EXHIBIT 1
KITTY HAWK, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF JANUARY 21, 2004
TABLE OF CONTENTS
SECTION PAGE
Section 1. Certain Definitions ............................................ 1
Section 2. Appointment of Rights Agent .................................... 8
Section 3. Issuance of Rights Certificates ................................ 9
(a) Distribution Date; Rights Certificates ..................... 9
(b) Common Stock Certificates; Summary of Rights ............... 9
(c) Legend ..................................................... 10
Section 4. Form of Rights Certificates .................................... 10
(a) Form; Date ................................................. 10
(b) Acquiring Person Legend .................................... 11
Section 5. Countersignature and Registration .............................. 12
(a) Signatures ................................................. 12
(b) Registration and Transfer .................................. 12
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates ................................................... 12
(a) Procedure .................................................. 12
(b) Issuance of New Rights Certificates ........................ 13
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights .. 13
(a) Exercise ................................................... 13
(b) Purchase Price ............................................. 14
(c) Rights Agent Actions ....................................... 14
(d) Partial Exercise ........................................... 14
(e) Termination of Acquiring Person's Rights ................... 14
(f) Surrender of Rights Certificates; Identity of Beneficial
Owner ...................................................... 15
Section 8. Cancellation and Destruction of Rights Certificates ............ 15
Section 9. Reservation and Availability of Capital Stock .................. 16
(a) Reservation of Capital Stock ............................... 16
(b) Listing .................................................... 16
(c) Registration under the Act ................................. 16
(d) Covenant Regarding Capital Stock ........................... 17
(e) Transfer Taxes and Charges ................................. 17
Section 10. Preferred Stock Record Date ................................... 17
Section 11. Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights .............................................. 17
(a) Certain Adjustments ....................................... 18
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(b) Purchase Price Adjustment -- Capital Stock ................ 21
(c) Purchase Price Adjustment -- Cash, Assets, etc ............ 22
(d) Current Market Price ...................................... 22
(e) Purchase Price Adjustment Threshold ....................... 24
(f) Equivalent Adjustments .................................... 24
(g) Post-Adjustment Rights Issuances .......................... 24
(h) Preferred Stock Anti-Dilution ............................. 24
(i) Adjustment of Number of Rights ............................ 25
(j) Rights Certificates ....................................... 25
(k) Adjustment Below Par Value ................................ 25
(l) Adjustment Effective as of Future Date; Exercise .......... 26
(m) Tax Adjustments ........................................... 26
(n) Restriction on Certain Transactions ....................... 26
(o) Restriction Against Diminishing Benefits of the Rights .... 27
(p) Common Stock Adjustments .................................. 27
Section 12. Certificate of Adjusted Purchase Price or Number of Shares .... 27
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power ................................................. 27
(a) Flip-over Event ........................................... 27
(b) Principal Party ........................................... 29
(c) Supplemental Agreement .................................... 29
(d) Exceptions ................................................ 30
Section 14. Fractional Rights and Fractional Shares ....................... 31
(a) Fractional Rights ......................................... 31
(b) Fractional Shares of Preferred Stock ...................... 31
(c) Fractional Shares of Common Stock ......................... 32
(d) Waiver of Fractional Rights and Shares .................... 32
Section 15. Rights of Action .............................................. 32
Section 16. Agreement of Rights Holders ................................... 33
Section 17. Rights Certificate Holder Not Deemed a Stockholder ............ 33
Section 18. Concerning the Rights Agent ................................... 34
(a) Compensation .............................................. 34
(b) Reliance .................................................. 34
Section 19. Merger or Consolidation or Change of Name of Rights Agent ..... 34
(a) Successor ................................................. 34
(b) Prior Countersignatures ................................... 34
Section 20. Duties of Rights Agent ........................................ 35
(a) Legal Counsel ............................................. 35
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(b) Certification by the Company .............................. 35
(c) Liability for Negligence, etc ............................. 35
(d) Statements of Fact or Recitals ............................ 35
(e) Agreement; Adjustments .................................... 35
(f) Further Assurances ........................................ 36
(g) Instructions .............................................. 36
(h) Dealing in Rights ......................................... 36
(i) Agents; Reasonable Care ................................... 36
(j) Expenses; Repayment Assurances ............................ 36
