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EXHIBIT 99
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RIGHTS AGREEMENT
by and between
WESTINGHOUSE ELECTRIC CORPORATION
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
as Rights Agent
_______________
Dated as of
December 28, 1995
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TABLE OF CONTENTS
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Section Page
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1. Certain Definitions ................................................ 2
2. Appointment of Rights Agent ........................................ 13
3. Issuance of Right Certificates ..................................... 14
4. Form of Right Certificates ......................................... 17
5. Countersignature and Registration .................................. 18
6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates ...................................... 19
7. Exercise of Rights; Exercise Price; Expiration Date
of Rights ...................................................... 21
8. Cancellation and Destruction of Right Certificates ................. 25
9. Reservation and Availability of Shares of Preferred
Stock .......................................................... 26
10. Preferred Stock Record Date ........................................ 28
11. Adjustment of Exercise Price or Number of Shares ................... 29
12. Certification of Adjusted Exercise Price or Number of
Shares ......................................................... 38
13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power ............................................... 39
14. Fractional Rights and Fractional Shares ............................ 45
15. Rights of Action ................................................... 47
16. Agreement of Right Holders ......................................... 48
17. Right Certificate Holder Not Deemed a Shareholder .................. 49
18. Concerning the Rights Agent ........................................ 49
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Section Page
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19. Merger or Consolidation of, or Change in Name of, the
Rights Agent ..................................................... 50
20. Duties of Rights Agent ............................................... 51
21. Change of Rights Agent ............................................... 55
22. Issuance of New Right Certificates ................................... 57
23. Redemption ........................................................... 57
24. Notice of Proposed Actions ........................................... 59
25. Notices .............................................................. 61
26. Supplements and Amendments ........................................... 62
27. Successors ........................................................... 63
28. Benefits of this Rights Agreement .................................... 64
29. Pennsylvania Contract ................................................ 64
30. Counterparts ......................................................... 64
31. Descriptive Headings ................................................. 64
32. Severability ......................................................... 65
Exhibit A -- Summary of Rights
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Resolution Authorizing
Series A Participating Preferred Stock
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RIGHTS AGREEMENT
Agreement, dated as of December 28, 1995 (the "Record Date"), by and
between Westinghouse Electric Corporation, a Pennsylvania corporation (the
"Company"), and First Chicago Trust Company of New York, a New York corporation
(the "Rights Agent").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company (the "Board of Directors")
has approved the execution of this Agreement and the payment of a dividend of
one right (a "Right") on each outstanding share of Common Stock, $1.00 par value
per share, of the Company, each such Right representing the right to purchase
one one-hundredth of a share (subject to adjustment) of Series A Participating
Preferred Stock of the Company ("Preferred Stock") having the rights and
preferences set forth in the resolution attached hereto as Exhibit C, upon the
terms and subject to the conditions hereinafter set forth; and
WHEREAS, the Board of Directors further approved the issuance of one Right
(subject to adjustment) with respect to each share of Common Stock which may be
issued between the Record Date and the earlier to occur of the Expiration Date
or the Final Expiration Date (as such terms are hereinafter defined);
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NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, and intending to be legally bound hereby, the parties hereby
agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such
term is hereinafter defined) and Associates (as such term is hereinafter
defined) of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the Voting Stock (as such term is
hereinafter defined) of the Company then outstanding; PROVIDED, that, an
Acquiring Person shall not include (i) an Exempt Person (as such term is
hereinafter defined) or (ii) any Person, together with all Affiliates and
Associates of such Person, who or which would be an Acquiring Person solely
by reason of (A) being the Beneficial Owner of shares of Voting Stock of
the Company, the Beneficial Ownership of which was acquired by such Person
or Persons pursuant to any action or transaction or series of related
actions or transactions approved by the Board of Directors before such
Person otherwise became an Acquiring Person or (B) a reduction in the
number of issued and outstanding
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shares of Voting Stock of the Company pursuant to a transaction or a series
of related transactions approved by the Board of Directors of the Company;
PROVIDED, FURTHER, that in the event such Person described in this clause
(ii) does not become an Acquiring Person by reason of subclause (A) or (B)
of this clause (ii), such Person nonetheless shall become an Acquiring
Person in the event such Person thereafter acquires Beneficial Ownership of
an additional 1% or more of the Voting Stock of the Company, unless the
acquisition of such additional Voting Stock would not result in such Person
becoming an Acquiring Person by reason of subclause (A) or (B) of this
clause (ii). Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith (but only if at the time of such
determination by the Board of Directors there are then in office not less
than two Continuing Directors and such action is approved by a majority of
the Continuing Directors then in office) that a Person who would otherwise
be an "Acquiring Person" as defined pursuant to the foregoing provisions of
this paragraph (a) has become such inadvertently, and such Person divests
as promptly as practicable a sufficient number of shares of Voting Stock so
that such Person would no longer be an "Acquiring Person" as
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defined pursuant to the foregoing provisions of this paragraph (a), then
such Person shall not be deemed an "Acquiring Person" for any purposes of
this Rights Agreement.
(b) "Affiliate" of a Person shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), as in effect
on the date of this Rights Agreement.
(c) "Associate" of a Person (as such term is hereinafter defined)
shall mean (i) with respect to a corporation, any officer or director
thereof or of any Subsidiary (as such term is hereinafter defined) thereof,
or any Beneficial Owner (as such term is hereinafter defined) of 10% or
more of any class of equity security thereof, (ii) with respect to a
partnership, any general partner thereof or any limited partner thereof who
is, directly or indirectly, the Beneficial Owner of a 10% or greater
ownership interest therein, (iii) with respect to a business trust, any
officer or trustee thereof or of any Subsidiary thereof or any Beneficial
Owner of 10% or more of any class of beneficial interest therein, (iv) with
respect to any association other than a corporation, partnership or
business trust, any officer or director or other person
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performing similar functions thereof or of any Subsidiary thereof or any
Beneficial Owner of 10% or more of the Common Stock (as such term is
hereinafter defined) of the association, (v) with respect to a trust that
is not a business trust or an estate, any trustee, executor or similar
fiduciary or any Person who has a 10% or greater interest as a beneficiary
in the income from or principal of such trust or estate, (vi) with respect
to a natural person, any relative or spouse of such person, or any relative
of such spouse, who has the same home as such person, and (vii) any
Affiliate of such Person.
(d) A person shall be deemed the "Beneficial Owner" of, or to
"Beneficially Own", any securities (and correlative terms shall have
correlative meanings):
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, for purposes of
Section 13(d) of the Exchange Act and Regulations 13D and 13G
thereunder (or any comparable or successor law or regulation), in
each case as in effect on the date hereof; or
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the
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right to acquire (whether such right is exercisable immediately or
only after the passage of time or the fulfillment of a condition or
both) pursuant to any agreement, arrangement or understanding, or upon
the exercise of conversion rights, exchange rights, other rights
(other than these Rights), warrants or options, or otherwise; PRO-
VIDED, HOWEVER, that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own", securities tendered pursuant to a
tender or exchange offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted
for purchase or exchange or (B) the right to vote, alone or in concert
with others, 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
securities if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given in
response to a proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under the
Exchange Act and (2) is not at the time
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reportable by such Person on a Schedule 13D report under the Exchange
Act (or any comparable or successor report), other than by reference
to a proxy or consent solicitation being conducted by such Person; or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except as described in the proviso
following clause (B) of subparagraph (ii) of this paragraph (d)) or
disposing of any securities of the Company; PROVIDED, HOWEVER, that
for purposes of determining Beneficial Ownership of securities under
this Rights Agreement, officers and directors of the Company solely by
reason of their status as such shall not constitute a group
(notwithstanding that they may be Associates of one another or may be
deemed to constitute a group for purposes of Section 13(d) the
Exchange Act) and shall not be deemed to own shares owned by another
officer or director of the Company.
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Notwithstanding anything in this paragraph (d) to the contrary, a
Person shall not be deemed the "Beneficial Owner" of, or to
"Beneficially Own," any security beneficially owned by another Person
solely by reason of an agreement, arrangement or understanding with
such other Person for the purposes of: (x) soliciting the Company's
shareholders for the election of director nominees or any other
shareholder resolution, the formation of and membership on any
committee for the purpose of promoting or opposing any shareholder
resolution or for electing a slate of nominees to the Company's
Board of Directors, service on such a slate of nominees, or agreement
to a slate of director nominees, PROVIDED, that such other Person
retains the right at any time to withdraw as a nominee or member of
any such committee, and to withhold or revoke any vote or proxy for or
against any such shareholder resolution or for such slate of nominees;
(y) entering into revocable voting agreements or the granting or
solicitation of revocable proxies with respect to any of the matters
described in the foregoing clause (x); or (z) the sharing of expenses
and the indemnification against expenses and liabilities by any
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such other Person with respect to expenses incurred or conduct
occurring during the time such other Person is a nominee or a member
of any such committee described in the foregoing clause (x). Further,
notwithstanding anything in this paragraph (d) to the contrary, a
Person engaged in the business of underwriting securities shall not be
deemed the "Beneficial Owner" of, or to "Beneficially Own," any
securities acquired in good faith in a firm commitment underwriting
until the expiration of forty days after the date of such acquisition.
(e) "Business Day" shall mean any day other than a Saturday, Sunday,
or a day on which banking institutions in the Commonwealth of
Pennsylvania are authorized or obligated by law or executive order to
close.
(f) "Close of Business" on any given date shall mean 5:00 P.M.,
Pennsylvania time, on such date; PROVIDED, HOWEVER, that if such date is
not a Business Day it shall mean 5:00 P.M., Pennsylvania time, on the next
succeeding Business Day.
(g) "Common Stock" when used with reference to the Company shall
collectively mean the Common Stock, $1.00 par value, of the Company.
"Common Stock" when used with reference to any Person other than the
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Company which shall be organized in corporate form shall mean the capital
stock or other equity security with the greatest per share voting power of
such Person. "Common Stock" when used with reference to any Person other
than the Company which shall not be organized in corporate form shall mean
units of beneficial interest, however denominated, which shall represent
the right to participate in profits, losses, deductions and credits of such
Person and which shall be entitled to exercise the greatest voting power
per unit of such Person.
(h) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who is
not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative or nominee of an Acquiring Person or of any
such Affiliate or Associate, and who either (i) was a member of the Board
of Directors prior to the time that any Person became an Acquiring Person
(other than pursuant to a Qualifying Tender Offer) or (ii) subsequently
became a member of the Board of Directors, and whose nomination for elec-
tion or election to the Board of Directors was recommended or approved by a
majority of the Continuing Directors then on the Board of Directors.
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(i) "Distribution Date" shall have the meaning set forth in Section
3(b) hereof.
(j) "Exchange Act" shall have the meaning set forth in Section 1(b)
hereof.
(k) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary
of the Company or (iii) any employee benefit plan, employee stock or
deferral plan or director compensation plan of the Company or any
Subsidiary of the Company, or any trust or other entity organized,
appointed, established or holding Common Stock for or pursuant to the terms
of any such plan.
(l) "Exercise Price" shall have the meaning set forth in Sections 4
and 7(b) hereof.
(m) "Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
(n) "Fair Market Value" of any property shall mean the fair market
value of such property as determined in accordance with Section 11(b)
hereof.
(o) "Final Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(p) "Fundamental Transaction" shall mean any transaction
authorized by Chapter 19 of the Pennsylvania Business Corporation Law,
including without limitation a merger, consolidation, share exchange, sale
of all or substantially all of the
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Company's assets, division, liquidation, dissolution or winding up of the
Company.
(q) "Person" shall mean any corporation, partnership, limited
liability company, business trust, other association, government entity,
estate, trust, foundation or natural person.
(r) "Principal Party" shall have the meaning set forth in Section
13(b) hereof.
(s) "Qualifying Tender Offer" shall mean a tender or exchange offer
for all outstanding shares of Common Stock of the Company approved by a
majority of the Board of Directors (PROVIDED, that at the time of such
approval of the Board of Directors there are then in office not less than
two Continuing Directors and such offer is approved by a majority of the
Continuing Directors then in office), after taking into account the
potential long-term value of the Company and all other factors that they
consider relevant.
