenced (subject
to the provisions of Section 3(b) hereof) by the certificates representing
shares of Common Stock registered in the names of the holders of the Common
Stock (which certificates shall be deemed also to be certificates for the
associated Rights) and not by separate rights certificates, and (ii) the Rights
will be transferable only in connection with the transfer of the associated
shares of Common Stock. As soon as practicable after the Distribution Date, the
Rights Agent will send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock 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, one or more rights certificates, in substantially the
form of Exhibit A hereto (the "Rights Certificates"), evidencing in the
aggregate that number of Rights to which such holder is entitled in accordance
with the provisions of this Agreement. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates. The Rights are
exercisable only in accordance with the provisions of Section 7 hereof and are
redeemable only in accordance with Section 23 hereof.
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(b) As soon as practicable after the Dividend Record Date, the Company
will cause a copy of a Summary of Rights, in substantially the form attached
hereto as Exhibit B (the "Summary of Rights"), to be sent by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the Close
of Business on the Dividend Record Date, at the address of such holder shown on
the stock transfer records of the Company. With respect to certificates for the
Common Stock outstanding as of the Dividend Record Date, until the Distribution
Date, the Rights associated with the shares of Common Stock represented by such
certificates will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the Distribution Date (or the earlier redemption,
expiration or termination of the Rights), the surrender for transfer of any of
the certificates representing shares of the Common Stock outstanding on the
Dividend Record Date, with or without a copy of the Summary of Rights, shall
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.
(c) Rights shall be issued in respect of all shares of Common Stock issued
(whether originally issued or delivered from the Company's treasury) after the
Dividend Record Date but prior to the earliest of (i) the Distribution Date,
(ii) the Expiration Date, or (iii) the redemption of the Rights. Certificates
representing such shares of Common Stock and certificates issued on transfer of
such shares of Common Stock, with or without a copy of the Summary of Rights,
prior to the Distribution Date (or earlier expiration or redemption of the
Rights) shall be deemed also to be certificates for the associated Rights, and
commencing as soon as reasonably practicable following the Dividend Record Date
shall bear the following legend (or a legend substantially in the form thereof):
This certificate also evidences and entitles the holder to Rights set forth
in a Rights Agreement between the issuer and First Chicago Trust Company of
New York, as Rights Agent (the "Rights Agent"), dated as of December 16,
1997 (the "Rights Agreement"), the terms of which are incorporated herein
by reference and a copy of which is on file at the principal offices of
both the issuer and the Rights Agent. The Rights Agent will mail to the
registered holder of this certificate a copy of the Rights Agreement, as in
effect on the date of mailing, without charge upon written request. Under
certain circumstances set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced by
this certificate. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by any Person who is, was or becomes,
or acquires shares from, an Acquiring Person or any Affiliate of an
Acquiring Person (as each such term is defined in the Rights Agreement and
generally relating to the ownership or purchase of large shareholdings),
whether currently held by or on behalf of such Person or Affiliate or by
certain subsequent holders, may become null and void.
Until the Distribution Date or the earlier redemption, expiration or termination
of the Rights, the Rights associated with the Common Stock shall be evidenced by
the Common Stock
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certificates alone and the registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the surrender for transfer of
any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
Section 4. Form of Rights Certificates.
---------------------------
(a) The Rights Certificates (and the form of assignment and the form of
exercise notice and certificate to be printed on the reverse thereof) shall each
be substantially in the form set forth in Exhibit A hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Sections 11 and 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Dividend Record Date (or, if the shares
pursuant to which the Rights are attached are issued thereafter, such date of
issuance), shall include the date of countersignature and on their face shall
entitle the holders thereof to purchase such number of shares of Common Stock as
shall be set forth therein at the Purchase Price (as hereinafter defined), but
the amount and type of securities issuable upon the exercise of each Right and
the Purchase Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Sections 3(a) or 22 hereof
that represents Rights beneficially owned by (i) any Acquiring Person or any
Affiliate of an Acquiring Person, or (ii) any Disqualified Transferee, and any
other Rights Certificate issued pursuant to Sections 6 or 11 hereof upon the
transfer, exchange, replacement, or adjustment of any such Rights Certificate
shall contain (to the extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate
(which includes both affiliates and associates) of an Acquiring Person (as
each such term is defined in the Rights Agreement between the issuer and
First Chicago Trust Company of New York, as Rights Agent, dated as of
December 16, 1997 (the "Rights Agreement")). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and void in
the circumstances specified in Section 7(e) of the Rights Agreement. The
Rights Agent will mail to the registered holder of this certificate a copy
of the Rights Agreement, as in effect on the date of mailing, without
charge upon written request.
Section 5. Countersignature and Registration.
---------------------------------
The Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, President, or any Vice President, either manually or by
facsimile signature, and
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<PAGE>
shall have affixed thereto the Company's seal or facsimile thereof which shall
be attested by the Treasurer or an Assistant Treasurer of the Company, either
manually or by facsimile signature. The Rights Certificates shall be
countersigned, either manually or by facsimile signature, by the Rights Agent
and shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Rights Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Rights Certificates,
nevertheless, may be countersigned by the Rights Agent, issued, and delivered
with the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company. Any Rights
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at the office of the Rights Agent designated for such purpose, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Rights
Certificates, the number of Rights evidenced on its face by each of the Rights
Certificates, and the date of countersignature thereof by the Rights Agent.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
------------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
---------------------------------------------------------
Certificates.
------------
(a) Subject to the provisions of Sections 4(b), 7(e), and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the earlier of the Close of Business on the Expiration Date or the redemption
of the Rights, any Rights Certificate may be transferred, split up, combined or
exchanged for another Rights Certificate or Rights Certificates, entitling the
registered holder to purchase a like number of shares of Common Stock (or,
following a Common Stock Event, Common Stock and/or such other securities, cash,
or other assets as shall be issuable in respect of the Rights in accordance with
the terms of this Agreement (such other securities, cash or other assets being
referred to herein as "Other Consideration")) as the Rights Certificate
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Rights Certificate to be
transferred, split up, combined, or exchanged at the office of the Rights Agent
designated for such purpose, accompanied by a medallion signature guarantee and
such other documentation as the Rights Agent may reasonably request. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial
Owner from whom the Rights evidenced by such Rights Certificate are to be
transferred (or the Beneficial Owner to
9
<PAGE>
whom such Rights are to be transferred) or Affiliates thereof as the Company
shall reasonably request. Thereupon, subject to Sections 4(b), 7(e) and 14
hereof, the Company shall execute and the Rights Agent shall countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment by the holders of Rights of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates which the Company is not
required to pay in accordance with Section 9(d) hereof.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, the receipt of
indemnity or security satisfactory to them, and upon reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Rights Certificate,
if mutilated, accompanied by a signature guarantee and such other documentation
as the Rights Agent may reasonably request, the Company will execute and deliver
a new Rights Certificate of like tenor to the Rights Agent for countersignature
and delivery to the registered owner in lieu of the Rights Certificate so lost,
stolen, destroyed, or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) Except as otherwise provided herein, the registered holder of any
Rights Certificate may exercise the Rights evidenced thereby in whole or in part
at any time from and after the Distribution Date and at or prior to the Close of
Business on December 15, 1997 (the "Expiration Date") or the earlier redemption
of the Rights. At the Expiration Date (or the earlier redemption of the
Rights), all Rights will be extinguished and all Rights Certificates shall
become null and void. To exercise Rights, the registered holder of the Rights
Certificate evidencing such Rights shall surrender such Rights Certificate, with
the form of election to purchase on the reverse side thereof and the certificate
contained therein duly executed, to the Rights Agent at the office of the Rights
Agent designated for such purpose, accompanied by a medallion signature
guarantee and such other documentation as the Rights Agent may reasonably
request, together with payment in cash, only if by electronic or wire transfer,
or by certified check or bank check, of the Purchase Price with respect to the
total number of shares of Common Stock (or, after a Common Stock Event, shares
and/or similar units of Common Stock or Other Consideration) as to which the
Rights are exercised (which payment shall include any additional amount payable
by such Person in accordance with Section 9(d) hereof). The Rights Agent shall
promptly deliver to the Company all payments of the Purchase Price received in
respect of Rights Certificates accepted for exercise.