(k) Exercise of Rights; Consultation with Company ............. 36
Section 21. Change of Rights Agent ........................................ 36
Section 22. Issuance of New Rights Certificates ........................... 37
Section 23. Redemption and Termination .................................... 38
(a) Redemption ................................................ 38
(b) Effect of Redemption; Procedure ........................... 38
Section 24. Exchange ...................................................... 38
(a) Right to Exchange ......................................... 38
(b) Effect of Exchange; Procedure ............................. 39
(c) Common Stock Equivalents .................................. 39
(d) Insufficient Common Stock ................................. 39
(e) Fractional Shares ......................................... 39
Section 25. Notice of Certain Events ...................................... 40
(a) Preferred Stock Transactions, etc ......................... 40
(b) Other Transactions ........................................ 40
Section 26. Notices ....................................................... 41
Section 27. Supplements and Amendments .................................... 41
Section 28. Successors .................................................... 42
Section 29. Determinations and Actions by the Board of Directors, etc ..... 42
Section 30. Periodic Review ............................................... 43
Section 31. Benefits of this Agreement .................................... 43
Section 32. Severability .................................................. 43
Section 33. Governing Law ................................................. 43
Section 34. Counterparts .................................................. 44
Section 35. Descriptive Headings .......................................... 44
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Exhibit 1 Certificate of Designation, Preferences and Rights of Series A
Preferred Stock of Kitty Hawk, Inc.
Exhibit 2 Form of Rights Certificate
Exhibit 3 Letter to Stockholders
Exhibit 4 Press Release
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of January 21, 2004, between KITTY HAWK,
INC., a Delaware corporation (the "COMPANY"), and American Stock Transfer &
Trust Company (the "RIGHTS AGENT").
RECITALS
On January 21, 2004 (the "RIGHTS DIVIDEND DECLARATION DATE"), the Board
of Directors of the Company (i) authorized and declared a dividend distribution
of one preferred share purchase right (a "RIGHT") for each share of Common Stock
(as hereinafter defined) of the Company outstanding at the close of business on
February 2, 2004 (the "RECORD DATE"), each Right initially representing the
right to purchase one one-thousandth of a share of Series A Preferred Stock, par
value $.01 per share, of the Company having the rights, powers and preferences
set forth in the Certificate of Designation, Preferences and Rights of Series A
Preferred Stock attached hereto as Exhibit 1, upon the terms and subject to the
conditions hereinafter set forth, and (ii) further authorized the issuance of
one Right (as such number may be hereafter adjusted as provided herein) for each
share of Common Stock of the Company issued between the Record Date (whether
originally issued or delivered from the Company's treasury) and the Distribution
Date;
AGREEMENT
In consideration of the premises and the mutual agreements herein set
forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "ACQUIRING PERSON" shall mean any Person (as such
term is hereinafter defined) who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of 15% or more of the shares of Common Stock then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan, (iv) any Person who
becomes an Acquiring Person solely as a result of a reduction in the number of
shares of Common Stock outstanding due to the repurchase of shares of Common
Stock by the Company, unless and until such Person shall purchase or otherwise
become (as a result of actions taken by such Person or its Affiliates or
Associates) the Beneficial Owner of additional shares of Common Stock
constituting 1% or more of the then outstanding shares of Common Stock, or (v)
an Exempted Person (as such term is hereinafter defined). Notwithstanding the
foregoing, if (i) the Board of Directors of the Company determines in good faith
that a Person who would otherwise be an Acquiring Person, as defined pursuant to
the foregoing provisions of this paragraph, has become such inadvertently
(including, without limitation, because (A) such Person was unaware that it
beneficially owned a percentage
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of Common Stock that would otherwise cause such Person to be an Acquiring
Person, or (B) such Person was aware of the extent of its Beneficial Ownership
of Common Stock but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement) and without any intention of changing
or influencing control of the Company, and (ii) within ten Business Days of
being requested by the Company to advise it regarding the same, such Person
certifies to the Company that such Person acquired shares of Common Stock in
excess of 14.99% inadvertently or without knowledge of the terms of the Rights
and who, together with all Affiliates and Associates, thereafter does not
acquire additional shares of Common Stock and within ten Business Days of being
requested by the Company to do so disposes of the portion of such shares of
Common Stock in excess of 14.99%, then such Person shall not be deemed to be or
to have become an Acquiring Person for any purposes of this Agreement; provided,
however, that if the Person requested to so certify fails to do so within ten
Business Days of the Company's request or such Person fails to dispose of such
shares of Common Stock in excess of 14.99% within ten Business Days of the