(t) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(u) "Right Certificate" shall have the meaning set forth in Section
3(d) hereof.
(v) "Securities Act" shall mean the Securities Act of 1933, as
amended.
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(w) "Stock Acquisition Date" shall mean the first date on which there
shall be a public announcement by the Company or an Acquiring Person that
an Acquiring Person has become such (which, for purposes of this
definition, shall include, without limitation, a report filed pursuant to
Section 13(d) of the Exchange Act) or such earlier date as a majority of
the Continuing Directors shall become aware of the existence of an
Acquiring Person.
(x) "Subsidiary" of a Person shall mean any corporation or other
entity of which securities or other ownership interests entitled to cast at
least a majority of the votes that would be entitled to be cast in an
election of the board of directors or other persons performing similar
functions are beneficially owned, directly or indirectly, by such Person or
by any corporation or other entity that is otherwise controlled by such
Person.
(y) "Summary of Rights" shall have the meaning set forth in Section
3(a) hereof.
(z) "Trading Day" shall have the meaning set forth in Section 11(b)
hereof.
(aa) "Transfer Tax" shall mean any tax or charge, including any
documentary stamp tax, imposed or collected by any governmental or
regulatory authority in
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respect of any transfer of any security, instrument or right, including
Rights, shares of Common Stock and shares of Preferred Stock.
(bb) "Voting Stock" shall mean (i) the Common Stock of the Company
and (ii) any other shares of capital stock of the Company entitled to vote
generally in the election of directors or entitled to vote together with
the Common Stock in respect of a Fundamental Transaction. For purposes of
this Agreement, a stated percentage of the Voting Stock shall mean a number
of shares of the Voting Stock as shall equal in voting power that stated
percentage of the total voting power of the then outstanding shares of
Voting Stock in the election of a majority of the Board of Directors or in
respect of any Fundamental Transaction, as the case may be.
Any determination required to be made by the Board of Directors of the Company
for purposes of applying the definitions contained in this Section 1 shall
be made by the Board of Directors in its good faith judgment, which
determination shall be binding on the Rights Agent and the holders of the
Rights.
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 in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such
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appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) On January 9, 1996, the record date for the dividend of the Rights
(the "Record Date") (or as soon as practicable thereafter), the Company or the
Rights Agent shall send a copy of a Summary of Rights, in substantially the form
attached hereto as Exhibit A (the "Summary of Rights"), by mail, postage
prepaid, to each record holder of the Common Stock as of the close of business
on the Record Date, at the address of such holder shown on the records
of the Company.
(b) Until the close of business on the day which is the earlier of (i) the
tenth day after the Stock Acquisition Date or (ii) the tenth Business Day (or
such later date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person) after the date of the
commencement by any Person (other than an Exempt Person) of, or the first public
announcement of the intent of any Person (other than an Exempt Person) to
commence, a tender or exchange offer upon the successful consummation of which
such Person, together with its Affiliates and Associates, would be the
Beneficial Owner of 30% or more of the then outstanding shares of Voting Stock
of the Company (irrespective of whether any shares are actually purchased
pursuant to any such offer) (the earlier of such dates being herein referred to
as the "Distribution Date"), (x) the
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Rights shall be evidenced by the certificates for Common Stock registered in the
name of the record holders of Common Stock and not by separate Right
Certificates and the record holders of such certificates for Common Stock shall
be the record holders of the Rights represented thereby and (y) each Right shall
be transferable only simultaneously and together with the transfer of a share of
Common Stock (subject to adjustment as hereinafter provided). Until the
Distribution Date (or, if earlier, the Expiration Date or Final Expiration
Date), the surrender for transfer of any certificate for Common Stock shall
constitute the surrender for transfer of the Right or Rights associated with the
Common Stock evidenced thereby, whether or not accompanied by a copy of the
Summary of Rights.
(c) Rights shall be issued in respect of all shares of Common Stock that
become outstanding after the Record Date but prior to the earlier of the
Distribution Date, the Expiration Date or the Final Expiration Date and, in
certain circumstances provided in Section 22 hereof, may be issued in respect of
shares of Common Stock that become outstanding after the Distribution Date.
Certificates for Common Stock issued (including, without limitation,
certificates issued upon original issuance, disposition from the Company's
treasury or transfer or exchange of Common Stock) after the Record Date but
prior to the earliest
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of the Distribution Date, the Expiration Date, or the Final Expiration Date (or,
in certain circumstances as provided in Section 22 hereof, after the
Distribution Date) shall have impressed, printed, written or stamped thereon or
otherwise affixed thereto the following legend:
This certificate also evidences and entitles the holder hereof to the
same number of Rights (subject to adjustment) as the number of shares of
Common Stock represented by this certificate, such Rights being on the
terms provided under the Rights Agreement between Westinghouse Electric
Corporation and First Chicago Trust Company of New York (the "Rights
Agent"), dated as of December 28, 1995, as it may be amended from time to
time (the "Rights Agreement"), the terms of which are incorporated herein
by reference and a copy of which is on file at the principal executive
offices of Westinghouse Electric Corporation. Under certain circumstances,
as set forth in the Rights Agreement, such Rights shall be evidenced by
separate certificates and shall no longer be evidenced by this certificate.
Westinghouse Electric Corporation shall mail to the registered holder of
this certificate a copy of the Rights Agreement without charge within five
days after receipt of a written request therefor. UNDER CERTAIN
CIRCUMSTANCES AS PROVIDED IN SECTION 7(e) OF THE RIGHTS AGREEMENT, RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR THEIR AFFILIATES OR
ASSOCIATES (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND MAY NOT BE
TRANSFERRED TO ANY PERSON.
(d) As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send), by
first class mail, postage prepaid, to each record holder of the Common Stock as
of the close of business on the Distribution Date, as shown by the records of
the Company, at the address of such holder shown on
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such records, a certificate in the form provided by Section 4 hereof (a "Right
Certificate"), evidencing one Right (subject to adjustment as provided herein)
for each share of Common Stock so held. As of and after the Distribution Date,
the Rights shall be evidenced solely by Right Certificates and may be
transferred by the transfer of the Right Certificate as permitted hereby,
separately and apart from any transfer of one or more shares of Common Stock.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase shares, certificate and assignment to be printed
on the reverse thereof), when, as and if issued, shall be substantially in the
form set forth in Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as may
be required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Common
Stock or the Rights may from time to time be listed or as the Company may deem
appropriate to conform to usage or otherwise and as are not inconsistent with
the provisions of this Rights Agreement. Subject to the provisions of Section
22 hereof, Right Certificates evidencing Rights whenever issued, (i) shall be
dated as of the date of issuance of the Rights they represent and (ii) subject
to adjustment from time to time as provided herein, on their face shall entitle
the holders thereof to purchase such number of
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shares (including fractional shares which are integral multiples
of one one-hundredth of a share) of Preferred Stock as shall be set forth
therein at the price payable upon exercise of a Right provided by Section 7(b)
hereof as the same may from time to time be adjusted as provided herein (the
"Exercise Price").
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) Each Right Certificate shall be executed by an officer of the
Company and countersigned by the Chief Financial Officer, the Treasurer or any
Assistant Treasurer of the Company, in each case on behalf of the Company,
either manually or by facsimile signature, and have affixed thereto the
Company's seal or a facsimile thereof. If such Right Certificate is executed
or sealed in facsimile, it shall be signed or countersigned by the Rights
Agent and shall not be valid for any purpose unless so signed or countersigned.
In case any officer of the Company who shall have signed any Right Certificate
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery of the certificate by the Company, such
Right Certificate, nevertheless, may be countersigned by the Rights Agent and
issued and delivered with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer of the
Company. Any Right Certificate may be signed on behalf of the Company by any
person who, on the date of the execution of such Right Certificate, shall be a
proper officer of the Company to
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sign such Right Certificate, although at the date of the execution of this
Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its principal office or one or more offices designated as the
appropriate place for surrender of Right Certificates upon exercise or transfer,
and in such other locations as may be required by law, books for registration
and transfer of the Right Certificates issued hereunder. Such books shall show
the names and addresses of the respective holders of the Right Certificates, the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Section 7(e), 7(f) and 14 hereof, at any
time after the Close of Business on the Distribution Date, and at or prior to
the Close of Business on the earlier of the Expiration Date or the Final
Expiration Date, any Right Certificate, may be (i) transferred or (ii) split up,
combined or exchanged for one or more other Right Certificates, entitling the
registered holder to purchase a like number of shares of Preferred Stock as the
Right Certificate or Right Certificates surrendered then entitled such holder to
purchase.
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Any registered holder desiring to transfer any Right Certificate shall surrender
the Right Certificate at the office of the Rights Agent designated for the
surrender of Right Certificates with the form of certificate and assignment on
the reverse side thereof duly endorsed (or enclosed with such Right Certificate
a written instrument of transfer in form satisfactory to the Company and the
Rights Agent), duly executed by the registered holder thereof or his attorney
duly authorized in writing, and with such signature duly guaranteed. Any
registered holder desiring to split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate to be split up, combined or
exchanged at the office of the Rights Agent designated therefor. Thereupon, the
Rights Agent shall countersign and deliver to the person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any Transfer Tax
that may be imposed in connection with any transfer, split up, combination or
exchange of any Right Certificates.
(b) Subject to the provisions of Section 7(e), 7(f) and 14 hereof, upon
receipt by the Company and the Rights Agent of (i) evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, (ii) in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, if requested by the Company,
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reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto and receipt of such other documents, if any, as may be deemed
necessary or appropriate, and (iii) upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company shall issue and
deliver a new Right Certificate of like tenor to the Rights Agent for delivery
to the registered owner in lieu of the Right Certificate so lost, stolen,
destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE OF RIGHTS.
(a) The Rights shall not be exercisable until, and shall become
exercisable on, the Distribution Date (unless otherwise provided herein,
including, without limitation, the restrictions on exercisability set forth in
Section 7(e) and 23(a) hereof). Except as otherwise provided herein, the Rights
may be exercised, in whole or in part, at any time commencing with the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and certificate on the reverse side thereof duly executed
(with signatures duly guaranteed), to the Rights Agent at the principal office
of the Rights Agent in Jersey City, New Jersey, together with payment of the
Exercise Price for each Right exercised, subject to adjustment as hereinafter
provided, at or prior to the Close of Business on the earlier of (i) January 9,
2006 (the "Final Expiration Date") or (ii) the date on which the Rights are
redeemed as provided in
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Section 23 hereof (such earlier date being herein referred to as the "Expiration
Date").
(b) The Exercise Price shall initially be $64.00 for each one
one-hundredth (1/100) of a share of Preferred Stock issued pursuant to the
exercise of a Right. The Exercise Price and the number of shares of Preferred
Stock or other securities to be acquired upon exercise of a Right shall be
subject to adjustment from time to time as provided in Sections 11 and 13
hereof. The Exercise Price shall be payable in lawful money of the United
States of America, in accordance with paragraph (c) below.
(c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by payment by certified check, cashier's
check, bank draft or money order payable to the Company or the Rights Agent of
the Exercise Price for the shares to be purchased and an amount equal to any
applicable Transfer Tax required to be paid by the holder of the Right
Certificate in accordance with Section 9(e) hereof, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Preferred
Stock of the Company one or more certificates representing the number of shares
of Preferred Stock to be so purchased, and the Company hereby authorizes and
directs such transfer agent to comply with all such requests, (ii) as provided
in Section 14(b), at the election of the Company, cause
27
depositary receipts to be issued in lieu of fractional shares of Preferred
Stock, (iii) if the election provided for in the immediately preceding clause
(ii) has not been made, requisition from the Company the amount of cash to be
paid in lieu of the issuance of fractional shares in accordance with Section
14(b) hereof, (iv) after receipt of such Preferred Stock certificates and, if
applicable, depositary receipts, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (v) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate; PROVIDED, HOWEVER, that in the case of a
purchase of securities, other than Preferred Stock, pursuant to Section 13
hereof, the Rights Agent shall promptly take the appropriate actions
corresponding in such case to that referred to in the foregoing clauses (i)
through (v) of this Section 7(c). Notwithstanding the foregoing provisions of
this Section 7(c), the Company may suspend the issuance of shares of Preferred
Stock upon exercise of a Right for a reasonable period, not in excess of 90
days, during which the Company seeks to register under the Securities Act of
1933, as amended (the "Act"), and any applicable securities law of any other
jurisdiction, the shares of Preferred Stock to be issued pursuant to the Rights;
PROVIDED, HOWEVER, that nothing contained in this
28
Section 7(c) shall relieve the Company of its obligations under Section 9(c)
hereof.
