Document:

EX-4(B)

 

Exhibit 4(b)

AMENDED AND RESTATED CODE OF REGULATIONS

OF

BRUSH ENGINEERED MATERIALS INC.

Shareholder Meetings

     1. Time And Place Of Meetings. All meetings of the shareholders for the election of directors
or for any other purpose will be held at such time and place, within or without the State of Ohio,
as may be designated by the Board of Directors or, in the absence of a designation by the Board of
Directors, the Chairman of the Board of Directors, if any (the ‘Chairman”), the President, the
Secretary or any other individual entitled to give notice pursuant to Regulation 4. The time of the
meeting shall be stated in the notice of meeting. The Board of Director may postpone and reschedule
any previously scheduled annual or special meeting of the shareholders.

     2. Annual Meeting. An annual meeting of the shareholders will be held at such time and place
as may be designated pursuant to Regulation 1, at which meeting the shareholders will elect
directors to succeed those directors whose terms expire at such meeting and will transact such
other business as may be brought properly before the meeting in accordance with Regulation 9. If
the annual meeting is not held or if the number of directors elected thereat is not sufficient to
replace the directors whose terms expire at that meeting and to fill all other vacancies, directors
may be elected at a special meeting called for the purpose of electing directors.

     3. Special Meetings. (a) Special meetings of shareholders maybe called by the Chairman, by the
President, by a Vice President, by a majority of the Board of Directors acting with or without a
meeting or by any person or persons who hold not less than 50% of all the shares outstanding and
entitled to be voted on any proposal to be submitted at the meeting to be called. Special meetings
of the holders of shares that are entitled to call a special meeting by virtue of any Preferred
Stock Designation may call such meetings in the manner and for the purposes provided in the
applicable terms of such Preferred Stock Designation. For purposes of this Amended and Restated
Code of Regulations, “Preferred Stock Designation” means the express terms of shares of any class
or series of capital stock of the Corporation, whether now or hereafter issued, with rights to
distributions senior to those of the Common Stock including, without limitation, any relative,
participating, optional or other special rights and privileges of, and any qualifications or
restrictions on, such shares.

     (b) Upon written request by any person or persons entitled to call a meeting of shareholders
delivered in person or by registered mail to the President or the Secretary, such officer shall
forthwith cause notice of the meeting to be given to the shareholders entitled to notice of such
meeting in accordance with Regulation 4. If such notice shall not be given within 60 days after the
delivery or mailing of such request, the person or persons requesting the meeting may fix the time
of the meeting and give, or cause to be given, notice in the manner provided in Regulation 4.

     4. Notice Of Meetings. Written notice of every meeting of the shareholders called in
accordance with these Regulations (including any postponed and rescheduled meeting), stating the
time, place and purposes for which the meeting is called, will be given by or at the direction of
the President, a Vice President, the Secretary or an Assistant Secretary (or in case of their
refusal to give notice by the person or persons entitled to call the meeting under Regulation 3).
Such notice twill be given by personal delivery, by mail or by electronic medium not fewer than 7
nor more than 60 calendar days before the date of the meeting to each shareholder of record
entitled to notice of such meeting. If such notice is mailed, it shall be addressed to the
shareholders at their respective addresses as they appear on the records of the Corporation, and
notice shall be deemed to have been given on the day so mailed. Notice of adjournment of a meeting
need not be given if the time and place to which it is adjourned are fixed and announced at such
meeting.

     5. Inspectors. Inspectors of election may be appointed to act at any meeting of shareholders
in accordance with Ohio law.

 

 

     6. Shareholder Lists. At any meeting of shareholders, an alphabetically arranged list, or
classified lists, of the shareholders of record as of the applicable record date who are entitled
to vote, showing their respective addresses and the number and classes of shares held by each,
shall be produced on the request of any shareholder.

     7. Quorum. To constitute a quorum at any meeting of shareholders, there shall be present, in
person or by proxy, shareholders of record entitled to exercise not less than a majority of the
voting power of the Corporation in respect of any one of the purposes for which the meeting is
called, unless a greater or lesser number is expressly provided for with respect to a particular
class or series of capital stock by the terms of any applicable Preferred Stock Designation. Except
as may be otherwise provided in any Preferred Stock Designation, the holders of a majority of the
voting power of the Corporation represented in person or by proxy at a meeting of shareholders,
whether or not a quorum be present, may adjourn the meeting from time to time. For purposes of this
Amended and Restated Code of Regulations, “voting power of the Corporation” means the aggregate
voting power of (a) all the outstanding shares of Common Stock of the Corporation and (b) all the
outstanding shares of any class or series of capital stock of the Corporation that has (i) rights
to distributions senior to those of the Common Stock including, without limitation, any relative,
participating, optional or other special rights and privileges of, and any qualifications or
restrictions on, such shares and (ii) voting rights entitling such shares to vote generally in the
election of directors.

     8. Voting. Except as otherwise expressly required by law, the Amended and Restated Articles of
Incorporation or this Amended and Restated Code of Regulations, at any meeting of shareholders at
which a quorum is present, a majority of the votes cast, whether in person or by proxy, on any
matter properly brought before such meeting in accordance with Regulation 9 will be the act of the
shareholders. An abstention shall not represent a vote cast. A shareholder may revoke any proxy
that is not irrevocable by attending the meeting and voting in person or by filing with the
Secretary written notice of revocation or a later appointment. The vote upon any question brought
before a meeting of the shareholders may be by voice vote, unless otherwise required by law, the
Amended and Restated Articles of Incorporation or this Amended and Restated Code of Regulations or
unless the presiding officer otherwise determines. Every vote taken by written ballot will be
counted by the inspectors of election, if inspectors of election are appointed.

     9. Order Of Business. (a) The Chairman, or such other officer of the Corporation as is
designated by a majority of the total number of directors that the Corporation would have if there
were no vacancies on the Board of Directors (such number being referred to as the “Whole Board”),
will call meetings of shareholders to order and will act as presiding officer thereof. Unless
otherwise determined by the Board of Directors prior to the meeting, the presiding officer of the
meeting of shareholders will also determine the order of business and have the authority in his or
her sole discretion to regulate the conduct of any such meeting, including, without limitation, (i)
by imposing restrictions on the persons (other than shareholders of the Corporation or their duly
appointed proxies) who may attend any such shareholders’ meeting, (ii) by ascertaining whether any
shareholder or his proxy may be excluded from any meeting of shareholders based upon the presiding
officer’s determination that any such person has unduly disrupted or is likely to disrupt the
proceedings of the meeting and (iii) by determining the circumstances in which and time at which
any person may make a statement or ask questions at any meeting of shareholders.

     (b) At an annual meeting of the shareholders, only such business will be conducted or
considered as is properly brought before the meeting. To be properly brought before an annual
meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the President, a Vice President, the Secretary or an Assistant Secretary
in accordance with Regulation 4, (ii) otherwise properly brought before the meeting by the
presiding officer or by or at the direction of a majority of the Whole Board or (iii) otherwise
properly requested to be brought before the meeting by a shareholder of the Corporation in
accordance with Regulation 9(c).

     (c) For business to be properly requested by a shareholder to be brought before an annual
meeting, the shareholder must (i) be a shareholder of the Corporation of record at the time of the
giving of the notice for such annual meeting as provided for in this Amended and Restated Code of
Regulations, (ii) be entitled to vote at such meeting and (iii) have given timely written notice of
the request to the Secretary. To be timely, a shareholder’s notice must be delivered to or mailed
and received at the principal executive offices of the

 

 

Corporation not fewer than 60 nor more than 90 calendar days prior to the annual meeting;
provided, however, that in the event public announcement of the date of the annual meeting is not
made at least 75 calendar days prior to the date of the annual meeting and the annual meeting is
held on a date more than ten calendar days before or after the first anniversary of the date on
which the prior year’s annual meeting was held, notice by the shareholder, to be timely, must be so
received not later than the close of business on the 10th calendar day following the day on which
public announcement is first made of the date of the annual meeting. A shareholder’s notice to the
Secretary must set forth as to each matter the shareholder proposes to bring before the annual
meeting (A) a description in reasonable detail of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual meeting, (B) the name and
address, as they appear on the Corporation’s books, of the shareholder proposing such business and
of the beneficial owner, if other than the shareholder, on whose behalf the proposal is made, (C)
the class and number of shares of the Corporation that are owned beneficially and of record by the
shareholder proposing such business and by the beneficial owner, if other than the shareholder, on
whose behalf the proposal is made and (D) any material interest of the shareholder proposing such
business and the beneficial owner, if other than the shareholder, on whose behalf the proposal is
made in such business. Notwithstanding the foregoing provisions of this Amended and Restated Code
of Regulations, a shareholder must also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the
matters set forth in this Regulation 9(c). For purposes of this Regulation 9(c) and Regulation 14,
“public announcement” means disclosure in a press release reported by the Dow Jones News Service,
Associated Press, or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, or publicly filed by the Corporation with any national
securities exchange or quotation service through which the Corporation’s stock is listed or traded,
or furnished by the Corporation to its shareholders. Nothing in this Regulation 9(c) will be deemed
to affect any rights of shareholders to request inclusion of proposals in the Corporation’s proxy
statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended.

     (d) At a special meeting of shareholders, only such business may be conducted or considered as
is properly brought before the meeting. To be properly brought before a special meeting, business
must be (i) specified in the notice of the meeting (or any supplement thereto) given by or at the
direction of the President, a Vice President, the Secretary or an Assistant Secretary (or in case
of their failure to give any required notice, the other persons entitled to give notice) in
accordance with Regulation 4 or (ii) otherwise brought before the meeting by the presiding officer
or by or at the direction of a majority of the Whole Board.

     (e) The determination of whether any business sought to be brought before any annual or
special meeting of the shareholders is properly brought before such meeting in accordance with this
Regulation 9 will be made by the presiding officer of such meeting. If the presiding officer
determines that any business is not properly brought before such meeting, he or she will so declare
to the meeting and any such business will not be conducted or considered.

     10. Report To Shareholders. At the annual meeting, or at the meeting held in lieu thereof, the
officers of the Corporation shall lay before the shareholders a financial statement as required by
statute.

     11. Action Without A Meeting. Any action that may be authorized or taken at a meeting of the
shareholders may be authorized or taken without a meeting in a writing or writings signed by all of
the shareholders who would be entitled to notice of a meeting for such purpose, which writing or
writings shall be filed with or entered upon the records of the Corporation.

     12. Function. Except where the law, the Amended and Restated Articles of Incorporation or this
Amended and Restated Code of Regulations requires action to be authorized or taken by the
shareholders, all of the authority of the Corporation shall be exercised by or under the direction
of the Board of Directors.

     13. Number, Terms And Election Of Directors. (a) The directors of the corporation, other than
those who may be expressly elected by virtue of the terms of any Preferred Stock Designation, shall
be classified with respect to the time for which they severally hold office into three classes.
Except as may be otherwise provided in any Preferred Stock Designation, each class will consist of
not less than three directors, unless and until the

 

 

number of directors of any such class is changed in accordance with this Regulation 13. The
number of directors of any class will be determined from time to time by (i) the affirmative vote
of the holders of a majority of the voting power of the Corporation, voting together as a single
class, or (ii) a vote of a majority of the Whole Board, provided that the number of directors of
any class changed by a vote of a majority of the Whole Board shall not differ by more than one from
the number of directors of such class as last fixed by the shareholders.

     (b) The directors first appointed to Class I will hold office for a term expiring at the
annual meeting of shareholders to be held in 2001; the directors first appointed to Class II will
hold office for a term expiring at the annual meeting of shareholders to be held in 2002; and the
directors first appointed to Class 111 will hold office for a term expiring at the annual meeting
of shareholders to be held in 2003. The members of each class will hold office until their
successors are elected. At each annual meeting beginning in 2001, directors will be elected for a
term of three years from the date of their election and until the election of their successors.

     (c) At each annual meeting of the shareholders of the Corporation, the successors to the
directors whose terms expire at that meeting shall be elected by a plurality of all the votes cast
at such meeting. Cumulative voting in the election of directors shall be permitted as provided by
statute. Election of directors of the Corporation need not be by written ballot unless requested by
the presiding officer or by the holders of a majority of the voting power of the Corporation
present in person or represented by proxy at a meeting of the shareholders at which directors are
to be elected. Directors may also be elected by a majority of the votes cast at a special meeting
called for the purpose of electing directors or as may otherwise be provided by any Preferred Stock
Designation.

     14. Newly Created Directorships And Vacancies. Except as may be otherwise provided in any
Preferred Stock Designation, any vacancy (including newly created directorships resulting from any
increase in the number of directors and any vacancies on the Board of Directors resulting from
death, resignation, disqualification, removal, or other cause) may be filled by (i) the affirmative
vote of a majority of the remaining directors then in office, even though less than a quorum of the
Board of Directors, (ii) sole remaining director or (iii) the affirmative vote of the holders of a
majority of the Voting Power of the Corporation, voting together as a single class, after a vote to
increase the number of directors at a meeting called for that purpose in accordance with this
Amended and Restated Code of Regulations. Any director elected in accordance with this Regulation
14, any Preferred Stock Designation or applicable statute will hold office for the remainder of the
full term of the class of directors in which the new directorship was created or the vacancy
occurred and until such director’s successor has been elected.

     15. Removal. Except as may otherwise be provided by any Preferred Stock Designation, all
Directors, for whatever terms elected, shall hold office subject to applicable statutory provisions
as to the creation of vacancies and removal. No decrease in the number of directors constituting
the Board of Directors may shorten the term of any incumbent director.

     16. Nominations Of Directors; Election. (a) Except as maybe otherwise provided in any
Preferred Stock Designation, only persons who are nominated in accordance with this Regulation 16
will be eligible for election at a meeting of shareholders to be members of the Board of Directors
of the Corporation.

     (b) Nominations of persons for election as directors of the Corporation may be made only at a
meeting of shareholders (i) by or at the direction of the Board of Directors or a committee thereof
or (ii) by any shareholder who is a shareholder of record at the time of giving of notice provided
for in this Regulation 16, who is entitled to — vote for the election of directors at such meeting,
and who complies with the procedures set forth in this Regulation 16. All nominations by
shareholders must be made to the Secretary in proper written form and must be timely.

     (c) To be timely, a shareholder’s notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, in the case of a special meeting of the
shareholders, at the time the meeting request is made in accordance with Regulation 3, or, in the
case of an annual meeting, not fewer than 60 nor more than 90 calendar days prior to such annual
meeting; provided, however, that in the event that public announcement of the date of the annual
meeting is not made at least 75 calendar days prior to the date of the annual meeting and the
annual meeting is held on a date more than one week before or after the first

 

 

anniversary of the date on which the prior year’s annual meeting was held, notice by the
shareholder to be timely must be so received not later than the close of business on the 10th
calendar day following the day on which public announcement is first made of the date of the annual
meeting.