(b) The purchase price for each share of Common Stock issuable pursuant to
the exercise of a Right (the "Purchase Price") shall initially be $200, shall be
subject to adjustment as provided in Section 11 hereof, and shall be payable in
lawful money of the United States of America.
10
<PAGE>
(c) Upon receipt of a Rights Certificate representing the Rights, with the
form of election to purchase set forth on the reverse side thereof and the
certificate contained therein duly executed, accompanied by payment of the
Purchase Price, with respect to each Right so exercised, the Rights Agent,
subject to Sections 7(e), 11(a)(iii) and 20(k) hereof, shall thereupon promptly
(i) requisition from any transfer agent of the Common Stock (or from the Company
if there shall be no such transfer agent, or make available if the Rights Agent
is such transfer agent) certificates for the total number of shares of Common
Stock to be purchased and the Company hereby irrevocably authorizes such
transfer agent to comply with any such request, (ii) after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated in writing by such holder, and (iii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of a fractional share in accordance with Section 14 hereof and after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Rights Certificate. After the occurrence of a Common Stock Event, the Company
will make all necessary arrangements so that any Other Consideration then
deliverable in respect of the Rights is available for distribution by the Rights
Agent. For purposes of this Section 7, the Rights Agent shall be entitled to
rely, and shall be protected in relying, on an Officers' Certificate from the
Company to the effect that the Distribution Date has occurred.
(d) Subject to Sections 4(b), 7(e) and 14 hereof, in case the registered
holder of any Rights Certificate shall exercise less than all the Rights
evidenced thereby, a new Rights Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be executed and delivered by the Company to
the Rights Agent and countersigned and delivered by the Rights Agent to the
registered holder of such Rights Certificate or to his duly authorized assigns.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Common Stock Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate of an Acquiring Person, or (ii)
a Disqualified Transferee shall become null and void without any further action,
and no holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but the Company shall
have no liability to any holder of Rights Certificates or other Person and none
of the terms of this Agreement or the Rights shall be deemed to be waived with
respect to such holder or other Person as a result of any failure by the Company
to make any determinations with respect to an Acquiring Person or any Affiliate
of an Acquiring Person or Disqualified Transferees hereunder or any failure to
have a legend placed on any Rights Certificate in accordance with Section 4(b)
hereof or on any Common Stock certificate in accordance with Section 3(c)
hereof.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a holder of
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<PAGE>
any Rights Certificate upon the occurrence of any purported exercise thereof
unless such holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner from whom the Rights evidenced
by such Rights Certificate are to be transferred (or the Beneficial Owner to
whom such Rights are to be transferred) or Affiliates thereof as the Company
shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
---------------------------------------------------
All Rights Certificates surrendered for the purpose of and accepted for
exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents (other than the Rights Agent), be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other Rights Certificates
purchased or retired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights Certificates to the Company,
or may, at the written request of the Company, but shall not be required to,
destroy such canceled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Common Stock; Other
-------------------------------------------------------------
Covenants.
---------
(a) The Company covenants and agrees that on and after the Distribution
Date, it will use reasonable efforts to cause to be reserved and kept available
out of its authorized and unissued shares of Common Stock (or, following the
occurrence of a Common Stock Event, out of its authorized and unissued shares of
Common Stock and/or other securities, or out of its authorized and issued shares
held in its treasury), the number of shares of Common Stock (or, following a
Common Stock Event, shares of Common Stock and/or other securities) that, except
as provided in Section 11(a)(iii) hereof, would then be sufficient to permit the
exercise in full of all outstanding Rights; provided, however, that the
-------- -------
reservation of such shares shall be subject and subordinate to any other
reservation of such shares made by the Company at any time for any lawful
purpose; provided, further, however, that in no event shall such failure to so
-------- ------- -------
reserve shares affect the rights of any holder of Rights hereunder.
(b) The Company covenants and agrees that on and after the Distribution
Date so long as the Common Stock (or, following a Common Stock Event, shares of
Common Stock and/or other securities and/or Other Consideration) issuable upon
the exercise of Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause all shares (or similar units)
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
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<PAGE>
(c) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that each share of Common Stock (or, following a
Common Stock Event, each share and/or similar unit of Common Stock or Other
Consideration) delivered upon exercise of Rights shall, at the time of delivery
of the certificates for such shares (or units), subject to payment of the
Purchase Price, be duly and validly authorized and issued and fully paid and
nonassessable.
(d) The Company covenants and agrees that it will pay when due and payable
any and all federal and state transfer taxes and similar charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any shares of Common Stock (or, following the occurrence of a Common Stock
Event, each share and/or similar units of Common Stock or Other Consideration)
upon the exercise of Rights; provided, however, that the Company shall not be
-------- -------
required to pay any transfer tax which may be payable in respect of any transfer
involved in the transfer or delivery of Rights Certificates or in the issuance
or delivery of certificates for any shares of Common Stock (or, following the
occurrence of a Common Stock Event, each share and/or similar units of Common
Stock or Other Consideration) in a name other than that of the registered holder
of the Rights Certificate evidencing Rights surrendered for exercise or to issue
or deliver any certificates for any shares of Common Stock (and, following the
occurrence of a Common Stock Event, all shares and/or similar units of Common
Stock or Other Consideration) upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
(e) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the first occurrence of a Common
Stock Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, or
as soon as is required by law following the Distribution Date, as the case may
be, a registration statement under the Act, with respect to the securities
issuable upon exercise of the Rights on an appropriate form, (ii) to cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, or (B) the Expiration Date or earlier redemption of the Rights. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file such registration
statement or to permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended. The Company shall thereafter issue a
public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be
13
<PAGE>
exercisable in any jurisdiction unless the requisite qualification in such
jurisdiction shall have been obtained.
Section 10. Common Stock Record Date; Etc.
-----------------------------
Each person in whose name any certificate for any shares of Common Stock
(or, following the occurrence of a Common Stock Event, shares and/or similar
units of Common Stock or Other Consideration) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
such shares of Common Stock (or such shares and similar units of Common Stock
and/or Other Consideration, as the case may be) represented thereby, and such
certificate shall be dated the date which is the later of (i) the date upon
which the Rights Certificate evidencing such Rights was duly surrendered, or
(ii) the date upon which payment of the Purchase Price (and any applicable
transfer taxes) in respect thereof was made; provided, however, that if such
-------- -------
date is a date upon which the relevant transfer books of the Company are closed,
such person shall be deemed to have become the record holder of such shares (or
Other Consideration) on, and such certificate shall be dated, the next
succeeding Business Day on which such transfer books of the Company are open;
provided, further, that the Company covenants and agrees that it shall not close
- -------- -------
such transfer books for a period exceeding ten consecutive days. Prior to the
exercise of the Rights evidenced thereby (which shall be deemed to have occurred
on the date such certificate for shares of Common Stock or other securities
shall be dated in accordance with this Section 10), the holder of a Rights
Certificate, as such, shall not be entitled to any rights of a security holder
of the Company with respect to the shares of Common Stock (and/or such shares or
similar units of Common Stock or Other Consideration) for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions, or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as expressly provided herein.
Section 11. Antidilution Adjustments.