(d) In case the record holder of any Right Certificate shall exercise less
than all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to the record holder of such Right Certificate or his assign, subject to
the provisions of Section 14(b) hereof.
(e) Notwithstanding any provision of this Rights Agreement to the
contrary, from and after the time (the "invalidation time") when any Person
first becomes an Acquiring Person (other than pursuant to a Qualifying Tender
Offer) any Rights that are Beneficially Owned by (x) such Acquiring Person (or
any Associate or Affiliate of such Acquiring Person), (y) a transferee of such
Acquiring Person (or any such Associate or Affiliate) who becomes a transferee
after the invalidation time or (z) a transferee of such Acquiring Person (or any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the invalidation time pursuant to either (I) a transfer from the Acquiring
Person to holders of its equity securities or to any Person with whom it has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (II) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding which has the purpose or effect of avoiding
the provisions of this Section
29
7(e), and subsequent transferees of such Persons referred to in clauses (y) and
(z) above, shall be void without any further action and any holder of such
Rights shall thereafter have no rights whatsoever with respect to such Rights
under any provision of this Rights Agreement. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(e) are
complied with, but shall have no liability to any holder of Right Certificates
or any other Person as a result of its failure to make any determination with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. No Right Certificate shall be issued pursuant to Section 3 hereof
that represents Rights Beneficially Owned by an Acquiring Person whose Rights
would be void pursuant to the provisions of this Section 7(e) or any Associate
or Affiliate thereof; no Right Certificate shall be issued at any time upon the
transfer of any Rights to an Acquiring Person whose Rights would be void
pursuant to the provisions of this Section 7(e) or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and
any Right Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be void pursuant to the provisions of this Section
7(e) shall be cancelled.
(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 record holder
30
upon the occurrence of any purported exercise as set forth in this Section 7
unless such record holder shall have (i) completed and signed the certificate
following the form of election to purchase set forth on the reverse side of the
Right Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall
cancel and retire, any Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
31
Section 9. RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK.
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Preferred Stock or
out of authorized and issued shares of Preferred Stock held in its treasury,
such number of shares of Preferred Stock as will from time to time be sufficient
to permit the exercise in full of all outstanding Rights.
(b) The Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares of Preferred Stock issued or
reserved for issuance in accordance with this Rights Agreement to be listed,
upon official notice of issuance, upon the principal national securities
exchange, if any, upon which the Common Stock is listed or, if the principal
market for the Common Stock is not on any national securities exchange, to be
eligible for quotation in The Nasdaq Stock Market or any successor thereto or
other comparable quotation system.
(c) The Company covenants and agrees that it will take all such action as
may be necessary to insure that all shares of Preferred Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
shares (subject to payment of the Exercise Price in respect thereof), be duly
and
32
validly authorized and issued and fully paid and nonassessable shares.
(d) The Company shall use its best efforts to (i) file, as soon as
practicable following the occurrence of the event described in Section
11(a)(ii), or as soon as is required by law following the Distribution Date, as
the case may be, a registration statement under the Securities Act, with respect
to the shares of Preferred Stock purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for Preferred Stock, and (B) the date
of the expiration of the Rights. The Company may temporarily suspend, for a
period of time not to exceed ninety days, the issuance of shares of Preferred
Stock upon exercise of a Right in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. 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. Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction unless the requisite quali-
33
fication in such jurisdiction shall have been obtained and until a registration
statement under the Securities Act (if required) shall have been declared
effective.
(e) The Company covenants and agrees that it will pay when due and payable
any and all federal and state Transfer Taxes which may be payable in respect of
the issuance or delivery of the Right Certificates or of any shares of Preferred
Stock issued or delivered upon the exercise of Rights. The Company shall not,
however, be required to pay any Transfer Tax which may be payable in respect of
any transfer or delivery of a Right Certificate to a Person other than, or the
issuance or delivery of certificates for Preferred Stock upon exercise of Rights
in a name other than that of, the registered holder of the Right Certificate,
and the Company shall not be required to issue or deliver a Right Certificate or
certificate for Preferred Stock to a Person other than such registered holder
until any such Transfer Tax shall have been paid (any such Transfer Tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's satisfaction that no such
Transfer Tax is due.
Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for shares of Preferred Stock is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Preferred Stock represented thereby on, and such certificate shall be dated as
34
of, the date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Exercise Price (and any applicable Transfer
Taxes) was made; PROVIDED, HOWEVER, that, if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated as of, the next succeeding
Business Day on which the Preferred Stock transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate, as such, shall not be entitled to any rights of a shareholder
of the Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.
Section 11. ADJUSTMENT OF EXERCISE PRICE OR NUMBER OF SHARES. The Exercise
Price and the number of shares of Preferred Stock which may be purchased upon
exercise of a Right are subject to adjustment from time to time as provided in
this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Rights Agreement (A) declare or pay any dividend on Common Stock
payable in shares of Common Stock, (B) subdivide or split the outstanding
shares of Common Stock into a greater
35
number of shares or (C) combine or consolidate the outstanding shares of
Common Stock into a smaller number of shares or effect a reverse split of
the outstanding shares of Common Stock, then and in each such event the
number of shares of Preferred Stock issuable upon the exercise of a Right
after the record date for such event (if one shall have been established
or, if not, after the date of such event) shall be the number of shares of
Preferred Stock issuable upon the exercise of a Right immediately prior to
such event multiplied by a fraction the numerator of which is the number of
Rights outstanding immediately prior to such event and the denominator of
which is the number of Rights outstanding immediately after such event and
the Exercise Price after such event shall be the Exercise Price in effect
immediately prior to such event multiplied by such fraction. 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 for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) In the event that any Person (other than an Exempt Person),
alone or together with its Affiliates and Associates, shall become an
Acquiring Person,
36
except pursuant to a Qualifying Tender Offer, then, subject to the last
sentence of Section 23(a) and except as otherwise provided in this Section
11, each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive upon exercise of such Right in
accordance with the terms of this Rights Agreement and payment of the
Exercise Price, the greater of (1) the number of one one-hundredths of a
share of Preferred Stock for which such Right was exercisable immediately
prior to the first occurrence of the event described in this Section
11(a)(ii) or (2) such number of one one-hundredths of a share of Preferred
Stock, based on the per share Fair Market Value of the Preferred Stock
(determined pursuant to Section 11(b) hereof) on the date of such first
occurrence, having a value equal to twice the Exercise Price; PROVIDED,
HOWEVER, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13
hereof, then only the provisions of Section 13 hereof shall apply and no
adjustment shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that the Company does not have available
sufficient authorized but unissued Preferred Stock to permit the
adjustments required pursuant to
37
the foregoing subparagraph (i) or the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company shall take all
such action as may be necessary to authorize and reserve for issuance such
number of additional shares of Preferred Stock as may from time to time be
required to be issued upon the exercise in full of all Rights from time to
time outstanding and, if necessary, shall use its best efforts to obtain
stockholder approval thereof. In lieu of issuing shares of Preferred Stock
in accordance with the foregoing subparagraphs (i) and (ii), the Company
may, if the Board of Directors determines (but only if at the time of such
determination by the Board of Directors there are then in office not less
than two Continuing Directors and such action is approved by a majority of
the Continuing Directors then in office) that such action is necessary or
appropriate and not contrary to the interests of holders of Rights, elect
to issue or pay, upon the exercise of the Rights, cash, property, shares of
Preferred or Common Stock, or any combination thereof, having an aggregate
Fair Market Value equal to the Fair Market Value of the shares of Preferred
Stock which otherwise would have been issuable pursuant to Section 11(a)(i)
or 11(a)(ii) hereof, which Fair Market Value shall be determined by
38
an investment banking firm selected by the Board of Directors (but only if
at the time of such selection there are then in office not less than two
Continuing Directors and such selection is approved by a majority of the
Continuing Directors then in office). For purposes of the preceding
sentence, the Fair Market Value of the Preferred Stock shall be as
determined pursuant to Section 11(b). Subject to Section 23 hereof, any
such election by the Board of Directors of the Company must be made and
publicly announced within thirty (30) days after the date on which the
event described in Section 11(a)(ii) occurs.
(b) For the purpose of this Rights Agreement, the "Fair Market Value" of
any share of Preferred Stock, Common Stock or any other stock or any Right or
other security or any other property on any date shall be determined as provided
in this Section 11(b). In the case of a publicly-traded stock or other
security, the Fair Market Value on any date shall be deemed to be the average of
the daily closing prices per share of such stock or per unit of such other
security for the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; PROVIDED, HOWEVER, that in the event
that the Fair Market Value per share of any share of Common Stock is determined
during a period which includes any date that is within 30 Trading Days after (i)
the ex-dividend date for a dividend or distribu-
39
tion on such stock payable in shares of Common Stock or securities convertible
into shares of Common Stock, or (ii) the effective date of any subdivision,
split, combination, consolidation, reverse stock split or reclassification of
such stock, then, and in each such case, the Fair Market Value shall be
appropriately adjusted by the Board of Directors of the Company to take into
account ex-dividend or post-effective date trading. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way
(in either case, as reported in the applicable transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange), or, if the securities are not listed or admitted to trading on the
New York Stock Exchange, as reported in the applicable 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 not
listed or admitted to trading on any national securities exchange, the last
quoted price (or, if not so quoted, the average of the high bid and low asked
prices) in the over-the-counter market, as reported by The Nasdaq Stock Market
or such other system then in use; or, if no bids for such security are quoted by
any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such security
selected by the Board of
40
Directors of the Company. The term "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
Business Day. If a security is not publicly held or not so listed or traded,
"Fair Market Value" shall mean the fair value per share of stock or per other
unit of such other security, as determined by an independent investment banking
firm experienced in the valuation of securities selected in good faith by the
Board of Directors of the Company, or, if no such investment banking firm is, in
the good faith judgment of the Board of Directors, available to make such
determination, in good faith by the Board of Directors of the Company; PROVIDED,
HOWEVER, that for purposes of making the adjustment provided for by Section
11(a)(ii) hereof, the Fair Market Value of a share of Preferred Stock shall not
be less than 100% of the product of the Fair Market Value of a share of Common
Stock multiplied by the higher of the then Dividend Multiple or Vote Multiple
applicable to the Preferred Stock (as defined in the terms of the Preferred
Stock) and shall not exceed 105% of the product of the then Fair Market Value of
a share of Common Stock multiplied by the higher of the then Dividend Multiple
or Vote Multiple applicable to the Preferred Stock. In the case of property
other than securities, the "Fair Market Value" thereof shall be determined in
good faith
41
by the Board of Directors of the Company based upon such appraisals or valuation
reports of such independent experts as the Board of Directors of the Company
shall in good faith determine to be appropriate in accordance with good business
practices and the interests of the holders of Rights. Any such determination of
Fair Market Value shall be described in a statement filed with the Rights Agent
and shall be binding upon the Rights Agent.
(c) All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-hundredth of a share, as the case may be.
(d) Irrespective of any adjustment or change in the Exercise Price or the
number of shares of Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Exercise Price and the number of shares to be issued upon exercise of the
Rights as in the initial Right Certificates issued hereunder but, nevertheless,
shall represent the Rights as so adjusted.
(e) Before taking any action that would cause an adjustment reducing the
purchase price per whole share of Preferred Stock upon exercise of the Rights
below the then par value, if any, of the shares of Preferred Stock, the Company
shall use its best efforts to take any corporate action which may, in the
opinion of its counsel, be necessary in order that
42
the Company may validly and legally issue fully paid and nonassessable shares of
such Preferred Stock at such adjusted purchase price per share.