Company's request, then such Person shall become an Acquiring Person immediately
after such ten Business Day period. Notwithstanding the foregoing or any
provision to the contrary herein, for the purposes of determining whether any
Person, together with all Affiliates and Associates of such Person, is or may
become the Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding, the Investor Shares acquired by such Person, or any Affiliate or
Associate of such Person, shall be deemed to be outstanding but shall not be
deemed to be Beneficially Owned by such Person, or any Affiliate or Associate of
such Person; provided, that, within five Business Days after the acquisition of
any Investor Shares, the Person has delivered written notice to the Company or
disclosed in its public filings with the Securities and Exchange Commission that
the Person (i) is not the Beneficial Owner of 5% or more of the shares of Common
Stock then outstanding (excluding any Investor Shares held by such Person, or
any Affiliate or Associate of such Person), (ii) is the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding (including any Investor
Shares held by such Person, or any Affiliate or Associate of such Person) and
(iii) is not the Beneficial Owner of greater than 30% of the shares of Common
Stock then outstanding (including any Investor Shares held by such Person, or
any Affiliate or Associate of such Person); provided, further, however, that if
such Person, together with all Affiliates or Associates of such Person, shall
become at any time after acquiring any Investor Shares, or is at the time of the
acquisition of any Investor Shares, (i) the Beneficial Owner of 5% or more of
the shares of Common Stock then outstanding (in addition to any Investor Shares
held by such Person, or any Affiliate or Associate of such Person), (ii) the
Beneficial Owner of less than 15% of the shares of Common Stock then outstanding
(including any Investor Shares held by such Person, or any Affiliate or
Associate of such Person) or (iii) the Beneficial Owner of greater than 30% of
the shares of Common Stock then outstanding (including any Investor Shares held
by such Person, or any Affiliate or Associate of such Person), then such Person
shall be deemed to be the Beneficial Owner of the Investor Shares held by such
Person and such Investor Shares shall no longer be treated as Investor Shares
under this Agreement regardless of the Beneficial Owner thereof. The phrase
"then outstanding," when used with reference to a Person's Beneficial Ownership
of securities of the Company, shall mean the number of such securities then
issued and outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to own
beneficially hereunder.
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(b) "ACT" shall mean the Securities Act of 1933, as amended
and in effect from time to time.
(c) "ADJUSTMENT SHARES" shall have the meaning set forth
in Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments)
(d) "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(e) "AGREEMENT" shall mean this
Rights Agreement as
originally executed or as it may from time to time be supplemented or amended
pursuant to the applicable provisions hereof.
(f) A Person shall be deemed the "BENEFICIAL OWNER" of,
and shall be deemed to "BENEFICIALLY OWN," any securities:
(i) 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, rights, warrants or options, or
otherwise; provided, however, that a Person shall not, for purposes of
this paragraph (i), be deemed the "Beneficial Owner" of or to
"beneficially own," (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person's Affiliates
or Associates until such tendered securities are accepted for purchase
or exchange, or (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Triggering Event, or (C) securities
issuable upon exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(a) (Issuance of Rights Certificates --
Distribution Date; Rights Certificates) or Section 22 (Issuance of New
Rights Certificates) (the "ORIGINAL RIGHTS") or pursuant to Section
11(i) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Adjustment of Number of Rights) in connection with
an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote
or dispose of or has "beneficial ownership" of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange
Act), including pursuant to any agreement, arrangement or
understanding, whether or not in writing; provided, however, that a
Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (ii) as a
result of an agreement, arrangement or understanding to vote such
security if such agreement, arrangement or understanding: (A) arises
solely from a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the
applicable provisions of the General Rules and
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Regulations under the Exchange Act, and (B) is not also then reportable
by such Person on a Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are "beneficially owned," directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person (or any of such Person's Affiliates or
Associates) has any agreement, arrangement or understanding (whether or
not in writing), for the purpose of acquiring, holding, voting (except
pursuant to a revocable proxy as described in the proviso to
subparagraph (ii) of this paragraph (f)) or disposing of any voting
securities of the Company;
provided, however, that nothing in this paragraph (f) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of or to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty (40) calendar days after the date of such acquisition;
provided, further, however, that each of Resurgence and Everest shall be deemed
to beneficially own all shares of Common Stock that may be acquired upon
exercise of warrants held by it on January 21, 2004, ignoring, for purposes
hereof, any restrictions on exercise thereof.