------------------------
The Purchase Price and the number and kind of securities covered by each
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a)(i) In the event that the Company shall at any time after the
Declaration Date (A) declare and pay a dividend on the Common Stock payable
in shares of Common Stock, (B) subdivide the outstanding Common Stock, (C)
combine the outstanding Common Stock into a smaller number of shares, or
(D) issue, change, or alter any of its shares of capital stock in a
reclassification or recapitalization (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving Person), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, then, and in each such case, the
Purchase Price in effect at the time of the record date for such dividend
or the effective time of such subdivision, combination,
14
<PAGE>
reclassification or recapitalization, and the number and kind of shares of
capital stock issuable at such time, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of Common Stock or other
capital stock which, if such Right had been exercised immediately prior to
such time at the Purchase Price then in effect and at a time when the
transfer books for the Common Stock of the Company were open, such holder
would have owned upon such exercise and been entitled to receive by virtue
of such dividend, subdivision, combination, reclassification or
recapitalization. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section
11(a)(ii) hereof.
(ii) In the event
(A) any Person shall at any time after the Declaration Date
become an Acquiring Person; or
(B) any Acquiring Person or any Affiliate of any Acquiring
Person, at any time after the Declaration Date, directly or
indirectly, shall (1) merge into the Company or otherwise combine with
the Company, and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Stock of the
Company shall remain outstanding and no shares thereof shall be
changed or otherwise transformed into stock or other securities of any
other Person or the Company or cash or any other property, (2) in one
or more transactions, transfer any assets to the Company in exchange
(in whole or in part) for shares of any class of its equity securities
or for securities exercisable for or convertible into shares of any
such class or otherwise obtain from the Company, with or without
consideration, any additional shares of any such class or securities
exercisable for or convertible into shares of any such class (other
than as part of a pro rata distribution to all holders of such class),
(3) sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise dispose (in one transaction or a series of transactions) to,
from or with the Company or any of the Company's Subsidiaries, assets
with an aggregate fair market value in excess of 25% of the assets of
the Company on terms and conditions less favorable to the Company than
the Company would be able to obtain through arm's-length negotiation
with an unaffiliated third party, (4) receive any compensation from
the Company or any of the Company's Subsidiaries other than
compensation as a director of the Company or for full-time employment
as a regular employee at rates in accordance with the Company's (or
such Subsidiary's) past practices, (5) receive the benefit (except
proportionately as a stockholder), of any loans, advances, guarantees,
pledges or other financial assistance provided by the Company or any
of its Subsidiaries
15
<PAGE>
on terms and conditions less favorable to the Company than the Company
would be able to obtain through arm's-length negotiation with an
unaffiliated third party or (6) commence a tender or exchange offer
for securities of the Company; or
(C) during such time as there is an Acquiring Person at any time
after the Declaration Date, there shall be any reclassification of
securities (including any combination thereof), or recapitalization of
the Company, or any merger or consolidation of the Company with any of
its Subsidiaries, or any repurchase by the Company or any of its
Subsidiaries of shares of the Common Stock of the Company, or any
other class or series of securities issued by the Company, which
reclassification, recapitalization, merger or consolidation or
repurchase is effected at a time when a majority of the Board of
Directors of the Company consists of persons who are the Acquiring
Person or its Affiliates, nominees or designees thereof (whether or
not with or into or otherwise involving an Acquiring Person or any
Affiliate of an Acquiring Person), which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of
the outstanding shares of any class of equity securities or securities
exercisable for or convertible into any class of equity securities of
the Company or any of its Subsidiaries which is directly or indirectly
owned by an Acquiring Person or any Affiliate of an Acquiring Person
then, in each such case, upon the Close of Business 15 Business Days after
the occurrence of such event, proper provision shall be made so that each
holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive, upon exercise thereof at the Purchase
Price in effect at the time of exercise in accordance with the terms of
this Agreement, in lieu of one share of Common Stock, such number of shares
of Common Stock of the Company as shall equal the result obtained by (x)
multiplying an amount equal to the then current Purchase Price by an amount
equal to the number of shares of Common Stock for which a Right was or
would have been exercisable immediately prior to the first occurrence of
any such event whether or not such Right was then exercisable, and (y)
dividing that product by 50% of the Current Market Price per share of the
Common Stock of the Company (as defined in Section 11(d) hereof) determined
as of the date of such first occurrence.
(iii) In lieu of issuing whole or fractional shares of Common Stock
in accordance with Section 7(c) hereof, the Company shall (i) in the event
that the number of shares of Common Stock which are authorized by the
Company's charter but not outstanding or reserved for issuance for purposes
other than upon exercise of the Rights are not sufficient to permit the
exercise in full of the Rights in accordance with Section 7(c) hereof, or
(ii) if a majority of the Board determines that it would be appropriate and
not contrary to the interests of the holders of Rights (other than any
Acquiring Person or Disqualified Transferee or any Affiliate of the
Acquiring Person or
16
<PAGE>
Disqualified Transferee), (A) determine an amount, if any, (the "Excess
Amount") equal to the excess of (1) the value (the "Current Value") of the
whole or fractional shares of Common Stock issuable upon the exercise of a
Right in accordance with Section 7(c) hereof, over (2) the Purchase Price,
and (B) with respect to each Right, (subject to Section 7(e) hereof) make
adequate provision to substitute for such whole or fractional shares of
Common Stock, upon payment of the applicable Purchase Price, (1) cash, (2)
a reduction in the Purchase Price, (3) Common Stock or other equity
securities of the Company (including, without limitation, shares or units
of preferred stock which the Board has deemed in good faith to have the
same value as a share of Common Stock (such shares of preferred stock being
referred to herein as "Common Stock Equivalents")), (4) debt securities of
the Company, (5) other assets, or (6) any combination of the foregoing
(which would include the additional consideration provided to any holder by
reducing the Purchase Price) having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board;
provided, however, subject to the-------- -------provisions of Section
9(e), that if the Company shall not have made adequate provision to deliver
value pursuant to clause (B) above within 30 days following the Close of
Business 15 Business Days after the first occurrence of a Common Stock
Event described in Section 11(a)(ii) hereof, then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, whole or fractional shares
of Common Stock (to the extent available) and then, if necessary, cash,
securities, and/or assets which in the aggregate are equal to the Excess
Amount. If the Board shall determine in good faith that it is likely that
sufficient additional shares of Common Stock or Common Stock Equivalents
could be authorized for issuance upon exercise in full of the Rights, the
30-day period set forth above may be extended to the extent necessary, but
not more than 90 days following the Close of Business 15 Business Days
after the first occurrence of such a Common Stock Event (such 30 day
period) as it may be extended to 90 days, is referred to herein as the
"Substitution Period"). To the extent that the Company determines that some
action is to be taken pursuant to the preceding provisions of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof,
that (except as to the form of consideration which shall be determined as
appropriate by a majority of the Board) such action shall apply uniformly
to all outstanding Rights which shall not have become null and void, and
(y) may suspend the exercisability of the Rights until the expiration of
the Substitution Period in order to seek any authorization of additional
shares and/or to decide the appropriate form of distribution to be made
pursuant to such provisions and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily
suspended. The Company shall thereafter issue a public announcement at such
time as the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of the Common Stock issuable upon exercise of a Right
in accordance with Section 7(c) hereof shall be the Current Market Price
per share of the Common Stock (as determined pursuant to Section 11(d)
hereof) on the Close of Business 15 Business Days after the date of the
17
<PAGE>
first occurrence of such a Common Stock Event and the value of any Common
Stock Equivalent shall be deemed to be equal to the Current Market Price
per share of the Common Stock on such date.