(f) Anything in this Section 11 to the contrary notwithstanding, in the
event of any reclassification of stock of the Company or any recapitalization,
reorganization or partial liquidation of the Company or similar transaction, the
Company shall be entitled to make such further adjustments in the number of
shares of Preferred Stock which may be acquired upon exercise of the Rights, and
such adjustments in the Exercise Price therefor, in addition to those
adjustments expressly required by the other paragraphs of this Section 11, as
the Board of Directors of the Company shall determine to be necessary or
appropriate in order for the holders of the Rights in such event to be treated
equitably and in accordance with the purpose and intent of this Rights Agreement
or in order that any such event shall not, but for such adjustment, in the
opinion of counsel to the Company, result in the stockholders of the Company
being subject to any United States federal income tax liability by reason
thereof.
(g) In the event the Company shall at any time after the Record Date make
any distribution on the shares of Common Stock of the Company, whether by way of
a dividend or a reclassification of stock, a recapitalization, reorganization or
partial liquidation of the Company or otherwise, in cash or any debt security,
debt instrument, real or personal property or any other
43
property (other than any shares of Common Stock or other capital stock of the
Company and other than any right or warrant to acquire any such shares,
including any debt security convertible into or exchangeable for any such share,
at less than the Fair Market Value of such shares) and the amount of such cash
dividend or the Fair Market Value of such debt security, debt instrument or
property exceeds 150% of the aggregate amount of the cash dividends declared or
paid on the Common Stock of the Company in the 15-month period immediately
preceding such distribution, then and in each such event, unless such
distribution is part of or is made in connection with a transaction to which
Section 11(a)(ii) or Section 13 hereof applies, the Exercise Price shall be
reduced by an amount equal to the cash or the Fair Market Value of such
distribution, as the case may be, per share of Common Stock of the Company. For
purposes hereof, the Fair Market Value of any property distributed to the
holders of shares of Common Stock of the Company shall be the Fair Market Value
of such property as determined by an independent investment banking firm
experienced in the valuation of securities or the other property so distributed,
as the case may be, selected in good faith by the Board of Directors of the
Company, or, if no such investment banking firm is in the good faith judgment of
the Board of Directors available to make such determination, in good faith by
the Board of Directors of the Company, whose determination shall be final and
44
binding on the Company, the Rights Agent and the holders of Rights.
Section 12. CERTIFICATION OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11, 13 or 23(c), the
Company shall (a) promptly prepare a certificate setting forth such
adjustment, and a brief statement of the facts giving rise to such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25.
Notwithstanding the foregoing sentence, the failure of the Company to make such
certification or give such notice shall not affect the validity of or the force
or effect of the requirement for such adjustment. Any adjustment to be made
pursuant to Section 11, 13 or 23(c) of this Rights Agreement shall be effective
as of the date of the event giving rise to such adjustment. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) Except for any transaction approved by the Board of Directors (but
only if at the time of such approval by the
45
Board of Directors there are then in office not less than two Continuing
Directors and such action is approved by a majority of the Continuing Directors
then in office), in the event that, at any time on or after the Distribution
Date, (x) the Company shall, directly or indirectly, consolidate with, or merge
with and into, any other Person or Persons (other than an Exempt Person) and the
Company shall not be the surviving or continuing corporation of such
consolidation or merger or the Company shall divide into two or more
corporations and the Company shall not survive the division, or (y) the Company
shall be a party to a Fundamental Transaction in which the Company shall be the
continuing or surviving corporation and, in connection with such Fundamental
Transaction, all or part of the outstanding shares of Common Stock shall be
changed into or exchanged for stock or other securities of any other Person
(other than an Exempt Person) or of the Company or cash or any other property,
or (z) the Company or one or more of its Subsidiaries shall, directly or
indirectly, sell or otherwise transfer to any other Person or any Affiliate or
Associate of such Person, in one or more transactions, or the Company or one or
more of its Subsidiaries shall sell or otherwise transfer to any Persons in one
or a series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole), then, on the first occurrence of any such event, proper
provision shall be
46
made so that (i) each holder of record of a Right, except as provided in Section
7(e) hereof, shall thereafter have the right to receive, upon the exercise
thereof and payment of the Exercise Price in accordance with the terms of this
Rights Agreement, such number of shares of validly issued, fully paid,
non-assessable and freely tradeable Common Stock of the Principal Party (as
defined herein), not subject to any liens, encumbrances, rights of first refusal
or other adverse claims, as shall, based on the Fair Market Value of the Common
Stock of the Principal Party on the date of the consummation of such
consolidation, merger, Fundamental Transaction, sale or transfer equal twice the
Exercise Price; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, Fundamental Transaction,
sale or transfer all the obligations and duties of the Company pursuant to this
Rights Agreement; (iii) the term "Company" for all purposes of this Rights
Agreement shall thereafter be deemed to refer to such Principal Party; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock in accordance
with the provisions of Section 9 hereof applicable to the reservation of
Preferred Stock) in connection with such consummation as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise
47
of the Rights; PROVIDED, HOWEVER, that, upon the subsequent occurrence of any
Fundamental Transaction, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of a Right shall thereupon be entitled to receive, upon
exercise of a Right and payment of the Exercise Price, such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had it, at the time of such transaction, owned the shares of Common
Stock of the Principal Party purchasable upon the exercise of a Right, and such
Principal Party shall take such steps (including, but not limited to,
reservation of shares of stock) as may be necessary to permit the subsequent
exercise of the Rights in accordance with the terms hereof for such cash,
shares, rights, warrants and other property and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the occurrence of any event
described in clause (x), (y) or (z) above of this Section 13(a).
(b) "Principal Party" shall mean
(i) in the case of any transaction described in (x) or (y) of the
first sentence of Section 13(a) hereof: (A) the Person that is the issuer of the
securities into which shares of Common Stock of the Company are changed or
otherwise exchanged or converted in such merger, consolidation or other
Fundamental Transaction or, if there is more than one such issuer, the issuer of
the Common Stock of which has the greatest
48
market value or (B) if no securities are so issued, (x) the Person that is the
other party to the merger, consolidation or other Fundamental Transaction and
that survives such merger, consolidation or other Fundamental Transaction or, if
there is more than one such Person, the Person the Common Stock of which has the
greatest market value or (y) if the Person that is the other party to the
merger, consolidation or other Fundamental Transaction does not survive the
merger, consolidation or other Fundamental Transaction, the Person that does
survive the merger, consolidation or other Fundamental Transaction (including
the Company if it survives); and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power so
transferred or if the Person receiving the greatest portion of the assets or
earning power cannot be determined, whichever of such Persons as is the issuer
of Common Stock having the greatest market value of shares outstanding;
PROVIDED, HOWEVER, that in any such case, if the Common Stock of such Person is
not at such time and has not been continuously over the preceding 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the
49
Common Stock of which is and has been so registered, the term "Principal Party"
shall refer to such other Person, or if such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Stocks of all of which are and
have been so registered, the term "Principal Party" shall refer to whichever of
such Persons is the issuer of the Common Stock having the greatest market value
of shares outstanding.
(c) The Company shall not consummate any Fundamental Transaction or sale
or transfer of assets or earning power referred to in Section 13(a) hereof
unless the Principal Party shall have a sufficient number of authorized shares
of its Common Stock that have not been issued or reserved for issuance to permit
exercise in full of all Rights in accordance with this Section 13 and unless
prior thereto the Company and the Principal Party involved therein shall have
executed and delivered to the Rights Agent an agreement confirming that the
Principal Party shall, upon consummation of such Fundamental Transaction or sale
or transfer of assets or earning power, assume this Rights Agreement in
accordance with Section 13(a) hereof and that all rights of first refusal or
preemptive rights in respect of the issuance of shares of Common Stock of the
Principal Party upon exercise of outstanding Rights have been waived and that
such transaction shall not result in a default by the Principal Party under this
Rights Agreement, and further providing that, as soon as practicable after the
date of any Fundamental Transaction or
50
sale or transfer of assets or earning power referred to in Section 13(a) hereof,
the Principal Party will:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and use its best efforts to cause such registration statement
to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the date of expiration of the Rights, and
similarly comply with applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on a
national securities exchange or to meet the eligibility requirements for
quotation on The Nasdaq Stock Market; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
In the event that any of the transactions described in Section 13(a) hereof
shall occur at any time after the occurrence
51
of a transaction described in Section 11(a) (ii) hereof, the Rights which have
not theretofore been exercised shall, subject to the provisions of Section 7(e)
hereof, thereafter be exercisable in the manner described in Section 13(a).
(d) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate or Articles of Incorporation or By-laws or
other instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Fair
Market Value per share (determined pursuant to Section 11(b) hereof) or
securities exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then Fair Market Value (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special tax or similar
payment in connection with the issuance to any holder of a Right of Common Stock
of such Principal Party pursuant to the provisions of this Section 13, then, in
such event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been canceled, waived
52
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights (i.e., Rights to
acquire less than one one-hundredth of a share of Preferred Stock), unless such
fractional Rights result from a transaction referred to in Section 11(a) (i)
hereof. If the Company shall determine not to issue such fractional Rights,
then, in lieu of such fractional Rights, there shall be paid to the holders of
record of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of the
Fair Market Value of a whole Right.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share) upon exercise of the Rights or to distribute
certificates which evidence fractional shares (other than fractions which are
integral multiples of one-hundredth of a share). In lieu of issuing fractions
of shares of Preferred Stock, the Company may, at its election, issue depositary
receipts evidencing fractions of shares pursuant to an appropriate agreement
between the
53
Company and a depositary selected by it, PROVIDED that such agreement shall
provide that the holders of such depositary receipts shall have all of the
rights, privileges and preferences to which they would be entitled as owners of
the Preferred Stock. With respect to fractional shares that are not integral
multiples of one-hundredth of a share, if the Company does not issue such
fractional shares or depositary receipts in lieu thereof, there shall be paid to
the holders of record of Right Certificates at the time such Right Certificates
are exercised as herein provided an amount in cash equal to the same fraction of
the Fair Market Value of a share of Preferred Stock.
(c) The holder of a Right by the acceptance of a Right expressly waives
his right to receive any fractional Right or any fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth of
a share) upon exercise of a Right.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Rights Agreement, except the rights of action given to the Rights Agent in
Section 18 hereof, are vested in the respective record holders of the Right
Certificates (and, prior to the Distribution Date, the holders of record of the
Common Stock); and any holder of record of any Right Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common
54
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Rights Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Rights Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Rights Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Each holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be evidenced by
the certificates for Common Stock registered in the name of the holders of
Common Stock (together, as applicable, with the Summary of Rights), which
certificates for Common Stock shall also constitute certificates for
Rights, and not by separate Right Certificates, and each Right shall be
transferable only simultaneously and together with the transfer of shares
of Common Stock;
55
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the office of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any nota-
tions of ownership or writing on the Right Certificates or the associated
Common Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of Preferred Stock or any other
securities which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Right
Certificate be construed to confer upon the holder of any Right Certificate, 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 shareholders at any
meeting thereof,
56
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in Section
24 hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder. The
Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without negligence, bad faith
or willful misconduct on the part of the Rights Agent, for anything done or
omitted to be done by the Rights Agent in connection with the acceptance and
administration of this Rights Agreement, including the cost and expenses of
defending against any claim of liability relating to the Rights or this Rights
Agreement.