(g) "BOARD" means the Board of Directors of the Company.
(h) "BUSINESS DAY" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in the State of
New York
are authorized or obligated by law or executive order to close.
(i) "CLOSE OF BUSINESS" on any given date shall mean 5:00
P.M.,
New York,
New York time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 P.M.,
New York,
New York time, on
the next succeeding Business Day.
(j) "COMMON STOCK" shall mean the common stock, par value
$0.000001 per share, of the Company, except that "Common Stock" when used with
reference to any Person other than the Company shall mean the capital stock of
such Person with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such
Person.
(k) "COMMON STOCK EQUIVALENTS" shall have the meaning set
forth in Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
(l) "COMPANY" shall mean the Person named as the "Company" in
the first paragraph of this Agreement until a successor corporation shall have
become such, or until a Principal Party shall assume, and thereafter be liable
for, all obligations and duties of the Company hereunder, pursuant to the
applicable provisions of this Agreement, and thereafter "Company" shall mean
such successor corporation or Principal Party.
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(m) "CURRENT MARKET PRICE" shall have the meaning set forth in
Section 11(d) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Current Market Price).
(n) "CURRENT VALUE" shall have the meaning set forth in
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments).
(o) "DISTRIBUTION DATE" shall have the meaning set forth
in Section 3(a) (Issuance of Rights Certificates -- Distribution Date; Rights
Certificates).
(p) "EQUIVALENT PREFERRED STOCK" shall have the meaning
set forth in Section 11(b) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Purchase Price Adjustment -- Capital Stock).
(q) "EVEREST SHARES" shall mean any shares of Common Stock
Beneficially Owned by Everest Capital Limited.
(r) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended and in effect on the date of this Agreement.
(s) "EXCHANGE NUMBER" shall mean one-half of the number
of shares of Common Stock or one one-thousandths of a share of Series A
Preferred Stock, or shares or other units of other property for which a Right is
exercisable immediately prior to the time of the action of the Board to exchange
the Rights.
(t) "EXEMPTED PERSON" shall mean:
(i) Resurgence Asset Management, L.L.C.
("RESURGENCE"), which prior to the date of this Agreement reported that
it is the Beneficial Owner of more than 15% of the shares of Common
Stock then outstanding, unless and until the earlier of such time as
Resurgence, directly or indirectly, and together with its Affiliates
and Associates, becomes the Beneficial Owner of (x) 30%% or more of the
shares of Common Stock then outstanding (other than under circumstances
described in Section 1(a)(iv) and in the second sentence of Section
1(a) (replacing for purposes of this clause (x) all references in the
second sentence of Section 1(a) to 15% with 30% and all references in
the second sentence of Section 1(a) to 14.99% with 29.99%)) or (y) less
than 15% of the shares of Common Stock then outstanding, in either of
which event, Resurgence immediately shall cease to be an Exempted
Person;
(ii) Everest Capital Limited ("EVEREST"), which prior
to the date of this Agreement reported that it is the Beneficial Owner
of more than 15% of the shares of Common Stock then outstanding, unless
and until the earlier of such time as Everest, directly or indirectly,
and together with its Affiliates and Associates, becomes the Beneficial
Owner of (x) 24.7% or more of the shares of Common Stock then
outstanding (other than under circumstances described in Section
1(a)(iv) and in the second sentence
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of Section 1(a) hereof (replacing for purposes of this clause (x) all
references in the second sentence of Section 1(a) to 15% with 24.7% and
all references in the second sentence of Section 1(a) to 14.99% with
24.69%)) or (y) less than 15% of the shares of Common Stock then
outstanding, in either of which event, Everest immediately shall cease
to be an Exempted Person; and
(iii) Stockton, LLC ("STOCKTON"), which prior to the
date of this Agreement reported that it is the Beneficial Owner of more
than 15% of the shares of Common Stock then outstanding, unless and
until the earlier of such time as Stockton, directly or indirectly, and
together with its Affiliates and Associates, becomes the Beneficial
Owner of (x) 20.0% or more of the shares of Common Stock then
outstanding (other than under circumstances described in Section
1(a)(iv) and in the second sentence of Section 1(a) (replacing for
purposes of this clause (x) all references in the second sentence of
Section 1(a) to 15% with 20.0% and all references in Section 1(a) to
14.99% with 19.99%)) or (y) less than 15% of the shares of Common Stock
then outstanding, in either of which event, Stockton immediately shall
cease to be an Exempted Person.