     (d) To be in proper written form, such shareholder’s notice must set forth or include:

     (i) the name and address, as they appear on the Corporation’s books, of the shareholder
giving the notice and of the beneficial owner, if any, on whose behalf the nomination is
made;

     (ii) a representation that the shareholder giving the notice is a holder of record of
stock of the Corporation entitled to vote at such annual meeting and intends to appear in
person or by proxy at the annual meeting to nominate the person or persons specified in the
notice;

     (iii) the class and number of shares of stock of the Corporation owned beneficially and
of record by the shareholder giving the notice and by the beneficial owner, if any, on whose
behalf the nomination is made;

     (iv) a description of all arrangements or understandings between or among any of (A)
the shareholder giving the notice, (B) the beneficial owner on whose behalf the notice is
given, (C) each nominee and (D) any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the shareholder giving the
notice;

     (v) such other information regarding each nominee proposed by the shareholder giving
the notice as would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission had the nominee been nominated, or
intended to be nominated, by the Board of Directors; and

     (vi) the signed consent of each nominee to serve as a director of the Corporation if so
elected.

     (e) The presiding officer of any annual meeting may, if the facts warrant, determine that a
nomination was not made in accordance with this Regulation 16, and if he or she should so
determine, he or she will so declare to the meeting, and the defective nomination will be
disregarded. Notwithstanding the foregoing provisions of this Regulation 16, a shareholder must
also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the matters set forth in this Regulation
16.

     17. Resignation. Any director may resign at any time by giving written notice of his
resignation to the Chairman or the Secretary. Any resignation will be effective upon actual receipt
by any such person or, if later, as of the date and time specified in such written notice.

     18. Regular Meetings. Regular meetings of the Board of Directors shall be held immediately
after the annual meeting of the shareholders and at such other time and place either within or
without the State of Ohio as may from time to time be determined by a majority of the Whole Board.
Notice of regular meetings of the Board of Directors need not be given.

     19. Special Meetings. Special meetings of the Board of Directors maybe called by the Chairman,
by the President, by a Vice President, by the Secretary or by any two directors. Notice of special
meetings, stating the place, date and hour, shall be given to each director by whom such notice is
not waived. Notice must be given either personally or by mail, telephone, telegram, telex,
facsimile or similar medium of communication not less than twenty- four hours before the designated
hour for such meeting. Special meetings of the Board of Directors may be held at such time and
place either within or without the State of Ohio as is determined by a majority of the Whole Board
or specified in the notice of any such meeting.

     20. Quorum And Vote. At all meetings of the Board of Directors, a majority of the total number
of directors then in office will constitute a quorum for the transaction of business. Except as may
be otherwise provided in any Preferred Stock Designation or by this Amended and Restated Code of
Regulations, the act of a

 

 

majority of the directors present at any meeting at which a quorum is present will be the act
of the Board of Directors. If a quorum is not present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time to another time or place,
without notice other than announcement at the meeting, until a quorum is present.

     21. Action Without A Meeting. Any action that may be authorized or taken at a meeting of the
Board of Directors may be authorized or taken without a meeting in a writing or writings signed by
all the directors, which writing or writings shall be filed with or entered upon the records of the
Corporation.

     22. Participation In Meetings By Communications Equipment. Meetings of the Board of Directors
or of any committee of the Board of Directors may be held through any means of communications
equipment if all persons participating can hear each other, and such participation will constitute
presence in person at such meeting.

     23. Committees. The Board of Directors may from time to time create an executive committee or
any other committee or committees of directors to act in the intervals between meetings of the
Board of Directors and may delegate to such committee or committees any of its authority other than
that of filling vacancies among the Board of Directors or in any committee of the Board of
Directors. Each committee shall consist of one or more directors. The Board of Directors may
appoint one or more directors as alternate members of any such committee to take the place of
absent committee members at meetings of such committee. Unless otherwise ordered by the Board of
Directors, a majority of the members of any committee appointed by the Board of Directors pursuant
to this Regulation 23 shall constitute a quorum at any meeting thereof, and the act of a majority
of the members present at a meeting at which a quorum is present shall be the act of such
committee. Action may be taken by any such committee without a meeting by a writing or writings
signed by all of its members. Any such committee shall prescribe its own rules for calling and
holding meetings and its method of procedure, subject to any rules prescribed by the Board of
Directors, and will keep a written record of all action taken by it.

     24. Compensation. The Board of Directors may establish the compensation and expense
reimbursement policies for directors in exchange for service on the Board of Directors and on
committees of the Board of Directors, for attendance at meetings of the Board of Directors or
committees of the Board of Directors, and for other services by directors to the Corporation or any
of its subsidiaries.

     25. Bylaws. The Board of Directors may adopt Bylaws for the conduct of its meetings and those
of any committees of the Board of Directors that are not inconsistent with the Amended and Restated
Articles of Incorporation or this Amended and Restated Code of Regulations.

OFFICERS

     26. Generally. The Corporation may have a Chairman, elected by the directors from among their
number, and shall have a President, who shall also be a director, a Secretary and a Treasurer. The
Corporation may also have one or more Vice Presidents and such other officers and assistant
officers as the Board of Directors may deem appropriate. If the Board of Directors so desires, it
may elect a Chief Executive Officer to manage the affairs of the Corporation, subject to the
direction and control of the Board of Directors. All of the officers shall be elected by the Board
of Directors. Notwithstanding the foregoing, by specific action, the Board of Directors may
authorize the Chairman or the President to appoint any person to any office other than Chairman,
President, Secretary or Treasurer. Any number of offices may be held by the same person, and no two
offices must be held by the same person. Any of the offices, other than the office of President,
Secretary and Treasurer, may be left vacant from time to time as the Board of Directors may
determine. In case of the absence or disability of any officer of the Corporation or for any other
reason deemed sufficient by a majority of the Board of Directors, the Board of Directors may
delegate the absent or disabled officer’s powers or duties to any other officer or to any director.

     27. Authority And Duties Of Officers. The officers of the Corporation shall have such
authority and shall perform such duties as are customarily incident to their respective offices, or
as may be specified from time to

 

 

time by the Board of Directors, regardless of whether such authority and duties are
customarily incident to such office.

     28. Compensation. The compensation of all officers and agents of the Corporation who are also
members of the Board of Directors of the Corporation will be fixed by the Board of Directors or by
a committee of the Board of Directors. The Board of Directors may fix the compensation of the other
officers and agents of the Corporation, or delegate the power to fix such compensation, to the
Chief Executive Officer or any other officer of the Corporation.

     29. Succession. The officers of the Corporation will hold office until their successors are
elected pursuant to Regulation 26. Any officer may be removed at any time by the affirmative vote
of a majority of the Whole Board. Any vacancy occurring in any office of the Corporation may be
filled by the Board of Directors or by the Chairman or President as provided in Regulation 26.

STOCK

     30. Transfer And Registration Of Certificates. The Board of Directors shall have authority to
make such rules and regulations as it deems expedient concerning the issuance, transfer and
registration of certificates for shares and the shares represented thereby and may appoint transfer
agents and registrars thereof.

     31. Substituted Certificates. Any person claiming a certificate for shares to have been lost,
stolen or destroyed (i) shall make an affidavit or affirmation of that fact, (ii) shall give the
Corporation and its registrar or registrars and its transfer agent or agents a bond of indemnity
satisfactory to the Board of Directors or a committee thereof or to the President or a Vice
President and the Secretary or the Treasurer and (iii) shall, if required by the Board of Directors
or a committee thereof or the officers named in this Regulation 31, advertise the fact that the
certificate has been lost, stolen or destroyed, whereupon a new certificate may be executed and
delivered of the same tenor and for the same number of shares as the one alleged to have been lost,
stolen or destroyed.

     32. Voting Of Shares Held By The Corporation. Unless otherwise ordered by the Board of
Directors, the President, in person or by proxy or proxies appointed by him, shall have full power
and authority on behalf of the Corporation to vote, act and consent with respect to any shares
issued by other corporations and owned by the Corporation.

     33. Record Dates And Owners. (a) In order that the Corporation may determine the shareholders
entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to
designate an agent to act on behalf of the shareholders to call a special meeting of shareholders,
or to take any other collective action on behalf of the shareholders, the Board of Directors may
fix a record date, which will not be fewer than 7 nor more than 60 calendar days before the date of
such meeting. If no record date is fixed by the Board of Directors, the record date for determining
shareholders entitled to notice of or to vote at a meeting of shareholders will be the date next
preceding the day on which notice is given, or, if notice is waived, the date next preceding the
day on which the meeting is held.

     (b) The Corporation will be entitled to treat the person in whose name shares are registered
on the books of the Corporation as the absolute owner thereof, and will not be bound to recognize
any equitable or other claim to, or interest in, such share on the part of any other person,
whether or not the Corporation has knowledge or notice of the claim or interest, except as
expressly provided by applicable law.

     34. Indemnification.

     (a) The Corporation shall indemnify, to the full extent then permitted by law, any director or
officer or former director or officer of the Corporation who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or was a member of the
Board of Directors or an officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, trustee, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. The Corporation

 

 

shall pay, to the full extent then required by law, expenses, including attorney’s fees,
incurred by a member of the Board of Directors in defending any such action, suit or proceeding as
they are incurred, in advance of the final disposition thereof.

     (b) To the full extent then permitted by law, the Corporation may indemnify employees, agents
and other persons and may pay expenses, including attorney’s fees, incurred by any employee, agent
or other person in defending any action, suit or proceeding as such expenses are incurred, in
advance of the final disposition thereof.

     (c) The indemnification and payment of expenses provided by this Regulation 34 shall not be
exclusive of, and shall be in addition to, any other rights granted to any person seeking
indemnification under any law, the Amended and Restated Articles of Incorporation, any agreement,
vote of shareholders or disinterested members of the Board of Directors, or otherwise, both as to
action in official capacities and as to action in another capacity while he or she is a member of
the Board of Directors or an officer, employee or agent of the Corporation, and shall continue as
to a person who has ceased to be a member of the Board of Directors, trustee, officer, employee or
agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.

     35. Insurance. The Corporation may, to the full extent then permitted by law and authorized by
the Board of Directors, purchase and maintain insurance or furnish similar protection, including
but not limited to trust funds, letters of credit or self-insurance, on behalf of or for any
persons described in Regulation 34 against any liability asserted against and incurred by any such
person in any such capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify such person against such liability. Insurance may be purchased
from or maintained with a person in which the Corporation has a financial interest.

     36. Agreements. The Corporation, upon approval by the Board of Directors, may enter into
agreements with any persons who the Corporation may indemnify under this Amended and Restated Code
of Regulations or under law and may undertake thereby to indemnify such persons and to pay the
expenses incurred by them in defending any action, suit or proceeding against them, whether or not
the Corporation would have the power under law or this Amended and Restated Code of Regulations to
indemnify any such person.

GENERAL

     37. Fiscal Year. The fiscal year of the Corporation will end on the thirty-first day of
December in each calendar year or such other date as maybe fixed from time to time by the Board of
Directors.

     38. Seal. The seal of the Corporation shall be circular in form with the name of the
Corporation stamped around the margin and the word “Seal” stamped across the center.

     39. Amendments. Except as otherwise provided by law or by the Amended and Restated Articles of
Incorporation or this Amended and Restated Code of Regulations, these Regulations or any of them
may be amended in any respect or repealed at any time by the affirmative vote of the holders of a
majority of the voting power of the Corporation, voting togetherEX-4(C)

 

Exhibit 4(c)

RIGHTS AGREEMENT

Dated as of May 10, 2000

By and Between

Brush Engineered Materials Inc.

and

National City Bank, N.A.,

as Rights Agent

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	1.
	 	Certain Definitions	 	 	1	 
	 
	 	 	 	 	 	 
	2.
	 	Appointment of Rights Agent	 	 	4	 
	 
	 	 	 	 	 	 
	3.
	 	Issue of Right Certificates	 	 	5	 
	 
	 	 	 	 	 	 
	4.
	 	Form of Right Certificates	 	 	6	 
	 
	 	 	 	 	 	 
	5.
	 	Countersignature and Registration	 	 	6	 
	 
	 	 	 	 	 	 
	6.
	 	Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates	 	 	7	 
	 
	 	 	 	 	 	 
	7.
	 	Exercise of Rights; Purchase Price; Expiration Date of Rights	 	 	8	 
	 
	 	 	 	 	 	 
	8.
	 	Cancellation and Destruction of Right Certificates	 	 	9	 
	 
	 	 	 	 	 	 
	9.
	 	Company Covenants Concerning Securities and Rights	 	 	9	 
	 
	 	 	 	 	 	 
	10.
	 	Record Date	 	 	10	 
	 
	 	 	 	 	 	 
	11.
	 	Adjustment of Purchase Price, Number and Kind of Securities or Number of Rights	 	 	11	 
	 
	 	 	 	 	 	 
	12.
	 	Certificate of Adjusted Purchase Price or Number of Securities	 	 	19	 
	 
	 	 	 	 	 	 
	13.
	 	Consolidation, Merger or Sale or Transfer of Assets or Earning Power	 	 	19	 
	 
	 	 	 	 	 	 
	14.
	 	Fractional Rights and Fractional Securities	 	 	21	 
	 
	 	 	 	 	 	 
	15.
	 	Rights of Action	 	 	22	 
	 
	 	 	 	 	 	 
	16.
	 	Agreement of Rights Holders	 	 	23	 
	 
	 	 	 	 	 	 
	17.
	 	Right Certificate Holder Not Deemed a Shareholder	 	 	23	 
	 
	 	 	 	 	 	 
	18.
	 	Concerning the Rights Agent	 	 	24	 
	 
	 	 	 	 	 	 
	19.
	 	Merger or Consolidation or Change of Name of Rights Agent	 	 	24	 
	 
	 	 	 	 	 	 
	20.
	 	Duties of Rights Agent	 	 	25	 
	 
	 	 	 	 	 	 
	21.
	 	Change of Rights Agent	 	 	26	 
	 
	 	 	 	 	 	 
	22.
	 	Issuance of New Right Certificates	 	 	27	 
	 
	 	 	 	 	 	 
	23.
	 	Redemption	 	 	28	 
	 
	 	 	 	 	 	 
	24.
	 	Exchange	 	 	28	 
	 
	 	 	 	 	 	 
	25.
	 	Notice of Certain Events	 	 	29	 
	 
	 	 	 	 	 	 
	26.
	 	Notices	 	 	30	 

 

 

	 	 	 	 	 	 	 
	27.
	 	Supplements and Amendments	 	 	30	 
	 
	 	 	 	 	 	 
	28.
	 	Successors; Certain Covenants	 	 	31	 
	 
	 	 	 	 	 	 
	29.
	 	Benefits of This Agreement	 	 	31	 
	 
	 	 	 	 	 	 
	30.
	 	Governing Law	 	 	31	 
	 
	 	 	 	 	 	 
	31.
	 	Severability	 	 	31	 
	 
	 	 	 	 	 	 
	32.
	 	Descriptive Headings, Etc.	 	 	32	 
	 
	 	 	 	 	 	 
	33.
	 	Determinations and Actions by the Directors	 	 	32	 
	 
	 	 	 	 	 	 
	34.
	 	Counterparts	 	 	32	 
	 
	 	 	 	 	 	 
	Exhibit A	 	 	A-1	 
	 
	 	 	 	 	 	 
	Exhibit B	 	 	B-1	 
	 
	 	 	 	 	 	 
	Exhibit C	 	 	C-1	 

 

 

RIGHTS AGREEMENT

     This RIGHTS AGREEMENT, dated as of May 10, 2000 (this “AGREEMENT”), is
made and entered into by and between Brush Engineered Materials Inc., an Ohio
corporation (the “COMPANY”), and National City Bank, N.A., as rights agent (the
“RIGHTS AGENT”).