(b) The Rights Agent shall be protected against, 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 Rights Agreement in reliance upon any
Right Certificate
57
or certificate for Preferred Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OF, OR CHANGE IN NAME OF, THE RIGHTS
AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Rights Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, PROVIDED that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Rights Agreement any of the Right
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 Right Certificates so countersigned; and in case at
58
that time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; in case at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates by their acceptance thereof shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protec-
59
tion 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 Rights Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the Chief
Executive Officer, the President or any Vice President and by the Treasurer, the
Chief Financial Officer or the Secretary of the Company and delivered to the
Rights Agent. Any such certificate shall be full authorization to the Rights
Agent for any action taken or suffered in good faith by it under the provisions
of this Rights Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
60
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Rights 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 Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of a certificate describing any
such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of Preferred Stock to be issued pursuant to this Rights Agreement or any
Right Certificate or as to whether any shares of Preferred Stock 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
61
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of the Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President or the Secretary, the Chief Financial Officer or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Rights Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys
or
62
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail. The Company may remove the Rights Agent or any successor Rights
Agent (with or without cause) upon 30 days' notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to each transfer
agent of the Common Stock and the Preferred Stock by registered or certified
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
Notwithstanding the foregoing provisions of this Section 21, in no event shall
the resignation or removal of a Rights Agent be effective until a successor
Rights Agent shall have been appointed and have accepted such appointment. If
the Company shall fail to make such appointment within a period of 30 days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his Right Certificate
for inspection by the Company), then the incumbent Rights Agent or the
63
holder of record of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be (a) a
corporation organized and doing business under the laws of the United States or
of any state thereof, in good standing, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination in the conduct of its corporate trust or stock transfer business
by federal or state authorities and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $5,000,000 or (b) an
Affiliate controlled by a corporation described in clause (a) of this sentence.
After appointment, the successor Rights Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
as Rights Agent without further act or deed, but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Stock
and Preferred Stock, and mail a notice thereof in writing to the record holders
of the Right Certificates. Failure to give any notice provided for in
64
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. Notwithstanding the
foregoing provisions, in the event of resignation, removal or incapacity of the
Rights Agent, the Company shall have the authority to act as the Rights Agent
until a successor Rights Agent shall have assumed the duties of the Rights Agent
hereunder.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjust-
ment or change in the Exercise Price per share and the number or kind or class
of shares of stock or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights Agreement.
Section 23. REDEMPTION.
(a) The Company may, at its option, but only by the vote of a majority of
the Board of Directors then in office redeem all but not less than all of the
then outstanding Rights, at any time prior to the Close of Business on the
earlier of (i) the tenth day following the Stock Acquisition Date (subject to
extension by the Company as provided in Section 26 hereof) or (ii) the Final
Expiration Date, at a redemption price of $.01 per
65
Right, subject to adjustments as provided in subsection (c) below (the
"Redemption Price"); provided, however, that from and after the time that any
Person shall become an Acquiring Person (other than pursuant to a Qualifying
Tender Offer), the Company may redeem the Rights only if at the time of the
action of the Board of Directors there are then in office not less than two
Continuing Directors and such redemption is approved by a majority of the
Continuing Directors then in office. Notwithstanding anything contained in this
Agreement to the contrary, the Rights shall not be exercisable pursuant to
Section 11(a)(ii) prior to the expiration of the Company's right of redemption
hereunder.
(b) Without any further action and without any notice, the right to
exercise the Rights will terminate effective at the effective time of the action
of the Board of Directors ordering the redemption of the Rights and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within 10 days after the effective time of the action of the Board of
Directors ordering the redemption 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
66
deemed given, whether or not the holder receives the notice. Each notice of
redemption will state the method by which the payment of the Redemption Price
will be made. At the option of the Board of Directors, the Redemption Price may
be paid in cash to each Rights holder or by the issuance of shares (and, at the
Company's election, cash or depositary receipts in lieu of fractions of shares
other than fractions which are integral multiples of one one-hundredth (1/100)
of a share of Preferred Stock) of Preferred Stock or Common Stock having a Fair
Market Value equal to such cash payment.
(c) In the event the Company shall at any time after the date of this
Rights Agreement (A) pay any dividend on Common Stock in shares of Common Stock,
(B) subdivide or split the outstanding shares of Common Stock into a greater
number of shares or (C) combine or consolidate the outstanding shares of Common
Stock into a smaller number of shares or effect a reverse split of the
outstanding shares of Common Stock, then, and in each such event, the Redemption
Price shall be adjusted so that the Redemption Price after such event shall
equal the Redemption Price immediately prior to such event multiplied by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock outstanding immediately prior to such event;
PROVIDED, HOWEVER, that in each case such adjustment to the Redemption Price
shall be made only if the
67
amount of the Redemption Price shall be reduced or increased by at least $.01
per Right.
Section 24. NOTICE OF PROPOSED ACTIONS.
(a) In case the Company, after the Distribution Date, shall propose (i) to
effect any of the transactions referred to in Section 11(a)(i) or 11(g) or (ii)
to offer to the holders of record of its Common Stock options, warrants, or
other rights to subscribe for or to purchase shares of Common Stock (including
any security convertible into or exchangeable for Common Stock) or shares of
stock of any class or any other securities, options, warrants, convertible or
exchangeable securities or other rights, or (iii) to effect any reclassification
of its Preferred Stock or Common Stock or any recapitalization or reorganization
of the Company, or (iv) to effect any Fundamental Transaction, or to effect any
sale or other transfer (or to permit one or more of its Subsidiaries to effect
any sale or other transfer), in one or more transactions, of more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of record of a Right Certificate, in accordance with
Section 25, notice of such proposed action, which shall specify the record date
for the purposes of such transaction referred to in Section 11(a)(i) or such
dividend or distribution, or the date on which such reclas-
68
sification, recapitalization, reorganization, Fundamental Transaction, sale or
transfer of assets, liquidation, dissolution, or winding up is to take place and
the record date for determining participation therein by the holders of record
of Common Stock or Preferred Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of
record of the Preferred Stock for purposes of such action, and in the case of
any such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record of
Common Stock or Preferred Stock, whichever shall be the earlier. The failure to
give notice required by this Section 24 or any defect therein shall not affect
the legality or validity of the action taken by the Company or the vote upon any
such action.
(b) In case any of the transactions referred to in Section 11(a)(i), 11(g)
or 13 of this Rights Agreement are proposed after the Distribution Date, then,
in any such case, the Company shall give to each holder of Rights, in accordance
with Section 25 hereof, notice of the proposal of such transaction at least 10
days prior to consummating such transaction, which notice shall specify the
proposed event and the consequences of the event to holders of Rights under
Section 11(a)(i), 11(g) or 13 hereof, as the case may be, and, upon consummating
such
69
transaction, shall similarly give notice thereof to each holder of Rights. The
failure to give notice required by this Section 24 or any defect therein shall
not affect the legality or validity of the action taken by the Company or the
vote upon any such action.
Section 25. NOTICES. Notices or demands authorized by this Rights
Agreement to be given or made by the Rights Agent or by the holder of record of
any Right Certificate or Right to or on the Company shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
Westinghouse Electric Corporation
ββ βββββββ ββββββ
ββββββββββ, ββββββββββββ βββββ-ββββ
Attn: General Counsel
Subject to the provisions of Section 21, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of record
of any Right Certificate or Right 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
βββ ββββββββββ βββββββββ
βββββ ββββ
ββββββ ββββ, βββ ββββββ βββββ
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or Right shall be sufficiently
70
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 26. SUPPLEMENTS AND AMENDMENTS. For as long as the Rights are
then redeemable and except as provided in the last sentence of this Section 26,
the Company may in its sole and absolute discretion, and the Rights Agent shall
if the Company so directs, supplement or amend any provision of this Agreement
without the approval of any holders of the Rights. At any time when the Rights
are not then redeemable and except as provided in the last sentence of this
Section 26, the Company may, and the Rights Agent shall if the Company so
directs, supplement or amend this Rights Agreement without the approval of any
holders of Right Certificates (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 or (iii) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable,
provided that no such supplement or amendment pursuant to this clause (iii)
shall materially adversely affect the interests of the holders of Right
Certificates. Upon the delivery of a certificate from an appropriate officer
of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. This Agreement may be amended or supplemented at
any
71
time with the approval of a majority of the record holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock).
Notwithstanding anything contained in this Rights Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price or the
Final Expiration Date and supplements or amendments may be made after the time
that any Person becomes an Acquiring Person (other than pursuant to a Qualifying
Tender Offer) only if at the time of the action of the Board of Directors
approving such supplement or amendment there are then in office not less than
two Continuing Directors and such supplement or amendment is approved by a
majority of the Continuing Directors then in office.
Section 27. SUCCESSORS. All of the covenants and provisions of this
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
Section 28. BENEFITS OF THIS RIGHTS AGREEMENT. Nothing in this Rights
Agreement shall be construed to give to any person or corporation other than the
Company, the Rights Agent and the record holders of the Right Certificates (and,
prior to the Distribution Date, the holders of Common Stock in their capacity as
holders of the Rights) any legal or equitable right, remedy or claim under this
Rights Agreement; but this Rights Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the holders of record of the
72
Right Certificates (and, prior to the Distribution Date, the holders of Common
Stock in their capacity as holders of the Rights).
Section 29. PENNSYLVANIA CONTRACT. This Rights Agreement and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the Commonwealth of Pennsylvania and for all purposes shall be governed
by and construed and enforced in accordance with the laws of such state
applicable to contracts to be made and performed entirely within such state.
Section 30. COUNTERPARTS. This Rights 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 31. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 32. SEVERABILITY. If any term, provision, covenant or restriction
of this Rights 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 Rights Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
73
IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed, all as of the day and year first above written.
WESTINGHOUSE ELECTRIC CORPORATION
Attest: ________________________ By /s/ βββββ β. ββββββββ
(SEAL) -------------------------
Name: βββββ β. ββββββββ
Title: Senior Vice President
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Attest: ________________________ By /s/ ββββββ ββββββββββ
(SEAL) -------------------------
Name: ββββββ ββββββββββ
Title: Assistant Vice President
74
EXHIBIT A
UNDER CERTAIN CIRCUMSTANCES AS PROVIDED IN THE
RIGHTS AGREEMENT (AS REFERRED TO BELOW), RIGHTS
ISSUED TO OR BENEFICIALLY OWNED BY ACQUIRING
PERSONS OR THEIR AFFILIATES OR ASSOCIATES (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS SHALL BE NULL AND
VOID AND MAY NOT BE TRANSFERRED TO ANY PERSON.
WESTINGHOUSE ELECTRIC CORPORATION
SUMMARY OF RIGHTS TO PURCHASE
SERIES A PARTICIPATING PREFERRED STOCK
Westinghouse Electric Corporation (the "Company") has declared a dividend
distribution of one Preferred Stock Purchase Right ("Right") for each
outstanding share of Common Stock, par value $1.00 per share (the "Common
Stock"), of the Company. The distribution is payable as of January 9, 1996 to
shareholders of record at the close of business on that date. Each Right
entitles the registered holder to purchase from the Company one one-hundredth
(1/100) of a share (subject to adjustment) of Series A Participating Preferred
Stock of the Company (the "Preferred Stock") at a price (the "Exercise Price")
of $64.00 per one one-hundredth (1/100) of a share (subject to adjustment). The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Rights Agent").
AS DISCUSSED BELOW, INITIALLY THE RIGHTS WILL NOT BE EXERCISABLE,
CERTIFICATES WILL NOT BE SENT TO SHAREHOLDERS AND THE RIGHTS WILL AUTOMATICALLY
TRADE WITH THE COMMON STOCK.
The Rights, unless earlier redeemed by the Board of Directors, become
exercisable upon the close of business on the day (the "Distribution Date")
which is the earlier of (i) the tenth day following a public announcement that
a person or group of affiliated or associated persons, with certain exceptions
set forth below, has acquired beneficial ownership of 15% or more of the
outstanding voting stock of the Company (an "Acquiring Person") and (ii) the
tenth business day (or such later date as may be determined by the Board of
Directors prior to such time as any person or group of affiliated or associated
persons becomes an Acquiring Person) after the date of the commencement or
announcement of a person's or group's intention to commence a tender or
exchange offer the consummation of which would result in the ownership of 30% or
more of the Company's outstanding voting stock (even if no shares are actually
purchased pursuant to such offer); prior thereto, the Rights will not be
exercisable, will not be represented by separate
75
certificates, and will not be transferable apart from the Company's Common
Stock, but will instead be evidenced, with respect to any of the Common Stock
certificates outstanding as of January 9, 1996, by such Common Stock
certificates. An Acquiring Person does not include (A) the Company, (B) any
subsidiary of the Company, (C) any employee benefit plan, employee stock or
deferral plan or director compensation plan of the Company or of any subsidiary
of the Company, or any trust or other entity organized, appointed, established
or holding Common Stock for or pursuant to the terms of any such plan or (D) any
person or group whose ownership of 15% or more of the shares of voting stock of
the Company then outstanding results solely from (i) any action or transaction
or transactions approved by the Board of Directors before such person or group
became an Acquiring Person or (ii) a reduction in the number of issued and
outstanding shares of voting stock of the Company pursuant to a transaction or
transactions approved by the Board of Directors (provided that any person or
group that does not become an Acquiring Person by reason of clause (i) or (ii)
above shall become an Acquiring Person upon acquisition of an additional 1% or
more of the Company's voting stock unless such acquisition of additional voting
stock will not result in such person or group becoming an Acquiring Person by
reason of such clause (i) or (ii)).