(u) "EXPIRATION DATE" shall have the meaning set forth in
Section 7(a) (Exercise of Rights; Purchase Price; Expiration Date of Rights --
Exercise).
(v) "FINAL EXPIRATION DATE" shall mean the Close of Business
on January 20, 2014.
(w) "FLIP-IN EVENT" shall mean any event described in
Section 11(a)(ii) (A) or (B) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
(x) "FLIP-IN TRIGGER DATE" shall have the meaning set
forth in Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
(y) "FLIP-OVER EVENT" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event).
(z) "INVESTOR SHARES" shall mean (i) the Resurgence
Shares Beneficially Owned by Resurgence as of January 21, 2004, (ii) the Everest
Shares Beneficially Owned by Everest as of January 21, 2004, and (iii) the
Stockton Shares Beneficially Owned by Stockton as of January 21, 2004, in each
case as reported in filings with the Securities and Exchange Commission. Any
shares of Common Stock acquired by Resurgence, Everest or Stockton after January
21, 2004 shall not be deemed to be Investor Shares, unless such shares were
Investor Shares prior to the time of such acquisition. Investor Shares may be
transferred to a third party and shall thereafter continue to be Investor Shares
for purposes of this Agreement until the earlier of (x) the sale of such
Investor Shares into the public market, at which time such Investor Shares shall
no longer be deemed to be Investor Shares
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hereunder regardless of the Beneficial Owner thereof, or (y) such Investor
Shares no longer being deemed to be Investor Shares pursuant to the third
sentence of Section 1(a). For purposes of this Agreement, until Resurgence is no
longer an Exempted Person, any Resurgence Shares transferred to a third party
shall be presumed to be Investor Shares unless such presumption shall conflict
with, or otherwise be contrary to, any provision contained herein. For purposes
of this Agreement, until Everest is no longer an Exempted Person, any Everest
Shares transferred to a third party shall be presumed to be Investor Shares
unless such presumption shall conflict with, or otherwise be contrary to, any
provision contained herein. For purposes of this Agreement, until Stockton is no
longer an Exempted Person, any Stockton Shares transferred to a third party
shall be presumed to be Investor Shares unless such presumption shall conflict
with, or otherwise be contrary to, any provision contained herein.
(aa) "ORIGINAL RIGHTS" shall have the meaning set forth in
Section 1(f)(i) (Certain Definitions).
(bb) "PERSON" shall mean any individual, firm, corporation,
partnership or other entity.
(cc) "PREFERRED STOCK" shall mean shares of Series A
Preferred Stock, par value $.01 per share, of the Company, and, to the extent
that there is not a sufficient number of shares of Series A Preferred Stock
authorized to permit the full exercise of the Rights, any other series of
Preferred Stock, par value $.01 per share, of the Company designated for such
purpose containing terms substantially similar to the terms of the Series A
Preferred Stock.
(dd) "PRINCIPAL PARTY" shall have the meaning set forth in
Section 13(b) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Principal Party).
(ee) "PURCHASE PRICE" shall have the meaning set forth in
Section 4(a) (Form of Rights Certificates -- Form; Date).
(ff) "RECORD DATE" shall have the meaning set forth in the
Recital at the beginning of the Agreement.
(gg) "REDEMPTION DATE" shall have the meaning set forth in
Section 23(a) (Redemption and Termination -- Redemption).
(hh) "REDEMPTION PRICE" shall have the meaning set forth
in Section 23(a) (Redemption and Termination -- Redemption).
(ii) "RESURGENCE SHARES" shall mean any shares of Common
Stock Beneficially Owned by Resurgence Asset Management, L.L.C.
(jj) "RIGHTS" shall have the meaning set forth in the Recital
at the beginning of the Agreement.