RECITALS

     WHEREAS, on May 10, 2000, the Directors of the Company authorized and
declared a dividend distribution of one right (a “RIGHT”) for each share of
common stock, no par value, of the Company (each, a “COMMON SHARE”) outstanding
as of the Close of Business (as defined in Section 1(e)) on May 16, 2000 (the
“RECORD DATE”), each Right initially representing the right to purchase one
one-hundredth of a Preferred Share (as defined in Section 1(q)) on the terms and
subject to the conditions herein set forth, and further authorized and directed
the issuance of one Right (subject to adjustment as provided herein) with
respect to each Common Share issued or delivered by the Company (whether
originally issued or delivered from the Company’s treasury) after the Record
Date but prior to the earlier of the Distribution Date (as defined in Section
1(h)) and the Expiration Date (as defined in Section 1(j)) or as provided in
Section 22.

     NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, the parties hereto hereby agree as follows:

     1. CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:

     (a) “ACQUIRING PERSON” means any Person (other than the Company or any
Related Person) that, together with all Affiliates and Associates of such
Person, is the Beneficial Owner of 20% or more of the then-outstanding Common
Shares; PROVIDED, HOWEVER, that a Person will not be deemed to have become an
Acquiring Person solely as a result of a reduction in the number of Common
Shares outstanding unless and until such time as (i) such Person or any
Affiliate or Associate of such Person thereafter becomes the Beneficial Owner of
additional Common Shares representing 1% or more of the then-outstanding Common
Shares, other than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all holders of Common Shares are
treated equally, or (ii) any other Person that is the Beneficial Owner of Common
Shares representing 1% or more of the then-outstanding Common Shares thereafter
becomes an Affiliate or Associate of such Person. Notwithstanding the foregoing,
if the Directors of the Company determine in good faith that a Person who would
otherwise be an “Acquiring Person” as defined pursuant to the foregoing
provisions of this paragraph (a), has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an “Acquiring Person” as defined pursuant to the
foregoing provisions of this paragraph (a), then such Person shall not be deemed
to be an “ACQUIRING PERSON” for any purposes of this Agreement.

     (b) “AFFILIATE” and “ASSOCIATE” will have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement.

     (c) A Person will be deemed the “BENEFICIAL OWNER” of, and to
“BENEFICIALLY OWN,” any securities:

 

 

     (i) the beneficial ownership of which such Person or any of
such Person’s Affiliates or Associates, directly or indirectly, has the
right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding (whether or not in writing), or upon the exercise of
conversion rights, exchange rights, warrants, options or other rights
(in each case, other than upon exercise or exchange of the Rights);
PROVIDED, HOWEVER, that a Person will not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of
such Person’s Affiliates or Associates until such tendered securities
are accepted for purchase or exchange; or

     (ii) which such Person or any of such Person’s Affiliates or
Associates, directly or indirectly, has or shares the right to vote or
dispose of, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); or

     (iii) of which any other Person is the Beneficial Owner, if
such Person or any of such Person’s Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing)
with such other Person (or any of such other Person’s Affiliates or
Associates) with respect to acquiring, holding, voting or disposing of
any securities of the Company;

PROVIDED, HOWEVER, that a Person will not be deemed the Beneficial Owner of, or
to Beneficially Own, any security (A) if such Person has the right to vote such
security pursuant to an agreement, arrangement or understanding (whether or not
in writing) which (1) arises solely from a revocable proxy given to such Person
in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report), or (B) if such beneficial ownership arises
solely as a result of such Person’s status as a “clearing agency,” as defined in
Section 3(a)(23) of the Exchange Act; PROVIDED FURTHER, HOWEVER, that nothing in
this paragraph (c) will cause a Person engaged in business as an underwriter of
securities to be the Beneficial Owner of, or to Beneficially Own, any securities
acquired through such Person’s participation in good faith in an underwriting
syndicate until the expiration of 40 calendar days after the date of such
acquisition, or such later date as the Directors of the Company may determine in
any specific case.

     (d) “BUSINESS DAY” means any day other than a Saturday, Sunday or a day
on which banking institutions in the State of New York (or such other state in
which the principal office of the Rights Agent is located) are authorized or
obligated by law or executive order to close.

     (e) “CLOSE OF BUSINESS” on any given date means 5:00 P.M., Eastern
time, on such date; PROVIDED, HOWEVER, that if such date is not a Business Day
it means 5:00 P.M., Eastern time, on the next succeeding Business Day.

     (f) “COMMON SHARES” when used with reference to the Company means the
shares of common stock, no par value, of the Company; PROVIDED, HOWEVER, that,
if the Company is the continuing or surviving corporation in a transaction described in Section
13(a)(ii), “Common Shares” when used with reference to the Company means shares
of the capital stock or units of the equity interests with the greatest
aggregate voting power of the Company. “Common Shares” when used with reference

 

 

to any corporation or other legal entity other than the Company, including an
Issuer, means shares of the capital stock or units of the equity interests with
the greatest aggregate voting power of such corporation or other legal entity.

     (g) “COMPANY” means Brush Engineered Materials Inc., an Ohio
corporation.

     (h) “DISTRIBUTION DATE” means the earlier of: (i) the Close of Business
on the tenth calendar day following the Share Acquisition Date, or (ii) the
Close of Business on the tenth Business Day (or, unless the Distribution Date
shall have previously occurred, such later date as may be specified by the
Directors of the Company) after the commencement of a tender or exchange offer
by any Person (other than the Company or any Related Person), if upon the
consummation thereof such Person would be the Beneficial Owner of 20% or more of
the then-outstanding Common Shares.

     (i) “EXCHANGE ACT” means the Securities Exchange Act of 1934.

     (j) “EXPIRATION DATE” means the earliest of (i) the Close of Business
on the Final Expiration Date, (ii) the time at which the Rights are redeemed as
provided in Section 23, and (iii) the time at which all exercisable Rights are
exchanged as provided in Section 24.

     (k) “FINAL EXPIRATION DATE” means the tenth anniversary of the Record
Date.

     (l) “FLIP-IN EVENT” means any event described in clauses (A), (B) or
(C) of Section 11(a)(ii).

     (m) “FLIP-OVER EVENT” means any event described in clauses (i), (ii) or
(iii) of Section 13(a).

     (n) “ISSUER” has the meaning set forth in Section 13(b).

     (o) “NASDAQ” means The NASDAQ Stock Market.

     (p) “PERSON” means any individual, firm, corporation or other legal
entity, and includes any successor (by merger or otherwise) of such entity.

     (q) “PREFERRED SHARES” means shares of Series A Junior Participating
Preferred Stock, without par value, of the Company having the rights and
preferences set forth in the form of Certificate of Adoption of Amendment to
Articles of Incorporation attached as EXHIBIT A.

     (r) “PURCHASE PRICE” means initially $110.00 per one one-hundredth of a
Preferred Share, subject to adjustment from time to time as provided in this
Agreement.

     (s) “RECORD DATE” has the meaning set forth in the Recitals to this
Agreement.

     (t) “REDEMPTION PRICE” means $0.01 per Right, subject to adjustment by
resolution of the Directors of the Company to reflect any stock split, stock
dividend or similar transaction occurring after the Record Date.

     (u) “RELATED PERSON” means (i) any Subsidiary of the Company or (ii)
any employee benefit or stock ownership plan of the Company or of any Subsidiary
of the Company or any entity holding Common Shares for or pursuant to the terms
of any such plan.

 

 

     (v) “RIGHT” has the meaning set forth in the Recitals to this
Agreement.

     (w) “RIGHT CERTIFICATES” means certificates evidencing the Rights, in
substantially the form attached as EXHIBIT B.

     (x) “RIGHTS AGENT” means National City Bank, N.A., unless and until a
successor Rights Agent has become such pursuant to the terms of this Agreement,
and thereafter, “Rights Agent” means such successor Rights Agent.

     (y) “SECURITIES ACT” means the Securities Act of 1933.

     (z) “SHARE ACQUISITION DATE” means the first date of public
announcement by the Company (by press release, filing made with the Securities
and Exchange Commission or otherwise) that an Acquiring Person has become such.

     (aa) “SUBSIDIARY” when used with reference to any Person means any
corporation or other legal entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or indirectly,
by such Person; PROVIDED, HOWEVER, that for purposes of Section 13(b),
“Subsidiary” when used with reference to any Person means any corporation or
other legal entity of which at least 20% of the voting power of the voting
equity securities or equity interests is owned, directly or indirectly, by such
Person.

     (bb) “TRADING DAY” means any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to trading
is open for the transaction of business or, if the Common Shares are not listed
or admitted to trading on any national securities exchange, a Business Day.

     (cc) “TRIGGERING EVENT” means any Flip-in Event or Flip-over Event.

     2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the Rights
Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3, will also be, prior to the Distribution Date, the
holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment and hereby
certifies that it complies with the requirements of the New York Stock Exchange
governing transfer agents and registrars. The Company may from time to time act
as Co-Rights Agent or appoint such Co-Rights Agents as it may deem necessary or
desirable. Any actions which may be taken by the Rights Agent pursuant to the
terms of this Agreement may be taken by any such Co-Rights Agent. To the extent
that any Co-Rights Agent takes any action pursuant to this Agreement, such
Co-Rights Agent will be entitled to all of the rights and protections of, and subject to all of the
applicable duties and obligations imposed upon, the Rights Agent pursuant to the terms of this
Agreement.

     3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Distribution Date, (i)
the Rights will be evidenced by the certificates representing Common Shares
registered in the names of the record holders thereof (which certificates
representing Common Shares will also be deemed to be Right Certificates), (ii)
the Rights will be transferable only in connection with the transfer of the
underlying Common Shares, and (iii) the surrender for transfer of any
certificates evidencing Common Shares in respect of which Rights have been
issued will also constitute the transfer of the Rights associated with the
Common Shares evidenced by such certificates. On or as promptly as practicable
after the Record Date, the Company will send by first class, postage prepaid
mail, to each record holder of Common Shares as of the Close of Business on the

 

 

Record Date, at the address of such holder shown on the records of the Company
as of such date, a copy of a Summary of Rights to Purchase Preferred Stock in
substantially the form attached as EXHIBIT C.

     (b) Rights will be issued by the Company in respect of all Common
Shares (other than Common Shares issued upon the exercise or exchange of any
Right) issued or delivered by the Company (whether originally issued or
delivered from the Company’s treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates
evidencing such Common Shares will have stamped on, impressed on, printed on,
written on, or otherwise affixed to them the following legend or such similar
legend as the Company may deem appropriate and as is not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or transaction reporting system on
which the Common Shares may from time to time be listed or quoted, or to conform
to usage:

This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between Brush
Engineered Materials Inc. and National City Bank, N.A., dated as of May
10, 2000 (the “RIGHTS AGREEMENT”), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Brush Engineered Materials Inc. The
Rights are not exercisable prior to the occurrence of certain events
specified in the Rights Agreement. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be redeemed, may be
exchanged, may expire, may be amended, or may be evidenced by separate
certificates and no longer be evidenced by this Certificate. Brush
Engineered Materials Inc. will mail to the holder of this Certificate a
copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor.
Under certain circumstances as set forth in the Rights Agreement,
Rights that are or were beneficially owned by an Acquiring Person or
any Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement) may become null and void.

     (c) Any Right Certificate issued pursuant to this Section 3 that
represents Rights beneficially owned by an Acquiring Person or any Associate or
Affiliate thereof and any Right Certificate issued at any time upon the transfer
of any Rights to an Acquiring Person or any Associate or Affiliate thereof or to
any nominee of such Acquiring Person, Associate or Affiliateand any Right Certificate issued
pursuant to Section 6 or 11 hereof upon transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall be subject to and contain the following
legend or such similar legend as the Company may deem appropriate and as is not inconsistent with
the provisions of this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange
on which the Rights
may from time to time be listed, or to conform to usage:

The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). This Right Certificate and the Rights
represented hereby may become null and void in the circumstances
specified in Section 11(a)(ii) or Section 13 of the Rights Agreement.

     (d) As promptly 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, insured, postage prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate evidencing
one Right for each Common Share so held, subject to adjustment as provided
herein. As of and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.

     (e) In the event that the Company purchases or otherwise acquires any
Common Shares after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares will be deemed canceled and retired so
that the Company will not be entitled to exercise any Rights associated with the
Common Shares so purchased or acquired.

     4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the form of
election to purchase and the form of assignment to be printed on the reverse
thereof) will be substantially in the form attached as EXHIBIT B with such
changes and marks of identification or designation, and such legends, summaries
or endorsements printed thereon, as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or transaction
reporting system on which the Rights may from time to time be listed or quoted,
or to conform to usage. Subject to the provisions of Section 22, the Right
Certificates, whenever issued, on their face will entitle the holders thereof to
purchase such number of one one-hundredths of a Preferred Share as are set forth
therein at the Purchase Price set forth therein, but the Purchase Price, the
number and kind of securities issuable upon exercise of each Right and the
number of Rights outstanding will be subject to adjustment as provided herein.

     5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right Certificates will
be executed on behalf of the Company by its Chairman, its President or any Vice
President, either manually or by facsimile signature, and will have affixed
thereto the Company’s seal or a facsimile thereof which will be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates will be manually countersigned by
the Rights Agent and will not be valid for any purpose unless so countersigned.
In case any officer of the Company who signed any of the Right Certificates
ceases to be such officer of the Company before countersignature by the Rights Agent and issuance
and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and effect as though the
person who signed such Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, is a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such officer.

     (b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at the principal office of the Rights Agent designated for
such purpose and at such other offices as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or any transaction reporting system on
which the Rights may from time to time be listed or quoted, books for
registration and transfer of the Right Certificates issued hereunder. Such books
will 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.

     6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT CERTIFICATES;
MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. (a) Subject to the
provisions of Sections 7(d) and 14, at any time after the Close of Business on
the Distribution Date and prior to the Expiration Date, any Right Certificate or
Right Certificates representing exercisable Rights may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a Preferred Share (or other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any such Right Certificate
or Rights Certificates must make such request in a writing delivered to the
Rights Agent and must surrender the Right Certificate or Right Certificates to
be transferred, split up, combined or exchanged at the principal office of the
Rights Agent designated for such purpose. Thereupon or as promptly as
practicable thereafter, subject to the provisions of Sections 7(d) and 14, the
Company will prepare, execute and deliver to the Rights Agent, and the Rights
Agent will countersign and deliver, 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 tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.

     (b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, if requested by the Company,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will prepare, execute and
deliver a new Right Certificate of like tenor to the Rights Agent and the Rights
Agent will countersign and deliver such new Right Certificate to the registered
holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

     7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS. (a)
The registered holder of any Right Certificate may exercise the Rights evidenced
thereby (except as otherwise provided herein) in whole or in part at any time
after the Distribution Date and prior to the Expiration Date, upon surrender of
the Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office or offices of the
Rights Agent designated for such purpose, together with payment in cash, in
lawful money of the United States of America by certified check or bank draft
payable to the order of the Company, equal to the sum of (i) the exercise price
for the total number of securities as to which such surrendered Rights are
exercised and (ii) an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with the provisions
of Section 9(d).