Until the Distribution Date (or earlier redemption or expiration of the
Rights), new Common Stock certificates issued after January 9, 1996 will
contain a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any of the Common Stock certificates outstanding as
of January 9, 1996, with or without a copy of this Summary of Rights attached
thereto, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution date and such separate
certificates alone will evidence the Rights from and after the Distribution
Date.
The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of
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76
business on January 9, 2006, unless earlier redeemed by the Company as
described below.
The Preferred Stock is nonredeemable and, unless otherwise provided in
connection with the creation of a subsequent series of preferred stock,
subordinate to any other series of the Company's preferred stock, including
the Series C Conversion Preferred Stock. The Preferred Stock may not be
issued except upon exercise of the Rights. Each share of Preferred Stock will
be entitled to receive when, as and if declared, a dividend in an amount equal
to (i) 100 times the per share amount of any cash dividend declared on the
Company's Common Stock and (ii) a quarterly preferred cash dividend of $1.00
less the per share amount of all cash dividends declared on the preferred
stock pursuant to clause (i) of this sentence. In addition, Preferred Stock
is entitled to 100 times any non-cash dividends (other than dividends payable
in equity securities or certain rights or warrants) declared on the Common
Stock, in like kind. In the event of the liquidation of the Company, the
holders of Preferred Stock will be entitled to receive, for each share of
Preferred Stock, a payment in an amount equal to the greater of $100.00 or 100
times the payment made per share of Common Stock. Each share of Preferred
Stock will have 100 votes, voting together with the Common Stock. In the
event of any merger, consolidation or other transaction in which Common Stock
is exchanged, each share of Preferred Stock will be entitled to receive 100
times the amount received per share of Common Stock. The rights of Preferred
Stock as to dividends, liquidation and voting are protected by anti-dilution
provisions.
The number of shares of Preferred Stock issuable upon exercise of the
Rights is subject to certain adjustments from time to time in the event of a
stock dividend on, or a subdivision or combination of, the Common Stock. The
Exercise Price for the Rights is subject to adjustment in the event of
extraordinary distributions of cash or other property to holders of Common
Stock.
Unless the Rights are earlier redeemed or the transaction is approved by
the Board of Directors and the Continuing Directors (as defined in the Rights
Agreement), if the Company at any time after the Distribution Date were to be
acquired in a merger or other fundamental transaction (in which any shares of
Common Stock are changed into or exchanged for other securities or assets) or
more than 50% of the assets or earning power of the Company and its
3
77
subsidiaries (taken as a whole) were to be sold or transferred in one or a
series of related transactions, the Rights Agreement provides that proper
provision will be made so that each holder of record of a Right will from and
after such date have the right to receive, upon payment of the Exercise
Price, that number of shares of common stock of the acquiring company having a
market value at the time of such transaction equal to two times the Exercise
Price. In addition, unless the Rights are earlier redeemed, in the event
that a person or group becomes the beneficial owner of 15% or more of the
Company's voting stock (other than pursuant to a tender or exchange offer (a
"Qualifying Tender Offer") for all outstanding shares of Common Stock that is
approved by the Board of Directors, after taking into account the long-term
value of the Company and all other factors they consider relevant in the
circumstances), the Rights Agreement provides that proper provisions will be
made so that each holder of record of a Right, other than the Acquiring Person
(whose Rights will thereupon become null and void), will thereafter have the
right to receive, upon payment of the Exercise Price, that number of shares of
the Preferred Stock having a market value at the time of the transaction equal
to two times the Exercise Price (such market value to be determined with
reference to the market value of the Company's Common Stock as provided in the
Rights Agreement).
Fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth of a share) may, at the election of
the Company, be evidenced by depositary receipts. The Company may also issue
cash in lieu of fractional shares which are not integral multiples of one
one-hundredth of a share.
At any time on or prior to the close of business on the earlier of (i)
the tenth day after the time that a person has become an Acquiring Person (or
such later date as a majority of the Board of Directors and, if applicable, a
majority of the Continuing Directors (as defined in the Rights Agreement) may
determine) or (ii) January 9, 2006, the Company may redeem the Rights in
whole, but not in part, at a value of $.01 per Right, subject to adjustment
(the "Redemption Price"). The Rights may be redeemed after the time that any
Person has become an Acquiring Person only if approved by a majority of the
Continuing Directors (as defined in the Rights Agreement). Immediately upon
the effective time of the action of the Board of Directors of the Company
authorizing redemption of the Rights, the right
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78
to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
For as long as the Rights are then redeemable, the Company may, except
with respect to the Redemption Price or date of expiration of the Rights,
amend the Rights in any manner, including an amendment to extend the time
period in which the Rights may be redeemed. At any time when the Rights are
not then redeemable, the Company may amend the Rights in any manner that does
not materially adversely affect the interests of holders of the Rights as
such. Amendments to the Rights Agreement from and after the time that any
Person becomes an Acquiring Person requires the approval of a majority of the
Continuing Directors (as provided in the Rights Agreement).
Until a Right is exercised, the holder, as such, will have no rights as a
shareholder of the Company, including, without limitation, the right to vote
or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated
January 9, 1996. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement which is incorporated in this summary description herein by
reference.
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79
EXHIBIT B
[Form of Right Certificate]
Certificate No. W- ______ Rights
NOT EXERCISABLE AFTER January 9, 2006 OR EARLIER
IF REDEEMED. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY AND UNDER
CERTAIN OTHER CIRCUMSTANCES, AT $.01 PER RIGHT
(SUBJECT TO ADJUSTMENT), ON THE TERMS SET FORTH OR
REFERRED TO IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES AS PROVIDED IN THE RIGHTS
AGREEMENT (AS REFERRED TO BELOW), RIGHTS ISSUED TO
OR BENEFICIALLY OWNED BY ACQUIRING PERSONS OR
THEIR AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
HOLDER OF SUCH RIGHTS SHALL BE NULL AND VOID AND
MAY NOT BE TRANSFERRED TO ANY PERSON.
Right Certificate
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 29, 1995 (the "Rights Agreement") between
Westinghouse Electric Corporation, a Pennsylvania corporation (the "Company"),
and First Chicago Trust Company of New York, a New York corporation, (the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(Pennsylvania time) on January 9, 2006 at the office of the Rights Agent
designated in the Rights Agreement for such purpose, or its successor as Rights
Agent, in [City], [State], one one-hundredth (1/100) of a fully paid
80
EXHIBIT B
nonassessable share of Series A Participating Preferred Stock (the "Preferred
Stock") of the Company at a purchase price of $64.00, as the same may from time
to time be adjusted in accordance with the Rights Agreement (the "Exercise
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase attached hereto duly executed.
As provided in the Rights Agreement, the Exercise Price and the number of
shares of Preferred Stock which may be purchased upon the exercise of the Rights
evidenced by this Right Certificate are subject to modification and adjustment
upon the happening of certain events and, upon the happening of certain events,
securities other than shares of Preferred Stock, or other property, may be
acquired upon exercise of the Rights evidenced by this Right Certificate, as
provided in the Rights Agreement.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
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 of the Rights Agent,
the Company and the holders of record of Right Certificates.
2
81
EXHIBIT B
Copies of the Rights Agreement are on file at the principal executive
office of the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated in the Rights Agreement
for such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder of
record to purchase a like aggregate number of shares of Preferred Stock as the
Rights evidenced by the Right Certificate or Right Certificates surrendered
shall have entitled such holder to purchase. If this Right Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof, another Right Certificate or Right Certificates for the number of whole
Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option or under certain
other circumstances at a value of $.01 per Right.
No fractional shares of Preferred Stock (other than fractions which are
integral multiples of one one-hundredth (1/100) of a share) are required to be
issued upon the exercise of any Right or Rights evidenced hereby, and in lieu
thereof the Company may cause depositary receipts to be
3
82
EXHIBIT B
issued and/or a cash payment may be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Stock or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at meeting thereof, or to give or
withhold consent to any corporate action or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of _____________, 199_.
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EXHIBIT B
COUNTERSIGNED
By: _____________________ By: ______________________
Title
[Chief Financial Officer
or Treasurer]
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
By ______________________
Authorized Signature
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84
EXHIBIT B
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED ___________________________________________
hereby sells, assigns and transfers unto _____________________________________
______________________________________________________________________________
(Please print name and address of transferee)
______________________________________________________________________________
Rights evidenced by this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint _________
____________ Attorney to transfer the within Right Certificate on the books of
the within-named Company, with full power of substitution.
Dated: ________________, 199__
___________________
Signature
Signature Guaranteed:
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85
EXHIBIT B
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Right Certificate [ ] is [ ] is not being sold, assigned or
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Associate or an Affiliate thereof (as such terms are 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 Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).
Dated: ____________, 199__ _________________________
Signature
NOTICE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
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86
EXHIBIT B
FORM OF ELECTION TO PURCHASE
(To be executed if registered holder
desires to exercise the Right Certificate.)
TO _____________________:
The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Right Certificate to purchase the shares of Preferred
Stock issuable upon the exercise of such Rights and requests that certificates
for such share(s) be issued in the following name:
Please insert social security
or other identifying number: __________________________________________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
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87
EXHIBIT B
Please insert social security
or other identifying number: __________________________________________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: _____________, 199__
_____________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the fact of this
Right Certificate)
Signature Guaranteed:
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88
EXHIBIT C
WESTINGHOUSE ELECTRIC CORPORATION
RESOLUTION ESTABLISHING THE SERIES A
PARTICIPATING PREFERRED STOCK*
RESOLVED, that a series of Preferred Stock of the Company, the Series A
Participating Preferred Stock, is hereby created out of the authorized but
unissued shares of Preferred Stock of the Company undesignated as to series,
with the terms and provisions herein set forth:
E. 1. DESIGNATION AND AMOUNT. The shares of this series shall be
designated as "Series A Participating Preferred Stock" (the "Series A Preferred
Stock"). The par value of each share of Series A Preferred Stock shall be
$1.00. The number of shares constituting the Series A Preferred Stock initially
shall be 5,000,000; PROVIDED, HOWEVER, that, if more than a total of 5,000,000
shares of Series A Preferred Stock shall be issuable upon the exercise of Rights
(the "Rights") issued pursuant to the Rights Agreement, dated as of December 28,
1995, between the Company and First Chicago Trust Company of New York, as Rights
_______________________________________________________________________________
* To be attached to Statement With Report To Shares or incorporated into an
Amendment to the Restated Articles of Incorporation.
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89
Agent (as such agreement may be amended from time to time, the "Rights
Agreement"), the Board of Directors of the Company, pursuant to Section 1914(c)
and/or Section 1522(b) of the Pennsylvania Business Corporation Law of 1988, as
amended (the "Pennsylvania BCL"), and in accordance with the provisions of
Article FIFTH of the Restated Articles of Incorporation, shall adopt a
resolution or resolutions increasing the previously determined total number of
shares of Series A Preferred Stock authorized to be issued (to the extent that
the Restated Articles of Incorporation then permit) to the largest number of
whole shares (rounded up to the nearest whole number) issuable upon exercise of
such Rights and directing that a statement or articles of amendment with respect
to such increase in authorized shares for the Series A Preferred Stock be
executed and filed with the Department of State of the Commonwealth of
Pennsylvania.