(b) In the event the Company shall, after the Dividend Record Date, fix a
record date for the issuance of any options, warrants, or other rights to all
holders of Common Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase (i) Common Stock or
(ii) Common Stock Equivalents or (iii) securities convertible into Common Stock
or Common Stock Equivalents at a price per share of Common Stock or Common Stock
Equivalents (or having a conversion price per share of Common Stock, if a
security is convertible into Common Stock or Common Stock Equivalents) less than
the Current Market Price per share of Common Stock (determined in accordance
with Section 11(d) hereof) determined as of such record date, the Purchase Price
to be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of shares of Common Stock and/or Common
Stock Equivalents which the aggregate minimum offering price of the total number
of shares of Common Stock and/or Common Stock Equivalents so to be offered
(and/or the aggregate minimum conversion price of such convertible securities so
to be offered) would purchase at such Current Market Price, and the denominator
of which shall be the number of shares of Common Stock outstanding on such
record date plus the maximum number of additional shares of Common Stock and/or
Common Stock Equivalents to be offered for subscription or purchase (or the
maximum number of shares into which such convertible securities so to be offered
are convertible). In case such subscription price may be paid by delivery of
consideration part or all of which shall be in a form other than cash, for
purposes of this Section 11(b) the value of such consideration shall be the fair
market value thereof as determined in good faith by the Board (which
determination shall be described in an Officers' Certificate filed with the
Rights Agent). Shares of Common Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed (subject, however, to such other
adjustments as are provided herein).
(c) In the event that the Company shall, after the Dividend Record Date,
fix a record date for the making of a distribution to all holders of Common
Stock (including any such distribution made in connection with a consolidation
or merger in which the Company is the surviving or continuing Person) of
evidences of indebtedness, cash (other than cash dividends paid out of the
earnings or retained earnings of the Company and its Subsidiaries determined on
a consolidated basis in accordance with generally accepted accounting principles
consistently applied), other property (other than a dividend payable in a number
of shares of Common Stock, but including any dividend payable in capital stock
other than Common Stock), or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof),
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<PAGE>
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, of which the numerator shall be the Current Market Price per
share of Common Stock (as defined in Section 11(d) hereof) determined as of such
record date, less the sum of that portion of cash plus the fair market value,
----
as determined in good faith by the Board (which determination shall be described
in an Officers' Certificate filed with the Rights Agent) of that portion of such
evidences of indebtedness, such other property, and/or such subscription rights
or warrants applicable to one share of Common Stock and of which the denominator
shall be such Current Market Price per share of the Common Stock. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event 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 (subject, however, to such other adjustments as are
provided herein).
(d) For purposes of any computation pursuant to Section 11(a)(iii) hereof,
the "Current Market Price" per share (or unit) of any security on any date shall
be deemed to be the average of the daily Closing Price of such security for the
10 consecutive Trading Days immediately after such date and for the purpose of
any other computation hereunder, the "Current Market Price" per share (or unit)
of any security on any date shall be deemed to be the average of the daily
Closing Price of such security for the 20 consecutive Trading Days immediately
prior to such date; provided, however, that in the event that the Current Market
-------- -------
Price per share of such security is determined during a period following the
announcement by the issuer of such security of (i) a dividend or distribution on
such security payable in shares (or units) of such security or securities
convertible into shares (or units) of such security, or (ii) any subdivision,
combination or reclassification of such security, and prior to the expiration of
such 10 Trading Days or 20 Trading Days after (A) the ex-dividend date for such
dividend or distribution, or (B) the record date for such subdivision,
combination or reclassification, as the case may be, then, and in each such
case, the "Current Market Price" shall be the Closing Price of such security on
the last day of such respective 10 Trading Day or 20 Trading Day period. For
purposes of this Agreement, the "Closing Price" of any security on any day shall
be the last sale price, regular way, with respect to shares (or units) of such
security, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, with respect to such security, 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 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 so listed or admitted to trading, the last quoted sale
price with respect to shares (or units) of such security, or, if not so quoted,
as the average of the high bid and low asked prices in the over-the-counter
market with respect to shares (or units) of such security, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System or
such other similar system then in use; or, if on any such date such security is
not quoted by any such
19
<PAGE>
organization, the average of the closing bid and asked prices with respect to
shares (or units) of such security, as furnished by a professional market maker
making a market in such security selected by the Board; or, if no such market
maker is available, the fair market value of shares (or units) of such security
as of such day as determined in good faith by the Board (which determination
shall be described in an Officers' Certificate filed with the Rights Agent).
(e) No adjustment in the Purchase Price shall be required unless
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section
- -------- -------
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share
(or similar unit) of Common Stock or securities. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the date of the
transaction which mandates the adjustment or (ii) the date of the expiration of
the right to exercise the Rights. Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those required by this Section 11, as it in its
discretion shall determine to be advisable in order that any dividends,
subdivision of shares, distribution of rights to purchase shares of beneficial
interest or other stock or securities, or distribution of securities convertible
into or exchangeable for stock hereafter made by the Company to its stockholders
shall not be taxable.
(f) In the event that at any time, as a result of an adjustment made in
respect of a Common Stock Event, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to such other shares
contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), (m) and (p)
hereof, and the provisions of Sections 7, 9, 10, 11(d), 13 and 14 hereof with
respect to the shares of Common Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of shares of Common Stock
purchasable from time to time hereunder upon exercise of the Rights represented
thereby, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of
the calculations made pursuant to Sections 11(b) and 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
shares of Common Stock (calculated to the nearest ten-thousandth of a share)
obtained by (i) multiplying (x) the number of shares of Common Stock
20
<PAGE>
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) Assuming that no other adjustment pursuant to this Section 11 has been
made, the Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights in substitution for any adjustment
in the number of shares of Common Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of shares of Common Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to such adjustment of the Purchase
Price by the Purchase Price in effect immediately after such adjustment of the
Purchase Price. The Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment, and,
if known at the time, the amount of the adjustment to be made. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least 10 days
later than the date of the public announcement. If Rights Certificates have
been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i) the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed, and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of whole or fractional shares of Common Stock issuable upon exercise of
such Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per share and the number of shares of
Common Stock which were expressed in the initial Rights Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the number of shares of
Common Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue
21
<PAGE>
such number of fully paid and nonassessable shares of Common Stock at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date the number
of shares of Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of shares of
Common Stock 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 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, by means of a resolution of the Board acting in good faith,
shall determine to be advisable in order that any consolidation or subdivision
of the Common Stock, issuance wholly for cash of any Common Stock at less than
the Current Market Price thereof, issuance wholly for cash of Common Stock (or
other securities which by their terms are convertible into or exchangeable for
Common Stock), dividends payable in shares of Common Stock or other capital
stock or shares of beneficial interest, or issuance of rights, options, or
warrants referred to hereinabove in this Section 11, hereafter made or declared
by the Company to the holders of its Common Stock, shall not be taxable to such
holders.
(n) The Company covenants and agrees that it shall not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, more than 25% of (A) the assets
(taken at net asset value as stated on the books of the Company and determined
on a consolidated basis in accordance with generally accepted accounting
principles consistently applied) or (B) the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any other Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale, there are any
rights, warrants or other instruments or securities outstanding or agreements
(whether or not in writing) in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
22
<PAGE>
sale, the stockholders of such other Person shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates.
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in the
event that the Company shall at any time after the Dividend Declaration Date and
prior to the Distribution Date (i) declare or pay a dividend on the outstanding
shares of Common Stock payable in shares of Common Stock, or (ii) effect a
subdivision, combination or consolidation of the outstanding Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock) into a greater or smaller number of shares, then in any such case, (i)
the number of shares of Common Stock purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of shares
of Common Stock so purchasable immediately prior to such event by a fraction the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to the occurrence of the event and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately following the occurrence of such event; and (ii) each share of
Common Stock outstanding immediately after such event shall have issued with
respect to it that number of Rights which each share of Common Stock outstanding
immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(p) shall be made successively whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.
Section 12. Certificate of Adjustments.
--------------------------
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall (a) promptly prepare an Officers' Certificate setting forth such
adjustment, including any adjustment in Purchase Price, the number of shares or
Other Consideration payable, and a brief statement of the facts accounting for
such adjustment, (b) promptly file with the Rights Agent and with the transfer
agent for the Common Stock a copy of such Officers' Certificate, and (c) mail a
brief summary thereof to each registered holder of a Rights Certificate in
accordance with Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such Officers' Certificate and on any adjustment therein
contained, and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such an Officers' Certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power.