     (b) Upon receipt of a Right Certificate representing exercisable Rights
with the form of election to purchase duly executed, accompanied by payment as
described above, the Rights Agent will promptly (i) requisition from any
transfer agent of the Preferred Shares (or make available, if the Rights Agent
is the transfer agent) certificates representing the number of one
one-hundredths of a Preferred Share to be purchased (and the Company hereby
irrevocably authorizes and directs its transfer agent to comply with all such
requests), or, if the Company elects to deposit Preferred Shares issuable upon

 

 

exercise of the Rights hereunder with a depositary agent, requisition from the
depositary agent depositary receipts representing such number of one
one-hundredths of a Preferred Share as are to be purchased (and the Company
hereby irrevocably authorizes and directs such depositary agent to comply with
all such requests), (ii) after receipt of such certificates (or depositary
receipts, as the case may be), 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, (iii) when appropriate,
requisition from the Company or any transfer agent therefor (or make available,
if the Rights Agent is the transfer agent) certificates representing the number
of equivalent common shares to be issued in lieu of the issuance of Common
Shares in accordance with the provisions of Section 11(a)(iii), (iv) when
appropriate, after receipt of such certificates, 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, (v) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of the issuance of fractional shares in accordance with the provisions of
Section 14 or in lieu of the issuance of Common Shares in accordance with the
provisions of Section 11(a)(iii), (vi) when appropriate, after receipt, deliver
such cash to or upon the order of the registered holder of such Right
Certificate, and (vii) when appropriate, deliver any due bill or other
instrument provided to the Rights Agent by the Company for delivery to the
registered holder of such Right Certificate as provided by Section 11(l).

     (c) In case the registered holder of any Right Certificate exercises
less than all the Rights evidenced thereby, the Company will prepare, execute
and deliver a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised and the Rights Agent will countersign and deliver such new
Right Certificate to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14.

     (d) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company will be obligated to undertake any action with
respect to any purported transfer, split up, combination or exchange of any
Right Certificate pursuant to Section 6 or exercise of a Right Certificate as
set forth in this Section 7 unless the registered holder of such Right
Certificate has (i) completed and signed the certificate following the form of
assignment or the form of election to purchase, as applicable, set forth on the reverse side of the
Right Certificate surrendered for such transfer, split up, combination,
exchange or 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 may reasonably request.

     8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, will be canceled by it,
and no Right Certificates will be issued in lieu thereof except as expressly
permitted by the provisions of this Agreement. The Company will deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent will so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent will deliver
all canceled Right Certificates to the Company, or will, at the written request
of the Company, destroy such canceled Right Certificates, and in such case will
deliver a certificate of destruction thereof to the Company.

     9. COMPANY COVENANTS CONCERNING SECURITIES AND RIGHTS. The Company

 

 

covenants and agrees that:

     (a) It will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held
in its treasury, a number of Preferred Shares that will be sufficient
to permit the exercise in full of all outstanding Rights in accordance
with Section 7.

     (b) So long as the Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other
securities) issuable upon the exercise of the Rights may be listed on a
national securities exchange, or quoted on Nasdaq, it will endeavor to
cause, from and after such time as the Rights become exercisable, all
securities reserved for issuance upon the exercise of Rights to be
listed on such exchange, or quoted on Nasdaq, upon official notice of
issuance upon such exercise.

     (c) It will take all such action as may be necessary to ensure
that all Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) delivered upon
exercise of Rights, at the time of delivery of the certificates for
such securities, will be (subject to payment of the Purchase Price)
duly authorized, validly issued, fully paid and nonassessable
securities.

     (d) It will pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the
issuance or delivery of the Right Certificates and of any certificates
representing securities issued upon the exercise of Rights; PROVIDED,
HOWEVER, that the Company will not be required to pay any transfer tax
or charge which may be payable in respect of any transfer or delivery
of Right Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts representing securities
issued upon the exercise of Rights in a name other than that of, the
registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or deliver any certificates or
depositary receipts representing securities issued upon the exercise of
any Rights until any such tax or charge has been paid (any such tax or
charge being payable by the holder of such Right Certificate at the time
of surrender) or until it has been established to the Company’s
reasonable satisfaction that no such tax is due.

     (e) It will use its best efforts (i) to file on an appropriate
form, as soon as practicable following the later of the Share
Acquisition Date and the Distribution Date, a registration statement
under the Securities Act with respect to the securities issuable upon
exercise of the Rights, (ii) to cause such registration statement to
become effective as soon as practicable after such filing, and (iii) to
cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities and (B) the Expiration Date. The
Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or “blue sky” laws of the
various states in connection with the exercisability of the Rights. The
Company may temporarily suspend, for a period of time after the date
set forth in clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file such
registration statement and to permit it to become effective. Upon any

 

 

such suspension, the Company will issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company determines that a
registration statement should be filed under the Securities Act or any
state securities laws following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights in each relevant
jurisdiction until such time as a registration statement has been
declared effective and, upon any such suspension, the Company will
issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement
at such time as the suspension is no longer in effect. Notwithstanding
anything in this Agreement to the contrary, the Rights will not be
exercisable in any jurisdiction if the requisite registration or
qualification in such jurisdiction has not been effected or the
exercise of the Rights is not permitted under applicable law.

     (f) Notwithstanding anything in this Agreement to the
contrary, after the later of the Share Acquisition Date and the
Distribution Date it will not take (or permit any Subsidiary to take)
any action if at the time such action is taken it is reasonably
foreseeable that such action will eliminate or otherwise diminish the
benefits intended to be afforded by the Rights.

     (g) In the event that the Company is obligated to issue other
securities of the Company and/or pay cash pursuant to Section 11, 13,
14 or 24 it will make all arrangements necessary so that such other
securities and/or cash are available for distribution by the Rights
Agent, if and when appropriate.

     10. RECORD DATE. Each Person in whose name any certificate representing
Preferred Shares (or Common Shares and/or other securities, as the case may be)
is issued upon the exercise of Rights will for all purposes be deemed to have
become the holder of record of the Preferred Shares (or Common Shares and/or
other securities, as the case may be) represented thereby on, and such
certificate will be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the date of such
surrender and payment is a date upon which the transfer books of the Company for
the Preferred Shares (or Common Shares and/or other securities, as the case may
be) are closed, such Person will be deemed to have become the record holder of
such securities on, and such certificate will be dated, the next succeeding
Business Day on which the transfer books of the Company for the Preferred Shares
(or Common Shares and/or other securities, as the case may be) are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate will not be entitled to any rights of a holder of any security for
which the Rights are or may become exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions, or to exercise
any preemptive rights, and will not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.

     11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SECURITIES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of securities issuable
upon exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.

(a) (i) In the event that the Company at any time after the Record Date
(A) declares a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivides the outstanding Preferred Shares, (C) combines

 

 

the outstanding Preferred Shares into a smaller number of Preferred
Shares, or (D) issues any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification and/or the
number and/or kind of shares of capital stock issuable on such date
upon exercise of a Right, will be proportionately adjusted so that the
holder of any Right exercised after such time is entitled to receive
upon payment of the Purchase Price then in effect the aggregate number
and kind of shares of capital stock which, if such Right had been
exercised immediately prior to such date and at a time when the
transfer books of the Company for the Preferred Shares were open, the
holder of such Right would have owned upon such exercise (and, in the
case of a reclassification, would have retained after giving effect to
such reclassification) and would have been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
PROVIDED, HOWEVER, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock issuable upon exercise of one Right. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) or Section 13, the adjustment provided
for in this Section 11(a)(i) will be in addition to, and will be made
prior to, any adjustment required pursuant to Section 11(a)(ii) or
Section 13.

     (ii) Subject to the provisions of Section 24, if:

     (A) any Person becomes an Acquiring Person; or

     (B) any Acquiring Person or any Affiliate or Associate of any
Acquiring Person, directly or indirectly, (1) merges into the Company
or otherwise combines with the Company and the Company is the
continuing or surviving corporation of such merger or
combination (other than in a transaction subject to Section 13), (2)
merges or otherwise combines with any Subsidiary of the Company, (3) in
one or more transactions (otherwise than in connection with the
exercise, exchange or conversion of securities exercisable or
exchangeable for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries) transfers cash,
securities or any other property to the Company or any of its
Subsidiaries in exchange (in whole or in part) for shares of any class
of capital stock of the Company or any of its Subsidiaries or for
securities exercisable or exchangeable for or convertible into shares
of any class of capital stock of the Company or any of its
Subsidiaries, or otherwise obtains from the Company or any of its
Subsidiaries, with or without consideration, any additional shares of
any class of capital stock of the Company or any of its Subsidiaries or
securities exercisable or exchangeable for or convertible into shares
of any class of capital stock of the Company or any of its Subsidiaries
(otherwise than as part of a pro rata distribution to all holders of
 shares of any class of capital stock of the Company, or any of its
Subsidiaries), (4) sells, purchases, leases, exchanges, mortgages,
pledges, transfers or otherwise disposes (in one or more transactions)
to, from, with or of, as the case may be, the Company or any of its
Subsidiaries (otherwise than in a transaction subject to Section 13),
any property, including securities, on terms and conditions less

 

 

favorable to the Company than the Company would be able to obtain in an
arm’s-length transaction with an unaffiliated third party, (5) receives
any compensation from the Company or any of its Subsidiaries other than
compensation as a director or a regular full-time employee, in either
case at rates consistent with the Company’s (or its Subsidiaries’) past
practices, or (6) receives the benefit, directly or indirectly (except
proportionately as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its Subsidiaries; or

     (C) during such time as there is an Acquiring Person, there
is any reclassification of securities of the Company (including any
reverse stock split), or any recapitalization of the Company, or any
merger or consolidation of the Company with any of its Subsidiaries, or
any other transaction or series of transactions involving the Company
or any of its Subsidiaries (whether or not with or into or otherwise
involving an Acquiring Person), other than a transaction subject to
Section 13, which has the effect, directly or indirectly, of increasing
by more than 1% the proportionate share of the outstanding shares of
any class of equity securities of the Company or any of its
Subsidiaries, or of securities exercisable or exchangeable for or
convertible into equity securities of the Company or any of its
Subsidiaries, of which an Acquiring Person, or any Affiliate or
Associate of any Acquiring Person, is the Beneficial Owner;
then, and in each such case, from and after the latest of the
Distribution Date, the Share Acquisition Date and the date of the
occurrence of such Flip-in Event, proper provision will be made so that
each holder of a Right, except as provided below, will thereafter have
the right to receive, upon exercise thereof in accordance with the
terms of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the date of the occurrence of such
Flip-in Event (or, if any other Flip-in Event shall have previously
occurred, the product of the then-current Purchase Price multiplied by
the number of one one-hundredths of a Preferred Share for which a Right
was exercisable immediately prior to the date of the first occurrence of
a Flip-in Event), in lieu of Preferred Shares, such
number of Common Shares as equals the result obtained by (x)
multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the occurrence of such Flip-in Event
(or, if any other Flip-in Event shall have previously occurred,
multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the date of the first occurrence of a Flip-in
Event), and dividing that product by (y) 50% of the current per share
market price of the Common Shares (determined pursuant to Section
11(d)) on the date of the occurrence of such Flip- in Event.
Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Flip-in Event, any Rights that are
Beneficially Owned by (A) any Acquiring Person (or any Affiliate or
Associate of any Acquiring Person), (B) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who becomes a transferee
after the occurrence of a Flip-in Event, or (C) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who became a
transferee prior to or concurrently with the occurrence of a Flip-in
Event pursuant to either (1) a transfer from an 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 (2) a transfer which the Directors of the Company
have determined is part of a plan, arrangement or understanding which
has the purpose or effect of avoiding the provisions of this Section
11(a)(ii), and subsequent transferees of any of such Persons, will be
void without any further action and any holder of such Rights will
thereafter have no rights whatsoever with respect to such Rights under
any provision of this Agreement. The Company will use all reasonable
efforts to ensure that the provisions of this Section 11(a)(ii) are
complied with, but will have no liability to any holder of Right
Certificates or any other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder. Upon the occurrence of a Flip-in
Event, no Right Certificate that represents Rights that are or have
become void pursuant to the provisions of this Section 11(a)(ii) will
thereafter be issued pursuant to Section 3 or Section 6, and any Right
Certificate delivered to the Rights Agent that represents Rights that
are or have become void pursuant to the provisions of this Section
11(a)(ii) will be canceled. Upon the occurrence of a Flip-over Event,
any Rights that shall not have been previously exercised pursuant to
this Section 11(a)(ii) shall thereafter be exercisable only pursuant to
Section 13 and not pursuant to this Section 11(a)(ii).

     (iii) Upon the occurrence of a Flip-in Event, if there are
not sufficient Common Shares authorized but unissued or issued but not
outstanding to permit the issuance of all the Common Shares issuable in
accordance with Section 11(a)(ii) upon the exercise of a Right, the
Directors of the Company will use their best efforts promptly to
authorize and, subject to the provisions of Section 9(e), make
available for issuance additional Common Shares or other equity
securities of the Company having equivalent voting rights and an
equivalent value (as determined in good faith by the Directors of the
Company) to the Common Shares (for purposes of this Section 11(a)(iii),
“EQUIVALENT COMMON SHARES”). In the event that equivalent common shares
are so authorized, upon the exercise of a Right in accordance with the
provisions of Section 7, the registered holder will be entitled to
receive (A) Common Shares, to the extent any are available, and (B) a
number of equivalent common shares, which the Directors of the Company
have determined in good
faith to have a value equivalent to the excess of (x) the aggregate
current per share market value on the date of the occurrence of the
most recent Flip-in Event of all the Common Shares issuable in
accordance with Section 11(a)(ii) upon the exercise of a Right (the
“EXERCISE VALUE”) over (y) the aggregate current per share market value
on the date of the occurrence of the most recent Flip-in Event of any
Common Shares available for issuance upon the exercise of such Right;
PROVIDED, HOWEVER, that if at any time after 90 calendar days after the
latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of the most recent Flip-in Event, there are not
sufficient Common Shares and/or equivalent common shares available for
issuance upon the exercise of a Right, then the Company will be
obligated to deliver, upon the surrender of such Right and without
requiring payment of the Purchase Price, Common Shares (to the extent
available), equivalent common shares (to the extent available) and then
cash (to the extent permitted by applicable law and any agreements or
instruments to which the Company is a party in effect immediately prior

 

 

to the Share Acquisition Date), which securities and cash have an
aggregate value equal to the excess of (1) the Exercise Value over (2)
the product of the then-current Purchase Price multiplied by the number
of one one- hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the date of the occurrence of the most
recent Flip-in Event (or, if any other Flip-in Event shall have
previously occurred, the product of the then-current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for
which a Right would have been exercisable immediately prior to the date
of the occurrence of such Flip-in Event if no other Flip-in Event had
previously occurred). To the extent that any legal or contractual
restrictions prevent the Company from paying the full amount of cash
payable in accordance with the foregoing sentence, the Company will pay
to holders of the Rights as to which such payments are being made all
amounts which are not then restricted on a pro rata basis and will
continue to make payments on a pro rata basis as promptly as funds
become available until the full amount due to each such Rights holder
has been paid.