2. DIVIDENDS AND DISTRIBUTIONS.
(a) Subject to the provisions for adjustment hereinafter set forth, the
holders of outstanding shares of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) a cash dividend in an amount per share (rounded
to the nearest cent) equal to 100 times the aggregate per share amount of each
cash dividend declared or paid on the Common Stock, $1.00 par value per share,
of the Company (the "Common Stock") and any other security ranking junior to the
Series A Preferred Stock, and (ii) a preferential cash dividend
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(the "Preferential Dividends"), if any, in preference to the holders of Common
Stock and any other security ranking junior to the Series A Preferred Stock, on
the first day of March, June, September and December of each year (each a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, payable in an amount (except in the case of the first
Quarterly Dividend Payment if the date of the first issuance of Series A
Preferred Stock is a date other than a Quarterly Dividend Payment date, in which
case such payment shall be a prorated amount of such amount) equal to $1.00 per
share of Series A Preferred Stock less the per share amount of all cash
dividends declared on the Series A Preferred Stock pursuant to clause (i) of
this sentence since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock. In
addition, in the event the Company shall, at any time after the issuance of any
share or fraction of a share of Series A Preferred Stock, pay any dividend or
make any distribution on the shares of Common Stock of the Company, whether by
way of a dividend or a reclassification of stock, a recapitalization,
reorganization or partial liquidation of the Company or otherwise, which is
payable in cash or any debt security, debt instrument, real or personal property
or any other property (other than (x) cash dividends subject to the immediately
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91
preceding sentence, (y) a distribution of shares of Common Stock or other
capital stock of the Company or (z) a distribution of rights or warrants to
acquire any such shares, including as such a right any debt security convertible
into or exchangeable for any such shares, at a price less than the Fair Market
Value (as hereinafter defined) of such shares on the date of issuance of such
rights or warrants), then, and in each such event, the Company shall
simultaneously pay on each then outstanding share of Series A Preferred Stock a
distribution, in like kind, of 100 times such distribution paid on a share of
Common Stock (subject to the provisions for adjustment hereinafter set forth).
The dividends and distributions on the Series A Preferred Stock to which holders
thereof are entitled pursuant to clause (i) of the first sentence of this
paragraph and pursuant to the second sentence of this paragraph are hereinafter
referred to as "Dividends" and the multiple of such cash and non-cash dividends
and distributions on the Common Stock applicable to the determination of the
Dividends, which shall be 100 initially but shall be adjusted from time to time
as hereinafter provided, is hereinafter referred to as the "Dividend Multiple."
In the event the Company shall at any time after January 9, 1996 declare or pay
any dividend or make any distribution on Common Stock payable in shares of
Common Stock, or effect a subdivision or split or a combination, consolidation
or reverse split of the outstanding shares of Common Stock into a greater or
lesser number of shares of Common Stock, then in each such case the Dividend
Multiple
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92
thereafter applicable to the determination of the amount of Dividends which
holders of shares of Series A Preferred Stock shall be entitled to receive shall
be the Dividend Multiple applicable immediately prior to such event multiplied
by a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(b) The Company shall declare each Dividend at the same time it declares
any cash or non-cash dividend or distribution on the Common Stock in respect of
which a Dividend is required to be paid. No cash or non-cash dividend or
distribution on the Common Stock in respect of which a Dividend is required to
be paid shall be paid or set aside for payment on the Common Stock unless a
Dividend in respect of such dividend or distribution on the Common Stock shall
be simultaneously paid, or set aside for payment, on the Series A Preferred
Stock.
(c) Preferential Dividends shall begin to accrue on outstanding shares of
Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding
the date of issuance of such shares of Series A Preferred Stock. Accrued but
unpaid Preferential Dividends shall cumulate but shall not bear interest.
(d) Any dividend payment made on shares of the Series A Preferred Stock
shall first be credited against the earliest
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93
accrued but unpaid Preferential Dividend due with respect to shares of the
Series A Preferred Stock.
(e) All dividends paid with respect to shares of the Series A Preferred
Stock pursuant to this paragraph 2 shall be paid pro rata on a share-by-share
basis to the holders entitled thereto.
(f) The holders of shares of Series A Preferred Stock shall not be
entitled to receive any dividends or distributions except as provided herein.
3. VOTING RIGHTS. The holders of record of outstanding shares of Series A
Preferred Stock shall have the following voting rights:
(a) Subject to the provisions for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the holders of the Common
Stock. The number of votes which a holder of a share of Series A Preferred
Stock is entitled to cast, as the same may be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Vote Multiple."
In the event the Company shall at any time after January 9, 1996 declare or
pay any dividend on Common Stock, payable in shares of Common Stock, or
effect a subdivision or split or a combination, consolidation or reverse
split of the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, then in each such case the
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94
Vote Multiple thereafter applicable to the determination of the number
of votes per share to which holders of shares of Series A Preferred Stock
shall be entitled after such event shall be the Vote Multiple immediately
prior to such event multiplied by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(b) Except as otherwise provided herein, in the Restated Articles of
Incorporation, in the By-laws, or as otherwise provided by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote
of shareholders of the Company.
(c) In the event that the Preferential Dividends payable to the
holders of Series A Preferred Stock are in arrears and unpaid for the
equivalent of six quarterly periods, the Board of Directors will be
increased by two directors and the holders of Series A Preferred Stock,
together with the holders of all other outstanding series of the Preferred
Stock in respect of which such a default in payment of dividends as
described hereinabove exists and is entitled to vote thereon, voting as a
single class without regard to series, will be entitled to elect two
directors of the expanded Board of Directors. Such entitlement shall
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95
continue until such time as all dividends in arrears on all of the Series A
Preferred Stock at the time outstanding have been paid or declared and set
aside for payment, whereupon such voting rights of the holders of the
Series A Preferred Stock shall cease (and, unless holders of shares of
other series of Preferred Stock shall still have the right to elect such
directors, the respective terms of the two additional directors shall
thereupon expire and the number of directors constituting the full board be
decreased by two) subject to being again revived from time to time upon the
reoccurrence of the conditions described in this paragraph (3)(c) as giving
rise thereto.
At any time when the rights of holders of Series A Preferred Stock to
elect two additional directors shall have so vested, the Company shall,
upon the written request of the holders of record of not less than 10% of
the Series A Preferred Stock then outstanding (or 10% of all of the shares
of Preferred Stock having the right to vote for such directors in case
holders of shares of other series of Preferred Stock shall also have the
right to elect directors in such circumstances), call a special meeting of
holders of the Series A Preferred Stock (and other series of Preferred
Stock, if applicable) for the election of directors. In the case of a
written request, the special meeting shall be held within 60 days after the
delivery of the request, upon the notice provided by law and in the By-laws
of the Company;
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96
except that the Company shall not be required to call such a special
meeting if the request is received less than 120 days before the date fixed
for the next ensuing annual meeting of shareholders of the Company.
Whenever the number of directors of the Company shall have been
increased by two as provided in this paragraph (3)(c), the number as so
increased may thereafter be further increased or decreased in such manner
as may be permitted by the By-laws and without the vote of the holders of
Series A Preferred Stock. No such action shall impair the right of the
holders of Series A Preferred Stock to elect and to be represented by two
directors as provided in this paragraph (3)(c).
The two directors elected as provided in this paragraph (3)(c) shall
serve until the next annual meeting of shareholders of the Company and
until their respective successors shall be elected and qualified or the
earlier expiration of their terms as provided in this paragraph (3)(c). No
such director may be removed without the vote of holders of a majority of
shares of Series A Preferred Stock (or holders of a majority of shares of
Preferred Stock having the right to vote in the election of such director
in case holders of shares of other series of Preferred Stock shall also
have the right to elect such director). If, prior to the expiration of the
term of any such director, a vacancy in the office of such director shall
occur, such
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vacancy shall, until the expiration of such term, in each case be filled by
the remaining director elected as provided in this paragraph (3)(c) or, if
none remains in office, by vote of the holders of record of a majority of
the outstanding shares of Series A Preferred Stock (or holders of a
majority of shares of Preferred Stock who are then entitled to participate
in the election of such directors in case holders of shares of other series
of Preferred Stock shall also have the right to elect such director).
(d) Except as otherwise required by the Articles of Incorporation or
By-laws or set forth in this paragraph 3 or in paragraph 13 or as otherwise
provided by law, holders of Series A Preferred Stock shall have no other
special voting rights and their consent shall not be required (except to
the extent they are entitled to vote with holders of Common Stock as set
forth herein) for the taking of any corporate action.
4. CERTAIN RESTRICTIONS.
(a) Whenever Preferential Dividends or Dividends are in arrears or the
Company shall be in default of payment thereof, thereafter and until all accrued
and unpaid Preferential Dividends and Dividends, whether or not declared, on
shares of Series A Preferred Stock outstanding shall have been paid or set
irrevocably aside for payment in full, and in addition to any and all other
rights which any holder of shares of Series A Preferred Stock may have in such
circumstances, the Company shall not:
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(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity as to dividends with the Series A
Preferred Stock, unless dividends are paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to which the holders of all
such shares are then entitled if the full dividends accrued thereon were to
be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph
4(a), redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, provided that
the Company may at any time redeem, purchase or otherwise acquire shares of
any such parity stock in exchange for shares of any stock of the Company
ranking junior (both as to dividends and upon liquidation, dissolution or
winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock
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(either as to dividends or upon liquidation, dissolution or winding up),
except as permitted by subparagraph (iii) of this paragraph 4(a) or in
accordance with a purchase offer made to all holders of such shares upon
such terms as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
(b) The Company shall not permit any Subsidiary (as hereinafter defined)
of the Company to purchase or otherwise acquire for consideration any shares of
stock of the Company unless the Company could, under subparagraph (a) of this
paragraph 4, purchase or otherwise acquire such shares at such time and in such
manner. A "Subsidiary" of the Company shall mean any corporation or other
entity of which securities or other ownership interests entitled to cast at
least a majority of the votes that would be entitled to be cast in an election
of the board of directors of such corporation or other entity or other persons
performing similar functions are beneficially owned, directly or indirectly, by
the Company or by any corporation or other entity that is otherwise controlled
by the Company.
(c) The Company shall not issue any shares of Series A Preferred Stock
except upon exercise of Rights issued pursuant to the Rights Agreement, a copy
of which is on file with the Secretary of the Company at its principal executive
office and
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shall be made available to shareholders of record without charge upon written
request therefor addressed to said Secretary. Notwithstanding the foregoing
sentence, nothing contained in the provisions of this Article FIFTH (E) shall
prohibit or restrict the Company from issuing for any purpose any series of
Preferred Stock with rights and privileges similar to, different from, or
greater than, those of the Series A Preferred Stock or, subject to the
limitations set forth in paragraph 13, from creating other securities senior to,
junior to or on a parity with the Series A Preferred Stock.
5. REACQUIRED SHARES. Any shares of Series A Preferred Stock purchased or
otherwise acquired by the Company in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such shares upon their
retirement and cancellation shall become authorized but unissued shares of
Preferred Stock, without designation as to series, and such shares may be
redesignated and reissued as part of any series of the Preferred Stock.