-------------
In the event that, following the Stock Acquisition Date, directly or
indirectly, (a) the Company shall consolidate with, or merge with and into, any
other Person (other than a
23
<PAGE>
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof) and the Company shall not be the continuing or surviving Person of such
consolidation or merger, (b) any Person (other than a Subsidiary of the Company
in a transaction that complies with Section 11(o) hereof) shall consolidate
with, or merge with and into, the Company, the Company shall be the continuing
or surviving Person of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the Common Stock of the Company shall be
changed or otherwise transformed into other 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 transaction or a series of related transactions,
more than 25% of (A) the assets (taken at net asset value as stated on the books
of the Company and determined on a consolidated basis in accordance with
generally accepted accounting principles consistently applied) or (B) the
earning power of the Company and its Subsidiaries (determined on a consolidated
basis in accordance with generally accepted accounting principles consistently
applied) to any Person (other than the Company or any Subsidiary of the Company
in one or more transactions each of which complies with Section 11(o) hereof)
then, from and after such event, proper provision shall be made so that (i) each
holder of a Right, except as provided in Section 7(e) hereof, shall thereafter
have the right to receive, upon the exercise thereof at the Purchase Price in
effect at the time of such exercise in accordance with the terms of this
Agreement, such number of whole or fractional shares of validly authorized and
issued, fully paid, non-assessable, and freely tradeable Common Stock of such
other Person (or in the case of a transaction or series of transactions
--
described in clause (c) above, the Person receiving the greatest amount of the
assets or earning power of the Company, or if the Common Stock of such other
--
Person is not and has not been continuously registered under Section 12 of the
Exchange Act for the preceding 12-month period and such Person is a direct or
indirect Subsidiary of another Person, that other Person, or if such other
--
Person is a direct or indirect Subsidiary of more than one other Person, the
Common Stock of two or more of which are and have been so registered, such other
Person whose issued Common Stock has the greatest aggregate value), free and
clear of any liens, encumbrances, rights of first refusal, or other adverse
claims, as shall be equal to the result obtained by (x) multiplying the Purchase
Price in effect immediately prior to the first occurrence of any Common Stock
Event under this Section 13 by the number of shares of Common Stock for which a
Right is exercisable immediately prior to such first occurrence (and without
taking into account any prior adjustment made pursuant to 11(a)(ii)) and (y)
dividing that product by 50% of the Current Market Price per share (as defined
in Section 11(d) hereof) of the Common Stock of such other Person determined as
of the date of consummation of such consolidation, merger, sale, or transfer;
(ii) the issuer of such Common Stock shall thereafter be liable for, and shall
assume, by virtue of such consolidation, merger, sale, or transfer, all the
obligations and duties of the Company pursuant to this Agreement; (iii) the term
"Company" shall thereafter be deemed, for all purposes of this Agreement, to
refer to such issuer, it being specifically intended that the provisions of
Section 11 hereof (other than Section 11(a)(ii) hereof) shall apply only to such
issuer following the first occurrence of a Common Stock Event under this Section
13; (iv) such issuer shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in
24
<PAGE>
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the whole or fractional shares of its Common Stock thereafter
deliverable upon the exercise of the Rights; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first occurrence of any
Common Stock Event described in clauses (a), (b) or (c) of this Section 13. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless (i) such issuer shall have a sufficient number of authorized shares of
its Common Stock which have not been issued or reserved for issuance as will
permit the exercise in full of the Rights in accordance with this Section 13,
and (ii) prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing and further
providing that as soon as practicable after the date of any Common Stock Event
described above in this Section 13 such issuer will (A) prepare and file a
registration statement under the Act, with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form, and
will use its best efforts to cause such registration statement to (I) become
effective as soon as practicable after such filing and (II) remain effective
(with a prospectus at all times meeting the requirements of the Act) until the
Expiration Date, and (B) will deliver to holders of the Rights historical
financial statements of such issuer and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under the
Exchange Act. Furthermore, in case the Person which is to be party to a
transaction referred to in this Section 13 has any provision in any of its
authorized securities or in its charter or by-laws or other agreement or
instrument governing its affairs, which provision would have the effect of
causing such Person to issue, in connection with, or as a consequence of, the
consummation of a Common Stock Event described in clauses (a), (b), or (c) of
this Section 13, whole or fractional shares of Common Stock of such Person at
less than the then Current Market Price per share thereof (as defined in Section
11(d) hereof), or to issue securities exercisable for, or convertible into,
Common Stock of such Person at less than such then Current Market Price, then,
in such event, the Company hereby agrees with each holder of the Rights that it
shall not consummate any such transaction unless prior thereto the Company and
such Person shall have executed and delivered to the Rights Agent a supplemental
agreement providing that such provision in question shall have been canceled,
waived, or amended so that it will have no effect in connection with, or as a
consequence of, the consummation of the proposed transaction. The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers. In the event that a Common Stock Event described in
this Section 13 shall occur at any time after the occurrence of a Common Stock
Event described in Section 11(a)(ii) hereof, the Rights which have not therefore
been exercised shall thereafter become exercisable, except as provided in
Section 7(e) hereof, in the manner described in this Section 13.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or to
distribute fractions of Rights, except prior to the Distribution Date as
provided in Section 11(i) hereof, or to distribute Rights Certificates which
evidence fractional Rights. In lieu of issuing such
25
<PAGE>
fractional Rights, at the election of the Company, there shall be paid to the
registered holders of the Rights with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the Closing Price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of shares of its
capital stock upon exercise of the Rights or to distribute certificates which
evidence fractional shares. In lieu of fractional shares, at the election of the
Company, there shall be paid to the registered holders of Rights at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of a share of such capital stock. For
purposes of this Section 14(b), the current market value of a share of such
capital stock shall be the Closing Price of such capital stock for the Trading
Day immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Right, expressly
waives his right to receive any fractional Rights or (except as provided in
Section 14(b) hereof) any fractional share upon exercise of a Right.
Section 15. Rights of Action.
----------------
Excepting the rights of action given the Rights Agent under Section 18
hereof and except as set forth in Section 20(1) hereof, all rights of action in
respect of this Agreement are vested in the registered holder of each Right; and
any registered holder of any Right, without the consent of the Rights Agent or
of the holder of any other Right, may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the rights evidenced by such Right in the manner provided in such
Rights Certificate and in this Agreement, and the Company hereby agrees to
reimburse such registered holder for all expenses (including reasonable
attorneys' fees) incurred by such registered holder in connection therewith.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of the obligations hereunder, and
shall be entitled to injunctive relief against actual or threatened violations
of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Rights Holders.
---------------------------
Every holder of a Right by accepting the same consents and agrees with the
Company and the Rights Agent and with every other holder of a Right that:
26
<PAGE>
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent, duly endorsed or accompanied by a proper instrument
of transfer with a form of assignment and certificate set forth on the reverse
side thereof duly executed, accompanied by a medallion signature guarantee and
such other documentation as the Rights Agent may reasonably request;
(c) subject to Sections 6(a) and 7(f) hereof, the Company and the Rights
Agent may deem and treat the person in whose name a Rights Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights Certificate
or, prior to the Distribution Date, the associated Common Stock certificate,
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company agrees to use its
-------- -------
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
--------------------------------------------------
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends, or otherwise be deemed for any purpose the holder of any
securities of the Company which may be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote in
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any action by the Company, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or preemptive rights, or
otherwise, until the time specified in Section 10 hereof.
27
<PAGE>
Section 18. Concerning the Rights Agent.
---------------------------
The Company agrees to pay to the Rights Agent such reasonable compensation
as shall be agreed to in writing between the Company and the Rights Agent for
all services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and disbursements and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any and all loss, liability, damages, claims or expense, incurred without gross
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
(including reasonable attorneys' fees and expenses) of defending against any
claim of liability for any of the foregoing.