     (b) In the event that the Company fixes a record date for the issuance
of rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or securities having equivalent
rights, privileges and preferences as the Preferred Shares (for purposes of this
Section 11(b), “EQUIVALENT PREFERRED SHARES”)) or securities convertible into
Preferred Shares or equivalent preferred shares at a price per Preferred Share
or equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the current per share market price of the Preferred Shares (determined
pursuant to Section 11(d)) on such record date, the Purchase Price to be in
effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which is the number of Preferred Shares outstanding on such record
date plus the number of Preferred Shares which the aggregate offering price of
the total number of Preferred Shares and/or equivalent preferred shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share market
price and the denominator of which is the number of Preferred Shares outstanding
on such record date plus the number of additional Preferred Shares and/or
equivalent preferred shares to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
PROVIDED, HOWEVER, that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of the shares of capital stock issuable
upon exercise of one Right. In case such subscription price may be paid in a consideration part or
all of which is in a form other than cash, the value of such consideration will be as determined in
good faith by the Directors of the Company, whose determination will be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account of the Company will
not be deemed outstanding for the purpose of any such computation. Such adjustment will be made
successively whenever such a record date is fixed, and in the event that such rights, options or
warrants are not so issued, the Purchase Price will be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.

     (c) In the event that the Company fixes a record date for the making of
a distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets, stock

 

 

(other than a dividend payable in Preferred Shares) or subscription rights,
options or warrants (excluding those referred to in Section 11(b)), the Purchase
Price to be in effect after such record date will be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which is the current per share market price of the
Preferred Shares (as determined pursuant to Section 11(d)) on such record date
or, if earlier, the date on which Preferred Shares begin to trade on an
ex-dividend or when issued basis for such distribution, less the fair market
value (as determined in good faith by the Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent) of
the portion of the evidences of indebtedness, cash, assets or stock so to be
distributed or of such subscription rights, options or warrants applicable to
one Preferred Share, and the denominator of which is such current per share
market price of the Preferred Shares; PROVIDED, HOWEVER, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock issuable upon exercise of one
Right. Such adjustments will be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price will again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.

(d) (i) For the purpose of any computation hereunder, the “current per
share market price” of Common Shares on any date will be deemed to be
the average of the daily closing prices per share of such Common Shares
for the 30 consecutive Trading Days immediately prior to such date;
PROVIDED, HOWEVER, that in the event that the current per share market
price of the Common Shares is determined during a period following the
announcement by the issuer of such Common Shares of (A) a dividend or
distribution on such Common Shares payable in such Common Shares or
securities convertible into such Common Shares (other than the Rights)
or (B) any subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in
each such case, the current per share market price will be
appropriately adjusted to take into account ex-dividend trading or to
reflect the current per share market price per Common Share equivalent.
The closing price for each day will be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Common Shares are not listed or admitted
To trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Common
Shares are listed or admitted to trading or, if the Common 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 Nasdaq or
such other system then in use, or, if on any such date the Common 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 Common Shares selected by the Directors of the Company.
If the Common Shares are not publicly held or not so listed or traded,
or are not the subject of available bid and asked quotes, “current per
share market price” will mean the fair value per share as determined in
good faith by the Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent.

 

 

     (ii) For the purpose of any computation hereunder, the
“current per share market price” of the Preferred Shares will be
determined in the same manner as set forth above for Common Shares in
Section 11(d)(i), other than the last sentence thereof. If the current
per share market price of the Preferred Shares cannot be determined in
the manner provided above, the “current per share market price” of the
Preferred Shares will be conclusively deemed to be an amount equal to
the current per share market price of the Common Shares multiplied by
one hundred (as such number may be appropriately adjusted to reflect
events such as stock splits, stock dividends, recapitalizations or
similar transactions relating to the Common Shares occurring after the
date of this Agreement). If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, or the subject of
available bid and asked quotes, “current per share market price” of the
Preferred Shares will mean the fair value per share as determined in
good faith by the Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent. For all purposes
of this Agreement, the current per share market price of one
one-hundredth of a Preferred Share will be equal to the current per
share market price of one Preferred Share divided by one hundred.

     (e) Except as set forth below, no adjustment in the Purchase Price will
be required unless such adjustment would require an increase or decrease of at
least 1% in such price; PROVIDED, HOWEVER, that any adjustments which by reason
of this Section 11(e) are not required to be made will be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 will be made to the nearest cent or to the nearest one one- millionth
of a Preferred Share or one ten-thousandth of a Common Share or other security,
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 will be made no later than the
earlier of (i) three years from the date of the transaction which requires such
adjustment and (ii) the Expiration Date.

     (f) If as a result of an adjustment made pursuant to Section 11(a), the
holder of any Right thereafter exercised becomes entitled to receive any
securities of the Company other than Preferred Shares, thereafter the number
and/or kind of such other securities so receivable upon exercise of any Right
(and/or the Purchase Price in respect thereof) will be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Preferred Shares (and the Purchase Price
in respect thereof) contained in this Section 11, and the provisions of Sections 7, 9, 10, 13 and
14 with respect to the Preferred Shares (and the Purchase Price in respect thereof) will apply on
like terms to any such other securities (and the Purchase Price in respect thereof).

     (g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder will evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share issuable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

     (h) Unless the Company has exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price pursuant to Section
11(b) or Section 11(c), each Right outstanding immediately prior to the making
of such adjustment will thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-hundredths of a Preferred Share
(calculated to the nearest one one-millionth of a Preferred Share) obtained by
(i) multiplying (x) the number of one one-hundredths of a Preferred Share

 

 

issuable upon exercise of a Right immediately prior to such adjustment of the
Purchase Price by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.

     (i) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of one one- hundredths of a Preferred Share issuable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights will be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights will become that number of Rights (calculated
to the nearest one ten-thousandth) obtained by dividing the Purchase Price in
effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company
will make a public announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. Such record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, will be at least 10 calendar days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11(i), the
Company will, as promptly as practicable, cause to be distributed to holders of
record of Right Certificates on such record date Right Certificates evidencing,
subject to the provisions of Section 14, the additional Rights to which such
holders are entitled as a result of such adjustment, or, at the option of the
Company, will cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of adjustment, and upon surrender thereof if required by the Company, new
Right Certificates evidencing all the Rights to which such holders are entitled
after such adjustment. Right Certificates so to be distributed will be issued,
executed, and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and will be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.

     (j) Without respect to any adjustment or change in the Purchase Price
and/or the number and/or kind of securities issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number and kind of securities which were expressed in the initial Right
Certificate issued hereunder.

     (k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of the
Preferred Shares or below the then par value, if any, of any other securities of
the Company issuable upon exercise of the Rights, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Preferred Shares or such other securities, as the case may be, at such adjusted
Purchase Price.

     (l) In any case in which this Section 11 otherwise requires that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Preferred Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of Preferred Shares or

 

 

other securities of the Company, if any, issuable upon such exercise on the
basis of the Purchase Price in effect prior to such adjustment; PROVIDED,
HOWEVER, that the Company delivers to such holder a due bill or other
appropriate instrument evidencing such holder’s right to receive such additional
Preferred Shares or other securities upon the occurrence of the event requiring
such adjustment.

     (m) Notwithstanding anything in this Agreement to the contrary, the
Company will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in its good faith judgment the Directors of the Company
determine to be advisable in order that any (i) consolidation or subdivision of
the Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less
than the current per share market price therefor, (iii) issuance wholly for cash
of Preferred Shares or securities which by their terms are convertible into or
exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter made by
the Company to holders of its Preferred Shares is not taxable to such
shareholders.

     (n) Notwithstanding anything in this Agreement to the contrary, in the
event that the Company at any time after the Record Date prior to the
Distribution Date (i) pays a dividend on the outstanding Common Shares payable
in Common Shares, (ii) subdivides the outstanding Common Shares, (iii) combines
the outstanding Common Shares into a smaller number of shares, or (iv) issues
any shares of its capital stock in a reclassification of the outstanding Common
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation), the
number of Rights associated with each Common Share then outstanding, or issued
or delivered thereafter but prior to the Distribution Date, will be
proportionately adjusted so that the number of Rights thereafter associated with
each Common Share following any such event equals the result obtained by
multiplying the number of Rights associated with each Common Share immediately
prior to such event by a fraction the numerator of which is the total number of
Common Shares outstanding immediately prior to the occurrence of the event and
the denominator of which is the total number of Common Shares outstanding
immediately following the occurrence of such event. The adjustments provided for
in this Section 11(n) will be made successively whenever such a dividend is paid
or such a subdivision, combination or reclassification is effected.

     12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SECURITIES.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company will promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Preferred Shares and the
Common Shares a copy of such certificate, and (c) if such adjustment is made
after the Distribution Date, mail a brief summary of such adjustment to each
holder of a Right Certificate in accordance with Section 26.

     13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER. (a) In the event that:

     (i) at any time after a Person has become an Acquiring
Person, the Company consolidates with, or merges with or into, any
other Person and the Company is not the continuing or surviving
corporation of such consolidation or merger; or

     (ii) at any time after a Person has become an Acquiring
Person, any Person consolidates with the Company, or merges with or

 

 

into the Company, and the Company is the continuing or surviving
corporation of such merger or consolidation and, in connection with
such merger or consolidation, all or part of the Common Shares is
changed into or exchanged for stock or other securities of any other
Person or cash or any other property; or

     (iii) at any time after a Person has become an Acquiring
Person, the Company, directly or indirectly, sells or otherwise
transfers (or one or more of its Subsidiaries sells or otherwise
transfers), in one or more transactions, assets or earning power
(including without limitation securities creating any obligation on the
part of the Company and/or any of its Subsidiaries) representing in the
aggregate more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any Person or Persons other
than the Company or one or more of its wholly owned Subsidiaries;

then, and in each such case, proper provision will be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of such Flip-over Event (A) each holder of a Right
thereafter has the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the Share Acquisition Date, such number of duly authorized,
validly issued, fully paid, nonassessable and freely tradeable Common Shares of
the Issuer, free and clear of any liens, encumbrances and other adverse claims
and not subject to any rights of call or first refusal, as equals the result
obtained by (x) multiplying the then-current Purchase Price by the number of one
one-hundredths of a Preferred Share for which a Right is exercisable immediately
prior to the Share Acquisition Date and dividing that product by (y) 50% of the
current per share market price of the Common Shares of the Issuer (determined
pursuant to Section 11(d)), on the date of the occurrence of such Flip-over
Event; (B) the Issuer will thereafter be liable for, and will assume, by virtue
of the occurrence of such Flip-over Event, all the obligations and duties of the
Company pursuant to this Agreement; (C) the term “Company” will thereafter be
deemed to refer to the Issuer; and (D) the Issuer will take such steps
(including without limitation the reservation of a sufficient number of its
Common Shares to permit the exercise of all outstanding Rights) in connection
with such consummation as may be necessary to assure that the provisions hereof are
thereafter applicable, as nearly as reasonably may be possible, in relation to
its Common Shares thereafter deliverable upon the exercise of the Rights.

     (b) For purposes of this Section 13, “Issuer” means (i) in the case of
any Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person
that is the continuing, surviving, resulting or acquiring Person (including the
Company as the continuing or surviving corporation of a transaction described in
Section 13(a)(ii) above), and (ii) in the case of any Flip-over Event described
in Section 13(a)(iii) above, the Person that is the party receiving the greatest
portion of the assets or earning power (including without limitation securities
creating any obligation on the part of the Company and/or any of its
Subsidiaries) transferred pursuant to such transaction or transactions;
PROVIDED, HOWEVER, that, in any such case, (A) if (1) no class of equity
security of such Person is, at the time of such merger, consolidation or
transaction and has been continuously over the preceding 12-month period,
registered pursuant to Section 12 of the Exchange Act, and (2) such Person is a
Subsidiary, directly or indirectly, of another Person, a class of equity
security of which is and has been so registered, the term “Issuer” means such
other Person; and (B) in case such Person is a Subsidiary, directly or

 

 

indirectly, of more than one Person, a class of equity security of two or more
of which are and have been so registered, the term “Issuer” means whichever of
such Persons is the issuer of the equity security having the greatest aggregate
market value. Notwithstanding the foregoing, if the Issuer in any of the
Flip-over Events listed above is not a corporation or other legal entity having
outstanding equity securities, then, and in each such case, (x) if the Issuer is
directly or indirectly wholly owned by a corporation or other legal entity
having outstanding equity securities, then all references to Common Shares of
the Issuer will be deemed to be references to the Common Shares of the
corporation or other legal entity having outstanding equity securities which
ultimately controls the Issuer, and (y) if there is no such corporation or other
legal entity having outstanding equity securities, (I) proper provision will be
made so that the Issuer creates or otherwise makes available for purposes of the
exercise of the Rights in accordance with the terms of this Agreement, a kind or
kinds of security or securities having a fair market value at least equal to the
economic value of the Common Shares which each holder of a Right would have been
entitled to receive if the Issuer had been a corporation or other legal entity
having outstanding equity securities; and (II) all other provisions of this
Agreement will apply to the issuer of such securities as if such securities were
Common Shares.

     (c) The Company will not consummate any Flip-over Event if, (i) at the
time of or immediately after such Flip-over Event, there are or would be any
rights, warrants, instruments or securities outstanding or any agreements or
arrangements in effect which would eliminate or substantially diminish the
benefits intended to be afforded by the Rights, (ii) prior to, simultaneously
with or immediately after such Flip-over Event, the shareholders of the Person
who constitutes, or would constitute, the Issuer for purposes of Section 13(a)
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates, or (iii) the form or nature of the
organization of the Issuer would preclude or limit the exercisability of the
Rights. In addition, the Company will not consummate any Flip-over Event unless
the Issuer has a sufficient number of authorized Common Shares (or other
securities as contemplated in Section 13(b) above) which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior to such consummation the Company and the
Issuer have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in subsections (a) and (b) of this
Section 13 and further providing that as promptly as practicable after the
consummation of any Flip-over Event, the Issuer will:

     (A) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities issuable
upon exercise of the Rights on an appropriate form, and use its best
efforts to cause such registration statement to (1) become effective as
soon as practicable after such filing and (2) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date;

     (B) take all 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; and

     (C) deliver to holders of the Rights historical financial
statements for the Issuer and each of its Affiliates which comply in
all respects with the requirements for registration on Form 10 under
the Exchange Act.

     (d) The provisions of this Section 13 will similarly apply to

 

 

successive mergers or consolidations or sales or other transfers. In the event
that a Flip-over Event occurs at any time after the occurrence of a Flip-in
Event, except for Rights that have become void pursuant to Section 11(a)(ii),
Rights that shall not have been previously exercised will cease to be
exercisable in the manner provided in Section 11(a)(ii) and will thereafter be
exercisable in the manner provided in Section 13(a).

     14. FRACTIONAL RIGHTS AND FRACTIONAL SECURITIES. (a) The Company will
not be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, the Company
will pay as promptly as practicable to the registered holders of the Right
Certificates with regard to which such fractional Rights otherwise would be
issuable, an amount in cash equal to the same fraction of the current market
value of one Right. For the purposes of this Section 14(a), the current market
value of one Right is the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights otherwise would
have been issuable. The closing price for any day is the last sale price,
regular way, or, in case no such sale takes place on such day, the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by Nasdaq or such other system then in use,
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Directors of the
Company. If the Rights are not publicly held or are not so listed or traded, or
are not the subject of available bid and asked quotes, the current market value
of one Right will mean the fair value thereof as determined in good faith by the
Directors of the Company, whose determination will be described in a statement
filed with the Rights Agent.