6. LIQUIDATION, DISSOLUTION OR WINDING UP; FAIR VALUE FOR PURPOSES OF
PENNSYLVANIA ANTI-TAKEOVER STATUTE.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the Company, no distribution shall be made (i) to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless the holders of shares of
Series A Preferred Stock outstanding shall have
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received out of the assets of the Company available for distribution to its
shareholders after payment or provision for payment of any securities ranking
senior to the Series A Preferred Stock, for each share of Series A Preferred
Stock, subject to adjustment as hereinafter provided, (A) $100.00 plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment or, (B) if greater than the amount
specified in clause (i)(A) of this sentence, an amount equal to 100 times the
aggregate amount to be distributed per share to holders of Common Stock, as the
same may be adjusted as hereinafter provided, and (ii) to the holders of stock
ranking on a parity upon liquidation, dissolution or winding up with the Series
A Preferred Stock, unless simultaneously therewith distributions are made
ratably on the Series A Preferred Stock and all other shares of such parity
stock in proportion to the total amounts to which the holders of shares of
Series A Preferred Stock are entitled under clause (i)(A) of this sentence and
to which the holders of such parity shares are entitled, in each case upon such
liquidation, dissolution or winding up. The amount to which holders of Series A
Preferred Stock may be entitled upon liquidation, dissolution or winding up of
the Company pursuant to clause (i)(B) of the foregoing sentence is hereinafter
referred to as the "Participating Liquidation Amount" and the multiple of the
amount to be distributed to holders of shares of Common Stock upon the
liquidation, dissolution or winding up of the Company applicable
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pursuant to said clause to the determination of the Participating Liquidation
Amount, as said multiple may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Liquidation Multiple." In the event
the Company shall at any time after January 9, 1996 declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding shares
of Common Stock into a greater or lesser number of shares of Common Stock, then,
in each such case, the Liquidation Multiple thereafter applicable to the
determination of the Participating Liquidation Amount to which holders of Series
A Preferred Stock shall be entitled after such event shall be the Liquidation
Multiple applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Except as provided in this paragraph 6(a), holders of Series A Preferred Stock
shall not be entitled to any distribution in the event of liquidation,
dissolution or winding up of the Company.
(b) For the purposes of this βββββββββ β, ββββ of the following shall be
deemed to be a voluntary or involuntary liquidation, dissolution or winding up
of the Company:
(i) the voluntary sale, conveyance, lease, exchange or transfer (for
cash, shares of stock, securities or other
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consideration) of all or substantially all of the property or assets of the
Company;
(ii) the consolidation or merger of the Company with or into one or
more other corporations or other associations;
(iii) the consolidation or merger of one or more corporations or
other associations with or into the Company;
(iv) the participation by the Company in a share exchange;
(v) the division of the Company pursuant to sections 1951 through
1957 of the Pennsylvania BCL;
(vi) the conversion of the Company pursuant to sections 1961 through
1966 of the Pennsylvania BCL;
(c) Notwithstanding anything to the contrary in this Article FIFTH (E), in
case any Controlling Person or Group (as defined from time to time in Section
2543 of the Pennsylvania BCL) shall be required to purchase any shares of Series
A Preferred Stock pursuant to Sections 2541 through 2548 of the Pennsylvania
BCL, as in effect from time to time, the amount that is determined to represent
the "fair value" (as that term is used in such Section 2542 of the Pennsylvania
BCL) of such shares shall be an amount per share equal to the Liquidation
Multiple then in effect times the aggregate amount per share that such
Controlling Person or Group is required to pay to purchase any share of Common
Stock pursuant to such Sections 2541 through 2548 of the Pennsylvania BCL.
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7. CERTAIN RECLASSIFICATIONS AND OTHER EVENTS.
(a) In the event that holders of shares of Common Stock of the Company
receive after January 9, 1996 in respect of their shares of Common Stock any
share of capital stock of the Company (other than any share of Common Stock of
the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise (a "Transaction"),
then, and in each such event, the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall be adjusted so that after such event the holders
of Series A Preferred Stock shall be entitled, in respect of each share of
Series A Preferred Stock held, in addition to such rights in respect thereof to
which such holder was entitled immediately prior to such adjustment, to (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such Transaction multiplied by the additional dividends which the holder of a
share of Common Stock shall be entitled to receive by virtue of the receipt in
the Transaction of such capital stock, (ii) such additional voting rights as
equal the Vote Multiple in effect immediately prior to such Transaction
multiplied by the additional voting rights to which the holder of a share of
Common Stock shall be entitled by virtue of the receipt in the Transaction of
such capital stock and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Company as equal the Liquidation Multiple in
effect immediately
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prior to such Transaction multiplied by the additional amount which the holder
of a share of Common Stock shall be entitled to receive upon liquidation,
dissolution or winding up of the Company by virtue of the receipt in the
Transaction of such capital stock, as the case may be, all as provided by the
terms of such capital stock.
(b) In the event that holders of shares of Common Stock of the Company
receive after January 9, 1996 in respect of their shares of Common Stock any
right or warrant to purchase Common Stock (including as such a right, for all
purposes of this paragraph 7(b), any security convertible into or exchangeable
for Common Stock) at a purchase price per share less than the Fair Market Value
of a share of Common Stock on the date of issuance of such right or warrant,
then and in each such event the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series A Preferred Stock shall each be adjusted so that after such event the
Dividend Multiple, the Vote Multiple and the Liquidation Multiple shall each be
the product of the Dividend Multiple, the Vote Multiple and the Liquidation
Multiple, as the case may be, in effect immediately prior to such event
multiplied by a fraction the numerator of which shall be the number of shares of
Common Stock outstanding immediately before such issuance of rights or warrants
plus the maximum number of shares of Common Stock which could be acquired upon
exercise in full of all such rights or warrants and the denominator of which
shall be the
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number of shares of Common Stock outstanding immediately before such issuance of
rights or warrants plus the number of shares of Common Stock which could be
purchased, at the Fair Market Value of the Common Stock at the time of such
issuance, by the maximum aggregate consideration payable upon exercise in full
of all such rights or warrants.
(c) In the event that holders of shares of Common Stock of the Company
receive after January 9, 1996 in respect of their shares of Common Stock any
right or warrant to purchase capital stock of the Company (other than shares of
Common Stock), including as such a right, for all purposes of this paragraph
7(c), any security convertible into or exchangeable for capital stock of the
Company (other than Common Stock), at a purchase price per share less than the
Fair Market Value of a share of such capital stock on the date of issuance of
such right or warrant, then and in each such event the dividend rights, voting
rights and rights upon liquidation, dissolution or winding up of the Company of
the shares of Series A Preferred Stock shall each be adjusted so that after such
event each holder of a share of Series A Preferred Stock shall be entitled, in
respect of each share of Series A Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled immediately prior to
such event, to receive (i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such event multiplied, first, by the
additional dividends to which the holder of a share of Common Stock shall be
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entitled upon exercise of such right or warrant by virtue of the capital stock
which could be acquired upon such exercise, and multiplied again by the Discount
Fraction (as hereinafter defined), (ii) such additional voting rights as equal
the Vote Multiple in effect immediately prior to such event multiplied, first,
by the additional voting rights to which the holder of a share of Common Stock
shall be entitled upon exercise of such right or warrant by virtue of the
capital stock which could be acquired upon such exercise, and multiplied again
by the Discount Fraction and (iii) such additional distributions upon
liquidation, dissolution or winding up of the Company as equal the Liquidation
Multiple in effect immediately prior to such event multiplied, first, by the
additional amount which the holder of a share of Common Stock shall be entitled
to receive upon liquidation, dissolution or winding up of the Company upon
exercise of such right or warrant by virtue of the capital stock which could be
acquired upon such exercise, and multiplied again by the Discount Fraction. For
purposes of this paragraph, the "Discount Fraction" shall be a fraction the
numerator of which shall be the difference between the Fair Market Value of a
share of the capital stock subject to a right or warrant distributed to holders
of shares of Common Stock of the Company as contemplated by this paragraph 7(c)
immediately after the distribution thereof and the purchase price per share for
such share of capital stock pursuant to such right or warrant and the
denominator of which shall be the Fair Market Value of a share of
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such capital stock immediately after the distribution of such right or warrant.
(d) For purposes of this Article FIFTH (E), the "Fair Market Value" of a
share of capital stock of the Company (including a share of Common Stock) on any
date shall be deemed to be the average of the daily closing price per share
thereof over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; PROVIDED, HOWEVER, that in the event
that such Fair Market Value of any such share of capital stock is determined
during a period which includes any date that is within 30 Trading Days after (i)
the ex-dividend date for a dividend or distribution on stock payable in shares
of such stock or securities convertible into shares of such stock, or (ii) the
effective date of any subdivision, split, combination, consolidation, reverse
stock split or reclassification of such stock or division of the Company
pursuant to Sections 1951 through 1957 of the Pennsylvania BCL, then, and in
each such case, the Fair Market Value shall be appropriately adjusted by the
Board of Directors of the Company to take into account ex-dividend or
post-effective date trading. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way (in either case, as
reported in the applicable transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange), or, if
the shares are not listed
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or admitted to trading on the New York Stock Exchange, as reported in the
applicable transaction reporting system with respect to securities listed on the
principal national securities exchange on which the shares are listed or
admitted to trading or, if the shares are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by The Nasdaq Stock Market or such other system then in use, or if
on any such date the shares are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in the shares selected by the Board of Directors of the Company.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the shares are listed or admitted to trading is
open for the transaction of business or, if the shares are not listed or
admitted to trading on any national securities exchange, on which the New York
Stock Exchange or such other national securities exchange as may be selected by
the Board of Directors of the Company is open. If the shares are not publicly
held or not so listed or traded on any day within the period of 30 Trading Days
applicable to the determination of Fair Market Value thereof as aforesaid, "Fair
Market Value" shall mean the fair market value thereof per share as determined
in good faith by the Board of Directors of the Company. In either case referred
to in the foregoing sentence, the determination of Fair Market Value shall
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be described in a statement filed with the Secretary of the Company.
8. CONSOLIDATION, MERGER, ETC. In case the Company shall enter into any
consolidation, merger, division, share exchange, combination, sale of all or
substantially all of the Company's assets, or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
outstanding share of Series A Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event; PROVIDED,
HOWEVER, no fractional share or scrip representing fractional shares of any
other stock or securities shall be issued. Instead of any fractional interest
in a share of such other stock or securities which would otherwise be
deliverable pursuant to this paragraph 8, the Company will pay to the holder
thereof an amount in cash (computed to the nearest cent) equal to the same
fraction of the Fair Market Value of a share of such other stock or security.
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9. EFFECTIVE TIME OF ADJUSTMENTS.
(a) Adjustments to the Series A Preferred Stock required by the provisions
hereof shall be effective as of the time at which the event requiring such
adjustments occurs.
(b) The Company shall give prompt written notice to each holder of a share
of outstanding Series A Preferred Stock of the effect of any adjustment to the
voting rights, dividend rights or rights upon liquidation, dissolution or
winding up of the Company of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
10. NO REDEMPTION. The shares of Series A Preferred Stock shall not be
redeemable at the option of the Company or any holder thereof. Notwithstanding
the foregoing sentence of this paragraph, the Company may acquire shares of
Series A Preferred Stock in any other manner permitted by law, the provisions
hereof and the Restated Articles of Incorporation.
11. RANKING. The Series A Preferred Stock shall rank senior to the Common
Stock and, unless otherwise provided in a Statement with Respect to Shares or an
amendment to the Restated Articles of Incorporation relating to the
determination of a subsequent series of preferred stock of the Company, the
Series A Preferred Stock shall rank junior to all other series of the Company's
preferred stock, including the Series C Conversion
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Preferred Stock, as to the payment of dividends and the distribution of assets
on liquidation, dissolution or winding up.
12. LIMITATIONS. Except as may otherwise be required by law, the shares
of Series A Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth in this Article FIFTH (E) (as such may be amended from time to time)
or otherwise in the Restated Articles of Incorporation.
13. AMENDMENT. So long as any shares of the Series A Preferred Stock are
outstanding, the Company shall not amend this Article FIFTH (E) or the Restated
Articles of Incorporation in any manner which would alter or change the rights,
preferences or limitations of the Series A Preferred Stock so as to affect such
rights, preferences or limitations in any material respect prejudicial to the
holders of the Series A Preferred Stock without, in addition to any other vote
of shareholders required by law, the affirmative vote of the holders of
two-thirds or more of the outstanding shares of Series A Preferred Stock, voting
together as a single class; PROVIDED, HOWEVER, that the creation of another
series of the Preferred Stock ranking senior to or on a parity with the Series A
Preferred Stock as to the payment of dividends or the distribution of assets or
liquidation, dissolution or winding up shall not be deemed to be prejudicial to
the holders of the Series A Preferred Stock for the purposes of this paragraph
13.
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