The Rights Agent shall be protected and shall incur no liability for or in
respect of any action taken, suffered, or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
certificate for any number of shares of Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, instruction, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed and executed by the proper Person or Persons, and verified or
acknowledged as required by this Agreement.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
Any corporation into which the 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 shall be a party, or any corporation
succeeding to the shareholder services business of the Rights Agent, shall be
the successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto;
provided, however, that such corporation would be eligible for appointment as a
- -------- -------
successor Rights Agent under the provisions of Section 21 hereof. In case at
the time such successor Rights Agent shall succeed to the agency created by this
Agreement and any of the Rights Certificates shall have been countersigned but
not delivered, any such successor Rights Agent may adopt the countersignature of
the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
shall have the full force provided in the Rights Certificates and in this
Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Rights Certificates shall have been countersigned but not
delivered, the Rights Agent
28
<PAGE>
may adopt the countersignature under its prior name and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may countersign
such Rights Certificates either in its prior name or in its changed name; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
----------------------
The Rights Agent undertakes only the duties and obligations expressly
imposed upon it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent. The Rights Agent shall
perform its duties and obligations hereunder upon the following terms and
conditions:
(a) The Rights Agent may consult with legal counsel of its selection (who
may be legal counsel to the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person) 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 (an "Officers' Certificate") signed by a person believed by the
Rights Agent to be the Chairman of the Board, the President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such Officers' 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 Officers' Certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith, or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature on such Rights Certificate) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be
29
<PAGE>
responsible for any adjustment required under the provisions of Sections 11
or 13 hereof or be responsible for the manner, method or amount of any such
adjustment or procedures or the ascertaining of the existence of facts that
would require any such adjustment or procedure (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt of a
certificate delivered pursuant to Section 12 hereof, describing any such
adjustment or procedures); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Common Stock or other securities to be issued pursuant to this Agreement or any
Rights Certificate or as to whether any shares of Common Stock, or any shares or
similar units of other securities, will, when issued, be validly authorized and
issued, fully paid, and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver, or cause to be performed, executed, acknowledged and delivered, all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or 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
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Secretary or any Assistant Secretary or
the Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer. Any application by the
Rights Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken or omitted by
the Rights Agent with respect to its duties or obligations under this Agreement
and the date on and/or after which such action shall be taken or omitted and the
Rights Agent shall not be liable for any action taken or omitted in accordance
with a proposal included in any such application on or after the date specified
therein (which date shall not be less than three Business Days after the date
any such officer actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking or
omitting any such action, the Rights Agent has received written instructions
from the Company in response to such application specifying the action to be
taken or omitted.
(h) The Rights Agent and any stockholder, director, officer, or employee
of the Rights Agent may buy, sell, or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or
30
<PAGE>
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct; provided, however,
-------- -------
that reasonable care was exercised in the selection and continued employment
thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certification appearing on the reverse side
thereof following the form of election to purchase has either not been completed
or indicates an affirmative response to clause 1 and/or 2 thereof, the Rights
Agent shall not take any further action with respect to such requested exercise
of transfer without first consulting with the Company.
(l) The provisions of this Section 20 are solely for the benefit of the
Rights Agent or the Company and any failure or omission under this Section 20
shall not affect the rights of the Company under this Agreement and the Rights
Agent or the Company shall have no liability to any holder of Rights or other
Person on account of such failure or omission.
Section 21. Change of Rights Agent.
----------------------
The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties under this Agreement upon 30 days' notice in writing mailed to
the Company and to each transfer agent of the Common Stock by registered or
certified mail, and, subsequent to the Distribution Date, to the holders of the
Rights Certificates by first-class mail. The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to
the Rights Agent, to each transfer agent of the Common Stock by registered or
certified mail, and, subsequent to the Distribution Date, to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States, the State of New York or The Commonwealth of Massachusetts (or of any
other State of the United States so long as such corporation is authorized to do
business as a banking institution in the State of New York or The Commonwealth
of Massachusetts), in good standing, having an office designated for such
31
<PAGE>
purpose in the State of New York or The Commonwealth of Massachusetts, which is
authorized under such laws to exercise corporate trust and/or stock transfer
powers and is subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent (a)
combined capital and surplus of at least $50,000,000, or (b) a subsidiary of
such a corporation. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose; and,
except as the context herein otherwise requires, such successor Rights Agent
shall be deemed to be the "Rights Agent" for all purposes of this Agreement.
Not later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Rights Certificates.
-----------------------------------
Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change in the Purchase Price per share and the number or kind or
class of shares of stock or other securities or property purchasable under the
Rights Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale by the Company of shares of
Common Stock following the Distribution Date and prior to the redemption or
expiration of the Rights, the Company (a) shall, with respect to shares of
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights evidenced by a
-------- -------
Rights Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights would be issued, and (ii) no such Rights Certificate shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.
32
<PAGE>
Section 23. Redemption and Termination.
--------------------------
The Board, by majority vote, may, at its option, at any time prior to the
Expiration Date, redeem all (but not less than all) of the then outstanding
Rights at a redemption price of $.01 per Right, appropriately adjusted to
reflect any stock split, stock dividend, combination of shares, or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). Immediately upon the taking
of such action ordering the redemption of all of the Rights, evidence of which
shall have been filed with the Rights Agent, and without any further action and
without any notice, the right to exercise the Rights so redeemed will terminate
and the only right thereafter of the holders of such Rights so redeemed shall be
to receive the Redemption Price (without the payment of any interest thereon).
Within 10 days after such action ordering the redemption of all of the Rights,
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 registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
Section 24. Exchange.
--------
(a) The Board, by majority vote, may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights for shares of Common Stock at an exchange ratio of one
share of Common Stock per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date hereof
(such exchange ratio being hereinafter referred to as the "Exchange Ratio").
Notwithstanding the foregoing, the Board shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary, or
any entity holding Common Stock for or pursuant to the terms of any such plan),
together with all Affiliates of such Person, becomes the Beneficial Owner of 50%
or more of the Common Stock then outstanding.
(b) Immediately upon the action of the Board ordering the exchange of any
Rights pursuant to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
-------- -------
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is
33
<PAGE>
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the Common Stock for Rights will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional Common Stock
for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to each registered holder of a Right Certificate with regard to which
a fractional share of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this paragraph (e), the current market value
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Proposed Actions.
--------------------------
In case the Company shall after the Distribution Date propose (a) to pay
any dividend payable in stock of any class to the holders of its Common Stock or
to make any other distribution to the holders of its Common Stock (other than a
cash dividend out of earnings or the retained earnings of the Company), or (b)
to offer to the holders of its Common Stock rights or warrants to subscribe for
or to purchase any additional shares of Common Stock or shares of stock of any
class or any other securities, rights, or options, or (c) to effect any
reclassification of the Common Stock (other than a reclassification involving
only the subdivision of outstanding shares of Common Stock), or (d) to effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one transaction or a series of related transactions, of more
than 25% of (i) the assets of the Company and its Subsidiaries (taken at net
asset value as stated on the books of the Company and determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied) or (ii) the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any other Person or
Persons, or (e) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the Rights Agent and
each holder of a Right, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or
34
<PAGE>
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of Common Stock, if any such date
is to be fixed, and such notice shall be so given in the case of any action
covered by clause (a) or (b) above at least twenty days prior to the record date
for determining holders of the Common Stock for purposes of such action, and in
the case of any such other action, at least twenty days prior to the date of the
taking of such proposed action or the date of participation therein by the
holders of Common Stock whichever shall be the earlier. The failure to give
notice required by this Section 25 or any defect therein shall not affect the
legality or validity of the action taken by the Company or the vote upon any
such action.
In case any Common Stock Event described in Section 11(a)(ii) hereof shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to the Rights Agent and each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such Common
Stock Event, which shall specify such event and the consequences of the event to
holders of Rights under Section 11(a)(ii) hereof.