     (b) The Company will not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share
may, at the election of the Company, be evidenced by depositary receipts
pursuant to an appropriate agreement between the Company and a depositary
selected by it, provided that such agreement provides that the holders of such
depositary receipts have all the rights, privileges and preferences to which
they are entitled as beneficial owners of the Preferred Shares represented by
such depositary receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Company may
pay to any Person to whom or which such fractional Preferred Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For purposes of this Section 14(b),
the current market value of one Preferred Share is the closing price of the
Preferred Shares (as determined in the same manner as set forth for Common
Shares in the second sentence of Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise; PROVIDED, HOWEVER, that if the
closing price of the Preferred Shares cannot be so determined, the closing price
of the Preferred Shares for such Trading Day will be conclusively deemed to be

 

 

an amount equal to the closing price of the Common Shares (determined pursuant
to the second sentence of Section 11(d)(i)) for such Trading Day multiplied by
one hundred (as such number may be appropriately adjusted to reflect events such
as stock splits, stock dividends, recapitalizations or similar transactions
relating to the Common Shares occurring after the date of this Agreement);
PROVIDED FURTHER, HOWEVER, that if neither the Common Shares nor the Preferred
Shares are publicly held or listed or admitted to trading on any national
securities exchange, or the subject of available bid and asked quotes, the
current market value of one Preferred Share will mean the fair value thereof as
determined in good faith by the Directors of the Company, whose determination
will be described in a statement filed with the Rights Agent.

     (c) Following the occurrence of a Triggering Event, the Company will
not be required to issue fractions of Common Shares or other securities issuable
upon exercise or exchange of the Rights or to distribute certificates which
evidence any such fractional securities. In lieu of issuing any such fractional
securities, the Company may pay to any Person to whom or which such fractional
securities would otherwise be issuable an amount in cash equal to the same
fraction of the current market value of one such security. For purposes of this
Section 14(c), the current market value of one Common Share or other security
issuable upon the exercise or exchange of Rights is the closing price thereof
(as determined in the same manner as set forth for Common Shares in the second
sentence of Section 11(d)(i)) for the Trading Day immediately prior to the date
of such exercise or exchange; PROVIDED, HOWEVER, that if neither the Common
Shares nor any such other securities are publicly held or listed or admitted to
trading on any national securities exchange, or the subject of available bid and
asked quotes, the current market value of one Common Share or such other
security will mean the fair value thereof as determined in good faith by the
Directors of the Company, whose determination will mean the fair value thereof
as will be described in a statement filed with the Rights Agent.

     15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the holder of any Common Shares), 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 Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to this Agreement.

     16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by accepting
the same consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:

     (a) Prior to the Distribution Date, the Rights are
transferable only in connection with the transfer of the Common Shares;

     (b) After the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if

 

 

surrendered at the principal office of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of
transfer;

     (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 Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the
Right Certificate or the associated Common Share certificate made by
anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent will be
affected by any notice to the contrary;

     (d) Such holder expressly waives any right to receive any
fractional Rights and any fractional securities upon exercise or
exchange of a Right, except as otherwise provided in Section 14.

     (e) Notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent will have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by
any governmental authority, prohibiting or otherwise restraining
performance of such obligation; PROVIDED, HOWEVER, that the Company
will use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.

     17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder, as
such, of any Right Certificate will be entitled to vote, receive dividends, or
be deemed for any purpose the holder of Preferred Shares or any other securities of the Company
which may at any time be issuable upon the exercise of the Rights represented thereby, nor will
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
shareholder of the Company or any right to vote for the election of Directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 25), 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 of this Agreement or exchanged pursuant to the
provisions of Section 24.

     18. CONCERNING THE RIGHTS AGENT. (a) The Company will 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 Agreement and the exercise and performance of its duties
hereunder. The Company will also indemnify the Rights Agent for, and hold it
harmless against, any loss, liability, suit, action, proceeding 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 Agreement, including
the costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly.

 

 

     (b) The Rights Agent will be protected and will incur no liability for
or in respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Right Certificate or
certificate evidencing Preferred Shares or Common Shares or 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.

     19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent is a party, or any corporation succeeding to the corporate trust business
of the Rights Agent or any successor Rights Agent, will be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21. If at the time such successor Rights Agent
succeeds to the agency created by this 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 if at 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 will have the full force provided in the Right Certificates
and in this Agreement.

     (b) If at any time the name of the Rights Agent changes and at such
time any of the Right Certificates have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and if at that time any of the Right
Certificates have not been countersigned, the Rights Agent may countersign such
Right Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates will have the full force provided in the
Right Certificates and in this Agreement.

     20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Right Certificates, by their
acceptance thereof, will 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 will
be full and complete authorization and protection to the Rights Agent
as to any action taken or omitted by it in good faith and in accordance
with such opinion.

     (b) Whenever in the performance of its duties under this
Agreement the Rights Agent deems it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by any one of the Chairman, the President, any Vice President,
the Secretary or the Treasurer of the Company and delivered to the

 

 

Rights Agent, and such certificate will be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.

     (c) The Rights Agent will be liable hereunder only for its own
negligence, bad faith or willful misconduct.

     (d) The Rights Agent will not be liable for or by reason of
any of the statements of fact or recitals contained in this 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 will be deemed to have been made by the Company only.

     (e) The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution and delivery hereof by the Rights
Agent) or in respect of the validity or execution of any Right
Certificate (except its countersignature thereof); nor will it be
responsible for any breach by the Company of any covenant contained in
this Agreement or in any Right Certificate; nor will it be responsible
for any adjustment required under the provisions of Sections 11 or 13
(including any adjustment which results in Rights becoming void) 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 actual notice of any such adjustment); nor
will it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of stock
or other securities to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares
of stock or other securities will, when issued, be duly authorized,
validly issued, fully paid and nonassessable.

     (f) The Company will perform, execute, acknowledge and deliver
or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.

     (g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from any one of the Chairman, the President, any Vice
President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its
duties, and it will not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any
such officer.

     (h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein
will preclude the Rights Agent from acting in any other capacity for
the Company or for any other Person.

     (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 will not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or 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. The Rights Agent will not be under any
duty or responsibility to ensure compliance with any applicable federal
or state securities laws in connection with the issuance, transfer or
exchange of Right Certificates.

     (j) If, with respect to any Right Certificate surrendered to
the Rights Agent for exercise, transfer, split up, combination or
exchange, either (i) the certificate attached to the form of assignment
or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 or 2
thereof, or (ii) any other actual or suspected irregularity exists, the
Rights Agent will not take any further action with respect to such
requested exercise, transfer, split up, combination or exchange without
first consulting with the Company, and will thereafter take further
action with respect thereto only in accordance with the Company’s
written instructions.

     21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
calendar days’ notice in writing mailed to the Company and to each transfer
agent of the Preferred Shares or the Common Shares by registered or certified
mail, and to the holders of the Right Certificates by first class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30
calendar 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 Preferred Shares and the Common Shares
by registered or certified mail, and to the holders of the Right
Certificates by first class mail. If the Rights Agent resigns or is removed or
otherwise becomes incapable of acting, the Company will appoint a successor to
the Rights Agent. If the Company fails to make such appointment within a period
of 30 calendar days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who will,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder 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, will be a
corporation or other legal entity organized and doing business under the laws of
the United States or of the State of New York (or of any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of New York), in good standing, having a
principal office in the State of New York, which is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million. After appointment, the successor Rights Agent will 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 will 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 will file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Preferred Shares or the Common Shares, and mail a notice thereof in writing
to the registered holders of the Right Certificates. Failure to give any notice

 

 

provided for in this Section 21, however, or any defect therein, will 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.

     22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Directors to reflect any adjustment or change in the
Purchase Price per share and the number or kind of securities issuable upon
exercise of the Rights made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale by the Company of Common
Shares following the Distribution Date and prior to the Expiration Date, the
Company (a) will, with respect to Common Shares so issued or sold pursuant to
the exercise, exchange or conversion of securities (other than Rights) issued
prior to the Distribution Date which are exercisable or exchangeable for, or
convertible into Common Shares, and (b) may, in any other case, if deemed
necessary, appropriate or desirable by the Directors of the Company, issue Right
Certificates representing an equivalent number of Rights as would have been
issued in respect of such Common Shares if they had been issued or sold prior to
the Distribution Date, as appropriately adjusted as provided herein as if they
had been so issued or sold; PROVIDED, HOWEVER, that (i) no such Right
Certificate will be issued if, and to the extent that, in its good faith
judgment the Directors of the Company determine that the issuance of such Right
Certificate could have a material adverse tax consequence to the Company or to
the Person to whom or which such Right Certificate otherwise would be issued and
(ii) no such Right Certificate will be issued if, and to the extent that,
appropriate adjustment otherwise has been made in lieu of the issuance thereof.

     23. REDEMPTION. (a) Prior to the Expiration Date, the Directors of the
Company may, at their option, redeem all but not less than all of the
then-outstanding Rights at the Redemption Price at any time prior to the Close
of Business on the later of (i) the Distribution Date and (ii) Share Acquisition
Date. Any such redemption will be effective immediately upon the action of the
Directors of the Company ordering the same, unless such action of the Directors
of the Company expressly provides that such redemption will be effective at a
subsequent time or upon the occurrence or nonoccurrence of one or more specified
events (in which case such redemption will be effective in accordance with the
provisions of such action of the Directors of the Company).

     (b) Immediately upon the effectiveness of the redemption of the Rights
as provided in Section 23(a), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights will be to receive the Redemption Price,
without interest thereon. Promptly after the effectiveness of the redemption of
the Rights as provided in Section 23(a), the Company will publicly announce such
redemption and, within 10 calendar days thereafter, will 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 Company; PROVIDED, HOWEVER, that the failure to give, or any defect
in, any such notice will not affect the validity of the redemption of the
Rights. Any notice that is mailed in the manner herein provided will be deemed
given, whether or not the holder receives the notice. The notice of redemption
mailed to the holders of Rights will state the method by which the payment of
the Redemption Price will be made. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based upon the current per share market
price of the Common Shares (determined pursuant to Section 11(d)) at the time of
redemption), or any other form of consideration deemed appropriate by the
Directors of the Company (based upon the fair market value of such other
consideration, determined by the Directors of the Company in good faith) or any

 

 

combination thereof. The Company may, at its option, combine the payment of the
Redemption Price with any other payment being made concurrently to holders of
Common Shares and, to the extent that any such other payment is discretionary,
may reduce the amount thereof on account of the concurrent payment of the
Redemption Price. If legal or contractual restrictions prevent the Company from
paying the Redemption Price (in the form of consideration deemed appropriate by
the Directors) at the time of redemption, the Company will pay the Redemption
Price, without interest, promptly after such time as the Company ceases to be so
prevented from paying the Redemption Price.

     24. EXCHANGE. (a) The Directors of the Company may, at their option, at
any time after the later of the Share Acquisition Date and the Distribution
Date, exchange all or part of the then-outstanding and exercisable Rights (which
will not include Rights that have become void pursuant to the provisions of
Section 11(a)(ii)) for Common Shares at an exchange ratio of one Common Share
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the Record Date (such exchange ratio being
hereinafter referred to as the “EXCHANGE RATIO”). Any such exchange will be
effective immediately upon the action of the Directors of the Company ordering
the same, unless such action of the Directors of the Company expressly provides
that such exchange will be effective at a subsequent time or upon the occurrence
or nonoccurrence of one or more specified events (in which case such exchange
will be effective in accordance with the provisions of such action of the
Directors of the Company). Notwithstanding the foregoing, the Directors of the
Company will not be empowered to effect such exchange at any time after any
Person (other than the Company or any Related Person), who or which, together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of the then-outstanding
Common Shares.

     (b) Immediately upon the effectiveness of the exchange of any Rights as
provided in Section 24(a), and without any further action and without any
notice, the right to exercise such Rights will terminate and the only right with
respect to such Rights thereafter of the holder of such Rights will be to
receive that number of Common Shares equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. Promptly after the effectiveness
of the exchange of any Rights as provided in Section 24(a), the Company will
publicly announce such exchange and, within 10 calendar days thereafter, will
give notice of such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent; PROVIDED,
HOWEVER, that the failure to give, or any defect in, such notice will not affect
the validity of such exchange. Any notice that is mailed in the manner herein
provided will be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
will be effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 11(a)(ii)) held by each
holder of Rights.

     (c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute for any Common Share exchangeable for a Right (i)
equivalent common shares (as such term is used in Section 11(a)(iii)), (ii)
cash, (iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value, as
determined in good faith by the Directors of the Company (whose determination
will be described in a statement filed with the Rights Agent), equal to the
current market value of one Common Share (determined pursuant to Section 11(d))
on the Trading Day immediately preceding the date of the effectiveness of the
exchange pursuant to this Section 24.

 

 

     25. NOTICE OF CERTAIN EVENTS. (a) If, after the Distribution Date, the
Company proposes (i) to pay any dividend payable in stock of any class to the
holders of Preferred Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular periodic cash dividend), (ii) to offer to
the holders of Preferred Shares rights, options or warrants to subscribe for or
to purchase any additional Preferred Shares or shares of stock of any class or
any other securities, rights or options, (iii) to effect any reclassification of
its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) representing more than 50% of the assets and earning power of the
Company and its Subsidiaries, taken as a whole, to any other Person or Persons
other than the Company or one or more of its wholly owned Subsidiaries, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or reclassification of the Common Shares then,
in each such case, the Company will give to each holder of a Right Certificate,
to the extent feasible and in accordance with Section 26, a notice of such
proposed action, which specifies the record date for the purposes of such stock
dividend, distribution or offering of rights, options or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or
winding up is to take place and the date of participation therein by the holders of the Common
Shares and/or Preferred Shares, if any such date is to be fixed, and such notice will be so given,
in the case of any action covered by clause (i) or (ii) above, at least 10 calendar days prior to
the record date for determining holders of
the Preferred Shares for purposes of such action, and, in the case of any such
other action, at least 10 calendar days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, whichever is the earlier.

     (b) In case any Triggering Event occurs, then, in any such case, the
Company will as soon as practicable thereafter give to the Rights Agent and each
holder of a Right Certificate, in accordance with Section 26, a notice of the
occurrence of such event, which specifies the event and the consequences of the
event to holders of Rights.

     26. NOTICES. (a) Notices or demands authorized by this Agreement to be
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company will 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:

Brush Engineered Materials Inc.

17876 St. Clair Avenue

Cleveland, Ohio 44110

Attention: Secretary

     (b) Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent will 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:

 

 

National City Bank, N.A.

Corporate Trust Administration

629 Euclid Avenue, Suite 635

Cleveland, Ohio 44114

Attention: Corporate Trust Administration

     (c) Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate (or,
if prior the Distribution Date, to the holder of any certificate evidencing
Common Shares) will be sufficiently given or made if sent by first class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.

     27. SUPPLEMENTS AND AMENDMENTS. Prior to the time at which the Rights
cease to be redeemable pursuant to Section 23, and subject to the last sentence
of this Section 27, the Company may in its sole and absolute discretion, and the
Rights Agent will if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights
or Common Shares. From and after the time at which the Rights cease to be
redeemable pursuant to Section 23, and subject to the last sentence of this
Section 27, the Company may, and the Rights Agent will if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to supplement or amend the provisions hereunder
in any manner which the Company may deem desirable; provided that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), and no such supplement or amendment shall cause the Rights
again to become redeemable or cause this Agreement again to become
supplementable or amendable otherwise than in accordance with the provisions of
this sentence. Without limiting the generality or effect of the foregoing, this
Agreement may be supplemented or amended to provide for such voting powers for
the Rights and such procedures for the exercise thereof, if any, as the
Directors of the Company may determine to be appropriate. Upon the delivery of a
certificate from an officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent will execute such supplement or amendment; PROVIDED, HOWEVER, that
the failure or refusal of the Rights Agent to execute such supplement or
amendment will not affect the validity of any supplement or amendment adopted by
the Directors of the Company, any of which will be effective in accordance with
the terms thereof. Notwithstanding anything in this Agreement to the contrary,
no supplement or amendment may be made which decreases the stated Redemption
Price to an amount less than $.01 per Right.