Notwithstanding anything in this Agreement to the contrary, prior to the
Distribution Date a filing by the Company with the Securities and Exchange
Commission shall constitute sufficient notice to the holders of securities of
the Company, including the Rights, for purposes of this Agreement and no other
notice need be given.
Section 26. Notices.
-------
Notices or demands authorized by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights Certificate to 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:
Allmerica Financial Corporation
440 Lincoln Street
Worcester, MA 01653
Attention: John F. Kelly, Esq.
Senior Vice President and
General Counsel
Copy to: Lauren I. Norton
Ropes & Gray
One International Place
Boston, MA 02110-2624
35
<PAGE>
Subject to the provisions of Sections 19 and 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
First Chicago Trust Company of New York
Address: 525 Washington Blvd., Suite 4660, Jersey City, NJ 07310
Attn: Tenders and Exchanges Administration
(Allmerica Financial Corporation Rights Agreement)
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments.
--------------------------
Prior to the Distribution Date, the Board, upon the vote of a majority of
the Board, may from time to time supplement or amend this Agreement without the
approval of any holders of the Rights. From and after the Distribution Date,
the Board may, upon the vote of a majority of the Board, from time to time amend
this Agreement without the approval of any holders of the Rights in order (i) to
cure any ambiguity, (ii) to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
to change any time period governing redemption of the Rights or any other time
period or (iv) to make any other provisions in regard to matters or questions
arising hereunder which the Board, upon the vote of a majority of the Board, may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of the Rights (other than any Acquiring Person or Disqualified
Transferee or any Affiliate of an Acquiring Person or Disqualified Transferee).
Any amendment made pursuant to this Section 27 after a Stock Acquisition Date
shall require the approval of a majority of the Board. The Rights Agent shall
join with the Company in the execution and delivery of any such supplement or
amendment, unless such supplement or amendment affects any of the rights,
duties, or obligations of the Rights Agent hereunder, in which case the Rights
Agent may, but shall not be required to, join in such execution and delivery.
Section 28. Successors.
----------
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board; etc.
--------------------------------------------
36
<PAGE>
The Board shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board, or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below all omissions with respect to the
foregoing) which are done or made by the Board of Directors in good faith and
with the concurrence of a majority of the Board then in office shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and (y) not subject any Director to any
liability to the holders of the Rights.
Section 30. Benefits of this Agreement.
--------------------------
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent, and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the associated shares of
Common Stock) any legal or equitable right, remedy, or claim under this
Agreement or the Rights; 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 associated Common Stock).
Section 31. Severability.
------------
The invalidity or unenforceability of any term or provision hereof shall
not affect the validity or enforceability of any other term or provision hereof.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
-------- -------
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board determines in its good faith
judgment that severing the invalid language from this Agreement would adversely
affect the purpose or effect of this Agreement, the right of redemption set
forth in Section 23 hereof shall be reinstated and shall not expire until the
Close of Business on the tenth day following the date of such determination by
the Board.
Section 32. Governing Law.
-------------
This Agreement and each Rights Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of said
State applicable to contracts to be made and performed entirely within said
State.
37
<PAGE>
Section 33. Counterparts.
------------
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings.
--------------------
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and shall not control or affect the meaning or construction
of any of the provisions hereof.
38
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and set their respective hands and seals, all as of the day and
year first above written.
ALLMERICA FINANCIAL CORPORATION
By: /s/ Edward J. Parry III
--------------------------------------
Title: Vice President and
Chief Financial Officer
Attest:
By: /s/ Richard Baker
-----------------------------------
Title: Vice President and Secretary
FIRST CHICAGO TRUST COMPANY OF
NEW YORK, AS RIGHTS AGENT
By: /s/ Michael P. Cummings
------------------------------------
Attest: Title: Michael P. Cummings
Vice President
By: /s/ Ralph Persico
---------------------------
Title: Vice President
39
<PAGE>
EXHIBIT A
---------
FORM OF RIGHTS CERTIFICATE
Certificate No. R- _______ Rights
NOT EXERCISABLE AFTER DECEMBER 15, 2007 OR EARLIER IF ORDER OF REDEMPTION
IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE (WHICH INCLUDES AFFILIATES AND ASSOCIATES) OF AN
ACQUIRING PERSON (AS EACH SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND
ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. THE RIGHTS
SHALL NOT BE EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN
ANY JURISDICTION WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH
HOLDER, OR THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION
SHALL NOT HAVE BEEN OBTAINED OR BE OBTAINABLE. [THE RIGHTS REPRESENTED BY
THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE (WHICH INCLUDES AFFILIATES AND
ASSOCIATES) OF AN ACQUIRING PERSON (AS EACH SUCH TERM IS DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED
IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]/*/
Rights Certificate
ALLMERICA FINANCIAL CORPORATION
This certifies that , or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions, and
conditions of the Rights Agreement dated as of December 16, 1997 (the "Rights
Agreement") between Allmerica Financial Corporation (the "Company"), and First
Chicago Trust Company of New York (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term
- -------------------
/*/ The portion of the legend in brackets shall be inserted only if applicable.
A-1
<PAGE>
is defined in the Rights Agreement) and prior to 5:00 P.M. (Boston,
Massachusetts time) on December 15, 2007 (the "Expiration Date") at the office
of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one share of the Common Stock, with a par value of $.01 per share
("Common Stock"), of the Company per each Right represented hereby, at a
purchase price of $200 per share (the "Purchase Price") upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase set
forth on the reverse side hereof and the certificate contained therein duly
executed, accompanied by a medallion signature guarantee and such other
documentation as the Rights Agent may reasonably request. The number of Rights
evidenced by this Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of December 16, 1997
based on the shares of Common Stock of the Company as constituted at such date.
As more fully set forth in the Rights Agreement, upon the occurrence of a
Common Stock Event (as such term is defined in the Rights Agreement), if the
Rights evidenced by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement) or (ii) a Disqualified Transferee (as defined
in the Rights Agreement), such Rights shall automatically become null and void
and no holder hereof shall have any right with respect to such Rights from and
after the occurrence of such Common Stock Event.
The Rights evidenced by this Rights Certificate shall not be exercisable,
and shall be void so long as held, by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable.
As provided in the Rights Agreement, the Purchase Price and the number of
shares of Common Stock which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events.
In the circumstances described in Section 13 of the Rights Agreement, the
securities issuable upon the exercise of the Rights evidenced hereby shall be
the common stock or similar equity securities or equity interests of an entity
other than the Company.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties, and immunities hereunder of the
Rights Agent, the Company, and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement
A-2
<PAGE>
are on file at the office of the Rights Agent designated for such purpose and
may be obtained by the holder of any Rights upon written request to the Rights
Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent, accompanied by a medallion
signature guarantee and such other documentation as the Rights Agent designated
for such purpose may reasonably request, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of whole or fractional
shares of Common Stock as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered shall have entitled such holder to purchase. If
this Rights Certificate shall be exercised in part, the holder shall be entitled
to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company by a majority vote of the Board
(as defined in the Rights Agreement) then in office at any time prior to the
Expiration Date, at a redemption price of $.01 per Right (which amount is
subject to adjustment as provided in the Rights Agreement).
The Company is not obligated to issue whole or fractional shares of Common
Stock (or other securities) upon the exercise of any Right or Rights evidenced
hereby, but in lieu thereof a cash payment may be made at the election of the
Company, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Stock or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any action by the Company, or to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
A-3
<PAGE>
WITNESS the facsimile signature and seal of the proper officers of the
Company. Dated as of December __, 1997.
ALLMERICA FINANCIAL CORPORATION
By _____________________________________
Title:
ATTEST:
________________________________
Title:
Countersigned:
________________________________
By _____________________________
Authorized Signatory
Date of Countersignature:
A-4
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED ________________________ hereby sells, assigns and
transfers unto ______________________
____________________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________ whose
social security or tax identification number, is: ______________ the Rights
evidenced by this Rights Certificate, together with all right, title and
interest herein, and does hereby irrevocably constitute and appoint
____________________ Attorney, to transfer the within Rights Certificate on the
books of the within-named Company, with full power of substitution.
Dated: _________________________, ____.
_________________________
Signature
Signature Guaranteed:/*/
- ------------------------
/*/ Signature must be guaranteed be a member firm of The New York Stock
Exchange, Inc. or a commercial bank or trust company having an office or
correspondent in New York City.
A-5
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate of an Acquiring Person (as each such term is defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or subsequently became an Acquiring Person or an Affiliate of
an Acquiring Person.
Dated:____________________ ______________________________________
Signature
Signature Guaranteed:*
____________________________
NOTICE
------
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
A-6
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise the Right
Certificate)
To Allmerica Financial Corporation
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Rights Certificate to purchase the number of shares
of Common Stock (or other securities) issuable upon the exercise of such Rights
and requests that certificates for such shares 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 Rights
Certificate, a new Rights 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: _______________________, ____
______________________________
Signature
(Signature must conform in all respects to name of
holder as specified on the face of this Rights
Certificate)
Signature Guaranteed:/**/
- ------------------------
/**/ Signature must be guaranteed by a member firm of The New York Stock
Exchange, Inc. or a commercial bank or trust company having an office of
correspondent in New York City.
A-7
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate of any such Acquiring Person (as each such term is defined in the
Rights Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate after
the occurrence of a Common Stock Event (as such term is defined in the Rights
Agreement) from any Person who is, was, or became an Acquiring Person or an
Affiliate of an Acquiring Person.
Dated: _________________, ____ _________________________
Signature
- --------------------------
Signature Guaranteed:/***/
/***/ Signature must be guaranteed by a member firm of The New York Stock
Exchange, Inc. or a commercial bank or trust company having an office of
correspondent in New York City.
A-8
<PAGE>
EXHIBIT B
---------
ALLMERICA FINANCIAL CORPORATION
SUMMARY OF PURCHASE RIGHTS
On December 16, 1997, the Board of Directors (the "Board") of Allmerica
Financial Corporation (the "Company") declared a dividend of one purchase right
(a "Right") for every outstanding share of the Company's common stock, $.01 par
value (the "Common Stock"). The Rights will be distributed on December 29, 1997
to stockholders of record as of the close of business on December 29, 1997 (the
"Dividend Record Date"). The terms of the Rights are set forth in a Rights
Agreement dated as of December 16, 1997 (the "Rights Agreement") between the
Company and First Chicago Trust Company of New York (the "Rights Agent"). The
Rights Agreement provides for the issuance of one Right for every share of
Common Stock issued and outstanding on the Dividend Record Date and for each
share of Common Stock which is issued or sold after that date and prior to the
"Distribution Date" (as defined below).
Each Right entitles the holder to purchase from the Company one share of
Common Stock at a price of $200 per share, subject to adjustment. The Rights
will expire on December 15, 2007 (the "Expiration Date"), or the earlier
redemption of the Rights, and are not exercisable until the Distribution Date.
No separate Rights certificates will be issued at the present time. Until
the Distribution Date (or earlier redemption or expiration of the Rights), (i)
the Rights will be evidenced by the Common Stock certificates and will be
transferred with and only with such Common Stock certificates, (ii) new Common
Stock certificates issued after the Dividend Record Date upon transfer or new
issuance of the Company's Common Stock will contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any of the
Company's Common Stock certificates will also constitute the transfer of the
Rights associated with the Common Stock represented by such certificate.
The Rights will separate from the Common Stock and Rights certificates will
be issued on the Distribution Date. Unless otherwise determined by a majority
of the Board then in office, the Distribution Date will occur on the earlier of
(i) the fifteenth business day following the later of the date of a public
announcement that a person, including affiliates or associates of such person
(an "Acquiring Person"), except as described below, has acquired or obtained the
right to acquire, beneficial ownership of 15% or more of the outstanding shares
of Common Stock or the date on which an executive officer of the Company has
actual knowledge that an Acquiring Person became such (the "Stock Acquisition
Date") or (ii) the fifteenth business day
B-1
<PAGE>
following commencement of a tender offer or exchange offer that would result in
any person or its affiliates and associates owning 15% or more of the Company's
outstanding Common Stock. In any event, the Board of Directors may delay the
distribution of the certificates. After the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Company's Common Stock as of the close of business on
the Distribution Date and such separate Rights Certificates alone will evidence
the Rights.
If, at any time after the Declaration Date, any person or group of
affiliated or associated persons (other than the Company and its affiliates)
shall become an Acquiring Person, each holder of a Right will have the right to
receive shares of the Company's Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a market value of two
times the exercise price of the Right. If the exercise price is $200, the
holder of each Right would be entitled to receive $400 in market value of the
Company's Common Stock for $200. Also, in the event that the Company were
acquired in a merger or other business combination, or more than 25% of its
assets or earning power were sold, each holder of a Right would have the right
to exercise such Right and thereby receive common stock of the acquiring company
with a market value of two times the exercise price of the Right. For example,
if the exercise price is $200, the holder of each Right would be entitled to
receive $400 in market value of the acquiring company's common shares (e.g., two
shares if the per share market value is $200, for $200). Following the
occurrence of any of the events described in this paragraph, any Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person shall immediately become null and
void.
The Board may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of declaration of the
Rights (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). The Board, however, may not effect an exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary or any entity holding Common
Stock for or pursuant to the terms of any such plan), together with all
Affiliates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Stock then outstanding. Immediately upon the action of the Board
ordering the exchange of any Rights and without any further action and without
any notice, the right to exercise such Rights will terminate and the only right
thereafter of a holder of such Rights will be to receive that number of shares
of Common Stock equal to the number of such Rights held by the holder multiplied
by the Exchange Ratio.
The exercise price of the Rights, and the number of shares of Common Stock
or other securities or property issuable upon exercise of the Rights are subject
to adjustment from time
B-2
<PAGE>
to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Stock, (ii) upon the
grant to holders of the Common Stock of certain rights or warrants to subscribe
for shares of the Common Stock or convertible securities at less than the
current market price of the Common Stock or (iii) upon the distribution to
holders of the Common Stock of evidences of indebtedness or assets (excluding
cash dividends paid out of the earnings or retained earnings of the Company and
certain other distributions) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustments in the exercise price of the Rights
will be required until cumulative adjustments equal at least 1% in such price.
At any time prior to the Expiration Date, the Company, by a majority vote
of the Board, may redeem the Rights at a redemption price of $.01 per Right (the
"Redemption Price"), as described in the Rights Agreement. Immediately upon the
action of the Board electing to redeem the Rights, the right to exercise the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Neither the distribution of the Rights nor the subsequent separation of the
Rights on the Distribution Date will be a taxable event for the Company or its
stockholders. Holders of Rights may, depending upon the circumstances,
recognize taxable income upon the occurrence of a Common Stock Event. In
addition, holders of Rights may have taxable income as a result of (i) an
exchange by the Company of shares of Common Stock for Rights as described above
or (ii) certain anti-dilution adjustments made to the terms of the Rights after
the Distribution Date. A redemption of the Rights would be a taxable event to
holders.
The Rights Agreement may be amended by the Board at any time prior to the
Distribution Date without the approval of the holders of the Rights. From and
after the Distribution Date, the Rights Agreement may be amended by the Board
without the approval of the holders of the Rights in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Rights Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Rights (other than any Acquiring Person or its affiliates,
associates or transferees).
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<PAGE>
A copy of the Rights Agreement will be filed with the Securities and
Exchange Commission as an Exhibit to the Company's Form 8-A. A copy of the
Rights Agreement is available free of charge from the Rights Agent, at the
following address:
First Chicago Trust Company of New York
525 Washington Blvd., Suite 4660, Jersey City, NJ 07810
Attention: Tenders & Exchanges Administration
(Allmerica Financial Corporation Rights Agreement)
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
B-4