     28. SUCCESSORS; CERTAIN COVENANTS. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent will be
binding on and inure to the benefit of their respective successors and assigns
hereunder.

     29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement will be
construed to give to any Person other than the Company, the Rights Agent, and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement. This Agreement will be for the sole and exclusive benefit of the
Company, the Rights Agent, and the registered holders of the Right Certificates
(or prior to the Distribution Date, the Common Shares).

 

 

     30. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder will be deemed to be a contract made under the
internal substantive laws of the State of Ohio and for all purposes will be
governed by and construed in accordance with the internal substantive laws of
such State applicable to contracts to be made and performed entirely within such
State.

     31. SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect and will in no way be affected, impaired or invalidated; PROVIDED,
HOWEVER, that nothing contained in this Section 31 will affect the ability of
the Company under the provisions of Section 27 to supplement or amend this
Agreement to replace such invalid, void or unenforceable term, provision,
covenant or restriction with a legal, valid and enforceable term, provision,
covenant or restriction.

     32. DESCRIPTIVE HEADINGS, ETC. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions hereof.
Unless otherwise expressly provided, references herein to Articles, Sections and
Exhibits are to Articles, Sections and Exhibits of or to this Agreement.

     33. DETERMINATIONS AND ACTIONS BY THE DIRECTORS. For all purposes of
this Agreement, any calculation of the number of Common Shares outstanding at
any particular time, including for purposes of determining the particular
percentage of such outstanding Common Shares of which any Person is the
Beneficial Owner, will be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The
Directors of the Company will have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including
without limitation the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including any determination as to whether
particular Rights shall have become void). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
any omission with respect to any of the foregoing) which are done or made by the
Directors of the Company in good faith will (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties and (y) not subject the Directors of the Company to any liability to any
Person, including without limitation the Rights Agent and the holders of the
Rights.

     34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the
same instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

 

 

	 	 	 	 	 
	 	BRUSH ENGINEERED MATERIALS INC.

 	 
	 	By:  	/s/ Michael C. Hasychak
 	 
	 	 	Name:  	Michael C. Hasychak  	 
	 	 	Title:  	Secretary 	 
	 
	 	NATIONAL CITY BANK, N.A.

 	 
	 	By:  	/s/ Laura S. Kress
 	 
	 	 	Name:  	Laura S. Kress 	 
	 	 	Title:  	Vice President 	 
	 

 

 

EXHIBIT A

FORM OF

CERTIFICATE OF ADOPTION OF AMENDMENT

TO AMENDED ARTICLES OF INCORPORATION

of

BRUSH ENGINEERED MATERIALS INC.

(Pursuant to Section 1701.70(B)(1) of the Ohio Revised Code)

     Brush Engineered Materials Inc., a corporation organized and existing under the laws of the
State of Ohio (the “Company”), DOES HEREBY CERTIFY:

     That, pursuant to authority vested in the Directors of the Company by its Amended and Restated
Articles of Incorporation (the “Articles”), and pursuant to the provisions of Section 1701.70(B)(1)
of the Ohio Revised Code, the Directors of the Company have adopted the following resolution
providing for the issuance of a series of Preferred Stock:

     RESOLVED, that pursuant to the authority expressly granted to and vested in the Board of
Directors of the Company (the “Directors”) by the Amended and Restated Articles of Incorporation of
the Company, Article III.B. of the Articles be, and it hereby is, amended by adding thereafter new
Sections I-X as set forth below.

I. Designation and Amount

     The shares of such series will be designated as Series A Junior
Participating Preferred Stock (the “Series A Preferred”) and the number of shares constituting the
Series A Preferred is 600,000. Such number of shares may be increased or decreased by resolution of
the Directors; provided, however, that no decrease will reduce the number of shares of Series A
Preferred to a number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the Company convertible into Series A Preferred.

II. Dividends and Distributions

     (a) Subject to the rights of the holders of any shares of any series of Preferred Stock
ranking prior to the Series A Preferred with respect to dividends, the holders of shares of Series
A Preferred, in preference to the holders of Common Stock, no par value (the “Common Stock”), of
the Company, and of any other junior stock, will be entitled to receive, when, as and if declared
by the Directors out of funds legally available for the purpose, dividends payable in cash (except
as otherwise provided below) on such dates as are from time to time established for the payment of
dividends on the Common Stock (each such date being referred to herein as a “Dividend Payment
Date”), commencing on the first Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred (the “First Dividend Payment Date”), in an amount per
share (rounded to the nearest cent) equal to the greater of (i) $1.00 or (ii) subject to the
provision for adjustment hereinafter set forth, one hundred times the aggregate per share amount of
all cash dividends, and one hundred times the aggregate per share amount (payable in kind) of all
non-cash dividends, other than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Dividend Payment Date or, with respect to the First Dividend
Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred.
In the event that the Company at any time (i)

 

 

declares a dividend on the outstanding shares of Common Stock payable in shares of Common Stock,
(ii) subdivides the outstanding shares of Common Stock, (iii) combines the outstanding shares of
Common Stock into a smaller number of shares, or (iv) issues any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such case and regardless of whether any shares of Series A Preferred
are then issued or outstanding, the amount to which holders of shares of Series A Preferred would
otherwise be entitled immediately prior to such event under clause (ii) of the preceding sentence
will be adjusted by multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such event.

     (b) The Company will declare a dividend on the Series A Preferred as provided in the
immediately preceding paragraph immediately after it declares a dividend on the Common Stock (other
than a dividend payable in shares of Common Stock). Each such dividend on the Series A Preferred
will be payable immediately prior to the time at which the related dividend on the Common Stock is
payable.

     (c) Dividends will accrue on outstanding shares of Series A Preferred from the Dividend
Payment Date next preceding the date of issue of such shares, unless (i) the date of issue of such
shares is prior to the record date for the First Dividend Payment Date, in which case dividends on
such shares will accrue from the date of the first issuance of a share of Series A Preferred or
(ii) the date of issue is a Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred entitled to receive a dividend and before
such Dividend Payment Date, in either of which events such dividends will accrue from such Dividend
Payment Date. Accrued but unpaid dividends will cumulate from the applicable Dividend Payment Date
but will not bear interest. Dividends paid on the shares of Series A Preferred in an amount less
than the total amount of such dividends at the time accrued and payable on such shares will be
allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The
Directors may fix a record date for the
determination of holders of shares of Series A Preferred entitled to receive payment of a dividend
or distribution declared thereon, which record date will be not more than 60 calendar days prior to
the date fixed for the payment thereof.

III. Voting Rights

     The holders of shares of Series A Preferred will have the following voting rights:

	 	(d)	 	Subject to the provision for adjustment hereinafter
set forth, each share of Series A Preferred will
entitle the holder thereof to one hundred votes on
all matters submitted to a vote of the stockholders
of the Company. In the event the Company at any time (i) declares a dividend on the outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivides the
outstanding shares of Common Stock, (iii) combines the outstanding
 shares of Common Stock into a smaller number of shares, or (iv) issues
any shares of its capital stock in a reclassification of the outstanding
 shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, in each such case and
regardless of whether any shares of Series A Preferred are then

 

 

	 	 	 	issued or outstanding, the number of votes per share to which holders of
 shares of Series A Preferred would otherwise be entitled immediately prior to
such event will be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
 shares of Common Stock that were outstanding immediately prior to such event.
	 
	 	(e)	 	Except as otherwise provided herein, in any other
Preferred Stock Designation creating a series of
Preferred Stock or any similar stock, or by law, the
holders of shares of Series A Preferred and the
holders of shares of Common Stock and any other
capital stock of the Company having general voting
rights will vote together as one class on all
matters submitted to a vote of stockholders of the
Company.
	 
	 	(f)	 	Except as set forth in the Amended and Restated
Articles of Incorporation or herein, or as otherwise
provided by law, holders of shares of Series A
Preferred will have no voting rights.

IV. Certain Restrictions

	 	(g)	 	Whenever dividends or other dividends or
distributions payable on the Series A Preferred are
in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred
outstanding have been paid in full, the Company will
not:

	 	(i)	 	Declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior
(either as to dividends or upon liquidation,
dissolution or winding up) to the shares of Series A
Preferred;
	 
	 	(ii)	 	Declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the shares of Series A Preferred, except dividends paid
ratably on the shares of Series A Preferred and all such
parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such
 shares are then entitled;
	 
	 	(iii)	 	Redeem, purchase or otherwise acquire for consideration
 shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the shares of Series A
Preferred; provided, however, that the Company may at any time
redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Company
ranking junior (either as to dividends or upon

 

 

	 	 	 	dissolution, liquidation or winding up) to the shares of
Series A Preferred; or
	 
	 	(iv)	 	Redeem, purchase or otherwise acquire for consideration
any shares of Series A Preferred, or any shares of stock ranking on
a parity with the shares of Series A Preferred, except in
accordance with a purchase offer made in writing or by publication
(as determined by
the Directors) to all holders of such shares upon such terms as the
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and
classes, may determine in good faith will result in fair and
equitable treatment among the respective series or classes.

     (h) The Company will not permit any majority-owned subsidiary
of the Company to purchase or otherwise acquire for consideration any
 shares of stock of the Company unless the Company could, under
paragraph (a) of this Article IV, purchase or otherwise acquire such
 shares at such time and in such manner.

V. Reacquired Shares

     Any shares of Series A Preferred purchased or otherwise acquired by the Company in any manner
whatsoever will be retired and canceled promptly after the acquisition thereof. All such shares
will upon their cancellation become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on
issuance set forth herein, in the Amended and Restated Articles of Incorporation of the Company, or
in any other Preferred Stock Designation creating a series of Preferred Stock or any similar stock
or as otherwise required by law.

VI. Liquidation, Dissolution or Winding Up

     Upon any liquidation, dissolution or winding up of the Company, no distribution will be made
(a) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the shares of Series A Preferred unless, prior thereto, the holders
of shares of Series A Preferred have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment; provided, however, that the holders of shares of Series A Preferred will be
entitled to receive an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to one hundred times the aggregate amount to be distributed per share
to holders of shares of Common Stock or (b) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the shares of Series A
Preferred, except distributions made ratably on the shares of Series A
Preferred and all such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In the event the Company
at any time (i) declares a dividend on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivides the outstanding shares of Common Stock, (iii) combines the
outstanding shares of Common Stock into a smaller number of shares, or (iv) issues any shares of
its capital stock in a reclassification of the outstanding shares of Common Stock (including any
such reclassification in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, in each such case and regardless of whether any shares
of Series A Preferred are then

 

 

issued or outstanding, the aggregate amount to which each holder of shares of Series A Preferred
would otherwise be entitled immediately prior to such event under the proviso in clause (a) of the
preceding sentence will be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

VII. Consolidation, Merger, Etc.

     In the event that the Company enters into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then, in each such case, each share of Series A
Preferred will at the same time be similarly exchanged for or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to one hundred times the
aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each share of Common Stock
is changed or exchanged. In the event the Company at any time (a) declares a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (b) subdivides the
outstanding shares of Common Stock, (c) combines the outstanding shares of Common Stock in a
smaller number of shares, or (d) issues any shares of its capital stock in a reclassification of
the outstanding shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving corporation), then, in
each such case and regardless of
whether any shares of Series A Preferred are then issued or outstanding, the amount set forth in
the preceding sentence with respect to the exchange or change of shares of Series A Preferred will
be adjusted by multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such event.

VIII. Redemption

     The shares of Series A Preferred are not redeemable.

IX. Rank

     The Series A Preferred rank, with respect to the payment of dividends and the distribution of
assets, junior to all other series of the Company’s Preferred Stock.

X. Amendment

     Notwithstanding anything contained in the Amended and Restated Articles of Incorporation of
the Company to the contrary and in addition to any other vote required by applicable law, the
Amended and Restated Articles of Incorporation of the Company may not be amended in any manner that
would materially alter or change the powers, preferences or special rights of the Series A
Preferred so as to affect them adversely without the affirmative vote of the holders of at least
80% of the outstanding shares of Series A Preferred, voting together as a single series.

     IN WITNESS WHEREOF, this Articles of Designation is executed on behalf of the Company by its
Secretary and attested by its ___this ___day of ___2000.

 

 

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

	 	 	 
	Attest:
	 	 
	 
	 	 
	 	 	 
	Name:

	 	 
	Title:
	 	 

 

 

EXHIBIT B

FORM OF RIGHT CERTIFICATE

			
	 	 	 
	Certificate No. R-
	 	___Rights

     NOT EXERCISABLE AFTER [INSERT FINAL EXPIRATION DATE] (SUBJECT TO POSSIBLE EXTENSION AT THE
OPTION OF THE COMPANY) OR EARLIER IF REDEEMED, EXCHANGED OR AMENDED. THE RIGHTS ARE SUBJECT TO
REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS THAT ARE OR
WERE BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING
PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) OR A TRANSFEREE THEREOF MAY BECOME NULL
AND VOID.

Right Certificate

BRUSH ENGINEERED MATERIALS INC.

     This certifies that Brush Engineered Materials Inc., 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 May 10, 2000 (the
“RIGHTS AGREEMENT”), between Brush Engineered Materials Inc., an Ohio corporation (the “COMPANY”),
and National City Bank, N.A. (the “RIGHTS AGENT”), to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M.
(Eastern time) on the Expiration Date (as such term is defined in the Rights Agreement) at the
principal office or offices of the Rights Agent designated for such purpose, one one-hundredth of a
fully paid nonassessable share of Series A Junior Participating Preferred tock, without par value
(the “PREFERRED SHARES”), of the Company, at a purchase rice of $110.00 per one one-hundredth of a
Preferred Share (the “PURCHASE RICE”), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase and related Certificate duly executed. If this Right
Certificate is exercised in part, the holder will be entitled to receive upon surrender hereof
another Right Certificate or Right Certificates for the number of whole Rights not exercised. The
number of Rights evidenced by this Right Certificate (and the number of one one-hundredths of a
Preferred Share which may be purchased upon exercise thereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of the date of the Rights Agreement,
based on the Preferred Shares as constituted at such date.

     As provided in the Rights Agreement, the Purchase Price and/or the number and/or kind of
securities issuable upon the exercise of the Rights evidenced by this Right Certificate are subject
to adjustment upon the occurrence of certain events.

     This Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and
made a part hereof and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of the Right Certificates, which limitations of rights include the
temporary suspension of the exercisability of the Rights under the

 

 

circumstances specified in the Rights Agreement. Copies of the Rights Agreement are on file at the
above- mentioned office of the Rights Agent and can be obtained from the Company without charge
upon written request therefore. Terms
used herein with initial capital letters and not defined herein are used herein with the meanings
ascribed thereto in the Rights Agreement.

     Pursuant to the Rights Agreement, from and after the occurrence of a Flip-in Event, any Rights
that are Beneficially Owned by (i) any Acquiring Person (or any Affiliate or Associate of any
Acquiring Person), (ii) a transferee of any Acquiring Person (or any such Affiliate or Associate)
who becomes a transferee after the occurrence of a Flip-in Event, or (iii) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the Flip-in Event pursuant to either (a) a transfer from an 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 (b) a transfer which the Directors
of the Company have determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding certain provisions of the Rights Agreement, and subsequent
transferees of any of such Persons, will be void without any further action and any holder of such
Rights will thereafter have no rights whatsoever with respect to such Rights under any provision of
the Rights Agreement. From and after the occurrence of a Flip-in Event, no Right Certificate will
be issued that represents Rights that are or have become void pursuant to the provisions of the
Rights Agreement, and any Right Certificate delivered to the Rights Agent that represents Rights
that are or have become void pursuant to the provisions of the Rights Agreement will be canceled.

     This Right Certificate, with or without other Right Certificates, may be transferred, split
up, combined or exchanged for another Right Certificate or Right Certificates entitling the holder
to purchase a like number of one one-hundredths of a Preferred Share (or other securities, as the
case may be) as the Right Certificate or Right Certificates surrendered entitled such holder (or
former holder in the case of a transfer) to purchase, upon presentation and surrender hereof at the
principal office of the Rights Agent designated for such purpose, with the Form of Assignment (if
appropriate) and the related
Certificate duly executed.

     Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate
may be redeemed by the Company at its option at a redemption price of $.01 per Right or may be
exchanged in whole or in part. The Rights Agreement may be supplemented and amended by the Company,
as provided therein.

     The Company is not required to issue fractions of Preferred Shares (other than fractions which
are integral multiples of one one-hundredth of a Preferred Share, which may, at the option of the
Company, be evidenced by depositary receipts) or other securities issuable upon the exercise of any
Right or Rights evidenced hereby. In lieu of issuing such fractional Preferred Shares or other
securities, the Company may make a cash payment, as provided in the Rights Agreement.

     No holder of this Right Certificate, as such, will be entitled to vote or receive dividends or
be deemed for any purpose the holder of the Preferred Shares or of any other securities of the
Company which may at any time be issuable upon the exercise of the Right or Rights represented
hereby, nor will anything contained herein or in the Rights Agreement be construed to confer upon
the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as

 

 

provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate have been exercised in accordance
with the provisions of the Rights Agreement.

     This Right Certificate will not be valid or obligatory for any purpose until it has been
countersigned by the Rights Agent.

     WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.
Dated as of ___, ___.

[SEAL]

	 	 	 	 	 
	ATTEST:	 BRUSH ENGINEERED MATERIALS INC.

 	 
	 	By:  	
 	 
	 	 	Title:  
Name:	 	 
	 

Countersigned:

NATIONAL CITY BANK, N.A.

	 	 	 	 	 
	By:	 	 	 	 
	 

	 	Authorized Signature
	 	 

 

 

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT 

(To be executed by the registered holder if such

holder desires to transfer the Right Certificate)

     FOR VALUE RECEIVED, ______  hereby sells, assigns and transfers unto

 

(Please print name and address of transferee)

this Right Certificate, together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint ___Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of substitution.

Dated: __________, ____

	 	 	 
	 
	 	 
	 
	 	Signature

Signature Guaranteed:

CERTIFICATE

     The undersigned hereby certifies by checking the appropriate boxes that:

     (1) the Rights evidenced by this Right Certificate [ ] are [ ] are not being sold, assigned,
transferred, split up, combined or exchanged by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Person (as such terms are defined in the Rights
Agreement);

     (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.

Dated: __________, ____

	 	 	 
	 
	 	 
	 
	 	Signature

 

 

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to

exercise the Right Certificate)

To Brush Engineered Materials Inc.

     The undersigned hereby irrevocably elects to exercise ___Rights represented by this
Right Certificate to purchase the one one-hundredths of a Preferred Share or other securities
issuable upon the exercise of such Rights and requests that certificates for such securities be
issued in the name of and delivered to:

Please insert social security or other identifying number:

 

 

 

(Please print name and address)

If such number of Rights is not all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights will be registered in
the name of and delivered to:

Please insert social security or other identifying number:

 

 

 

(Please print name and address)

Dated: __________, ____

	 	 	 
	 
	 	 
	 
	 	Signature

Signature Guaranteed:

 

 

CERTIFICATE

     The undersigned hereby certifies by checking the appropriate boxes that:

     (1) the Rights evidenced by this Right Certificate [ ] are [ ] are not being exercised by or
on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such
Person (as such terms are defined pursuant to the Rights Agreement);

     (2) after due inquiry and to the best knowledge of the undersigned, it [ ] did [ ] did not
acquire the Rights evidenced by this Right Certificate from any Person who is, was, or became an
Acquiring Person or an Affiliate or Associate of an Acquiring Person.

Dated: __________, ____

	 	 	 
	 
	 	 
	 
	 	Signature

NOTICE

     SIGNATURES ON THE FOREGOING FORM OF ASSIGNMENT AND FORM OF ELECTION TO PURCHASE AND IN THE
RELATED CERTIFICATES 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.

     SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE
PROGRAM) PURSUANT TO RULE 17AD-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

 

EXHIBIT C

SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK

     The Directors (the “DIRECTORS”) of Brush Engineered Materials Inc. (the “COMPANY”) have
declared a dividend distribution of one right (a “RIGHT”) for each outstanding share of common
stock, no par value (the “COMMON SHARES”), of the Company. The distribution is payable on May 16,
2000 (the “RECORD DATE”) to the shareholders of record as of the close of business on the Record
Date. Each Right entitles the registered holder thereof to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, without par value (the
“PREFERRED SHARES”), of the Company at a price (the “PURCHASE PRICE”) of $110.00 per one
one-hundredth of a Preferred Share, subject to adjustment. The description and terms of the Rights
are set forth in a Rights Agreement, dated as of May 10, 2000 (the “RIGHTS AGREEMENT”), between the
Company and National City Bank, N.A., as Rights Agent (the “RIGHTS AGENT”).

     Under the Rights Agreement, the Rights will be evidenced by the certificates evidencing Common
Shares until the earlier (the “DISTRIBUTION DATE”) of: (i) the close of business on the tenth
calendar day following the first date (the “SHARE ACQUISITION DATE”) of public announcement that a
person or group (other than the Company, a subsidiary or employee benefit or stock ownership plan
of the Company or any of its affiliates or associates), together with its affiliates and
associates, has acquired beneficial ownership of 20% or more of the outstanding Common Shares (any
such person or group being hereinafter called an “ACQUIRING PERSON”) or (ii) the close of business
on the tenth business day (or such later date as may be specified by the Directors)following the
commencement of a tender offer or exchange offer by a person (other than the Company, a subsidiary
or employee benefit or stock ownership plan of the Company or any of its affiliates or
associates), the consummation of which would result in beneficial ownership by such person of 20%
or more of the outstanding Common Shares.

     The Rights Agreement provides that, until the Distribution Date, the Rights may be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier redemption, exchange
or expiration of the Rights), any certificate evidencing Common Shares of the Company issued upon
transfer or new issuance of the Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption, exchange or expiration
of the Rights), the surrender for transfer of any certificates evidencing Common Shares will also
constitute the transfer of the Rights associated with such certificates. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights (“RIGHT CERTIFICATES”)
will be mailed to holders of record of Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the Rights. No Right is
exercisable at any time prior to the Distribution Date. The Rights will expire on the tenth
anniversary of the Record Date (the “FINAL EXPIRATION DATE”) unless earlier redeemed, exchanged or
amended
by the Company as described below. Until a Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including the right to vote or to receive
dividends.

     The Purchase Price payable, and the number of the Preferred Shares or other securities
issuable, upon exercise of the Rights will be subject to adjustment from time to time to prevent
dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification
of, the Preferred Shares, (ii) upon the grant to holders of Preferred Shares of certain rights or
warrants to subscribe for or purchase the Preferred Shares at a price, or

 

 

securities convertible into the Preferred Shares with a conversion price, less than the
then-current market price of the Preferred Shares, or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness, cash (excluding regular periodic cash dividends),
assets, stock (excluding dividends payable in the Preferred Shares) or subscription rights or
warrants (other than those referred to above). The number of outstanding Rights and the number of
one one-hundredths of the Preferred Shares issuable upon exercise of each Right will be subject to
adjustment in the event of a stock dividend on the Common Shares payable in Common Shares or a
subdivision, combination or reclassification of Common Shares occurring, in any such case, prior to
the Distribution Date.

     Rights will be exercisable to purchase Preferred Shares only after the Distribution Date
occurs and prior to the occurrence of a Flip-in Event as described below. A Distribution Date
resulting from the commencement of a tender offer or exchange offer described in clause (ii) of the
second paragraph of this summary could precede the occurrence of a Flip-in Event and thus result in
the Rights being exercisable to purchase Preferred Shares. A Distribution Date
resulting from any occurrence described in clause (i) of the second paragraph of this summary would
necessarily follow the occurrence of a Flip-in Event and thus result in the Rights being
exercisable to purchase Common Shares or other securities as described below.

     Under the Rights Agreement, in the event (a “FLIP-IN EVENT”) that (i)any person or group,
together with its affiliates and associates, becomes an Acquiring Person (ii) any Acquiring Person
or any affiliate or associate thereof merges into or combines with the Company and the Company is
the surviving corporation, (iii) any Acquiring Person or any affiliate or associate thereof effects
certain other transactions with the Company, or (iv) during such time as there is an Acquiring
Person the Company effects certain transactions, in each case as described in the Rights Agreement,
then, in each such case, proper provision will be made so that from and after the latest of the
Share Acquisition Date, the Distribution Date and the date of the occurrence of such Flip-in Event
each holder of a Right, other than Rights that are or were owned beneficially by an Acquiring
Person (which, from and after the date of a Flip-in Event, will be void), will have the right to
receive, upon exercise thereof at the then-current exercise price of the Right, that number of
Common Shares (or, under certain circumstances, an economically equivalent security or securities
of the Company) that at the time of such Flip-in Event have a market value of two times the
exercise price of the Right.

     In the event (a “FLIP-OVER EVENT”) that, at any time after a person has become an Acquiring
Person, (i) the Company merges with or into any person and the Company is not the surviving
corporation, (ii) any person merges with or into the Company and the Company is the surviving
corporation, but all or part of the Common Shares are changed or exchanged for stock or other
securities of any other person or cash or any other property, or (iii) 50% or more of the Company’s
assets or earning power, including securities creating obligations of the Company, are sold, in
each case as described in the Rights Agreement, then, and in each such case, proper provision will
be made so that from and after the latest of the Share Acquisition Date, the Distribution Date and
the date of the occurrence of such Flip-over Event, each holder of a Right, other than Rights which
have become void, will thereafter have the right to receive, upon the exercise thereof at the
then-current exercise price of the Right, that number of shares of common stock (or, under certain
circumstances, an economically equivalent security or securities) of such other person that at the
time of such Flip-over Event have a market value of two times the exercise price of the Right.

     From and after the later of the Share Acquisition Date and the
Distribution Date, Rights (other than any Rights that have become void) will be exercisable as
described above, upon payment of the aggregate exercise price in

 

 

cash. In addition, at any time after the later of the Share Acquisition Date and the Distribution
Date and prior to the acquisition by any person or group of affiliated or associated persons of 50%
or more of the outstanding Common Shares, the Company may exchange the Rights (other than any
rights that have become void), in whole or in part, at an exchange ratio of one Common Share per
Right(subject to adjustment).

     With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment in the Purchase Price of at least 1%. The Company will not be
required to issue fractional Preferred Shares (other than fractions that are integral multiples of
one one-hundredth of a Preferred Share, which may, at the option of the Company, be evidenced by
depositary receipts) or fractional Common Shares or other securities issuable upon the exercise of
Rights. In lieu of issuing such securities, the Company may make a cash payment, as provided in the
Rights Agreement.

     The Company may, at its option, redeem the Rights in whole, but not in part, at a price of
$.01 per Right, subject to adjustment (the “REDEMPTION PRICE”), at any time prior to the close of
business on the later of the Distribution Date and the Share Acquisition Date. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and the only right of the
holders of Rights will be to receive the Redemption Price.

     The Rights Agreement may be amended by the Company without the approval of any holders of
Rights Certificates, including amendments that increase or decrease the Purchase Price, that add
other events requiring adjustment to the Purchase Price payable and the number of the Preferred
Shares or other securities issuable upon the exercise of the Rights or that modify procedures
relating to the redemption of the Rights, except that no amendment may be made that decreases the
stated Redemption Price to an amount less than $.01 per Right.

     The Directors will have the exclusive power and authority to administer the Rights Agreement
and to exercise all rights and powers specifically granted to the Directors or to the Company
therein, or as may be necessary or advisable in the administration of the Rights Agreement,
including without limitation the right and power to interpret the provisions of the Rights
Agreement and to make all determinations deemed necessary or advisable for the administration of
the Rights Agreement (including any determination to redeem or not redeem the Rights or to amend or
not amend the Rights Agreement). All such actions, calculations, interpretations and determinations
(including any omission with respect to any of the foregoing) which are done or made by the
Directors in good faith will be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties and will not subject the Directors to any liability to
any person, including without limitation the Rights Agent and the holders of the Rights.

     A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an exhibit to a Registration Statement on Form 8-A. A copy of the Rights Agreement is available
free of charge from the Company.

     This summary description of the Rights is as of the Record Date, does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by this reference.

 

 

Exhibit 5

[THOMPSON HINE LLP LETTERHEAD]

August 6, 2007

Brush Engineered Materials Inc.

17876 St. Clair Avenue

Cleveland, Ohio 44110

			
	Re:    	 	Brush Engineered Materials Inc. Registration Statement on Form S-8

 — Brush Engineered Materials Inc. Savings and Investment Plan

Ladies and Gentlemen:

     Brush Engineered Materials Inc. (“Brush”) is filing with the Securities and Exchange
Commission a Registration Statement on Form S-8 (the “Registration Statement”) for the
registration, under the Securities Act of 1933, as amended, of 3,000,000 common shares, with no par
value, of Brush (“Common Shares”) to be issued from time to time pursuant to the terms of the Brush
Engineered Materials Inc. Savings and Investment Plan (the “Plan”).

     Item 601 of Regulation S-K and the instructions to Form S-8 require
that an opinion of counsel concerning the legality of the securities to be
registered be filed as an exhibit to a Form S-8 registration statement if the
securities are original issue shares. This opinion is provided in satisfaction of that requirement
as it relates to the Registration Statement.

     In rendering this opinion, we have examined (a) the Amended and
Restated Articles of Incorporation and Amended and Restated Code of Regulations of Brush, (b) the
Plan and (c) such records and documents as we have deemed advisable in order to render this
opinion. As a result of the foregoing, we are of the opinion that:

     (1) Brush is a corporation validly organized and existing and in good standing under the laws
of the State of Ohio.

     (2) When issued pursuant to the terms of the Plan, the Common Shares which are the subject of
the Registration Statement will be legally issued, fully paid and non-assessable.

     We hereby consent to the use and filing of this opinion in connection with the Registration
Statement.

Very truly yours,

/s/ Thompson Hine LLP

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