(kk) "RIGHTS AGENT" shall mean the Person named as the
"Rights Agent" in the first paragraph of this Agreement until a successor Rights
Agent shall have become such
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pursuant to the applicable provisions hereof and thereafter "Rights Agent" shall
mean such successor Rights Agent. If at any time there is more than one Person
appointed by the Company as Rights Agent pursuant to the applicable provisions
of this Agreement, "Rights Agent" shall mean and include each such Person.
(ll) "RIGHTS CERTIFICATES" shall have the meaning set
forth in Section 3(a) (Issuance of Rights Certificates -- Distribution Date;
Rights Certificates).
(mm) "RIGHTS DIVIDEND DECLARATION DATE" shall have the
meaning set forth in the Recital at the beginning of the Agreement.
(nn) "SPREAD" shall have the meaning set forth in Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments).
(oo) "STOCK ACQUISITION DATE" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed or amended pursuant to Section 13(d) under
the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.
(pp) "STOCKTON SHARES" shall mean any shares of Common Stock
Beneficially Owned by Stockton, LLC.
(qq) "SUBSIDIARY" shall mean, with reference to any Person,
any corporation or other entity of which a majority of the voting power of
equity securities or majority of the equity interest is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such Person.
(rr) "SUBSTITUTION PERIOD" shall have the meaning set
forth in Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Certain Adjustments).
(ss) "TRADING DAY" shall have the meaning set forth in
Section 11(d)(i) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Current Market Price).
(tt) "TRIGGERING EVENT" shall mean any Flip-in Event or any
Flip-over Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable.
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Section 3. Issuance of Rights Certificates.
(a) Distribution Date; Rights Certificates. Until the earlier
of (i) the Close of Business on the tenth Business Day after the Stock
Acquisition Date (or, if the tenth Business Day after the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date), or
(ii) the Close of Business on the tenth Business Day (or such later date as the
Board shall determine prior to such time as any Person becomes an Acquiring
Person) after the date that a tender or exchange offer by any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan) is first published or sent or given within the meaning of Rule 14d-2(a) of
the General Rules and Regulations under the Exchange Act, if upon consummation
thereof such Person would be the Beneficial Owner of 15% (or, in the case of
Resurgence greater than 30.0%, or, in the case of Everest greater than 24.7%,
or, in the case of Stockton greater than 20.0%, in each case for so long as it
is an Exempted Person) or more of the shares of Common Stock then outstanding
(the earlier of (i) and (ii) being herein referred to as the "DISTRIBUTION
DATE"), (x) the Rights will be evidenced (subject to the provisions of paragraph
(b) of this Section 3) by the certificates for the Common Stock registered in
the names of the holders of the Common Stock (which certificates for Common
Stock shall be deemed also to be certificates for Rights) and not by separate
certificates, and (y) the Rights will be transferable only in connection with
the transfer of the underlying shares of Common Stock (including a transfer to
the Company, except pursuant to the provision of Section 23 (Redemption and
Termination)). As soon as practicable after the Distribution Date, the Rights
Agent will send by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Distribution Date,
at the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit 2 hereto (the "RIGHTS
CERTIFICATES"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(p) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Common Stock Adjustments) at the time of distribution of the Rights
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) (Fractional Rights and Fractional
Shares -- Fractional Rights)) so that Rights Certificates representing only
whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates.
(b) Common Stock Certificates; Summary of Rights. With respect
to certificates for the Common Stock outstanding as of the Record Date, until
the Distribution Date, the Rights associated with the Common Stock represented
by such certificates will be evidenced by such certificates alone and the
registered holders of such Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date, the transfer of any certificates representing shares of Common
Stock in respect
9
of which Rights have been issued shall also constitute the transfer of the
Rights associated with such shares of Common Stock. On the Record Date, or as
soon as practicable thereafter, the Company will send a copy of a Summary of
Rights to Purchase Preferred Stock, in substantially the form of Exhibit 3
hereto (the "SUMMARY OF RIGHTS"), by first-class, postage-prepaid mail, to each
record holder of shares of Common Stock as of the close of business of the
Record Date, at the address of such holder shown on the records of the Company.
(c) Legend. Rights shall be issued in respect of all
certificates for shares of Common Stock which are issued (whether originally
issued or from the Company's treasury) after the Record Date but prior to the
earliest of the (i) Distribution Date, (ii) the Expiration Date, or (iii) the
Redemption Date, or, in certain circumstances provided in Section 22 (Issuance
of New Rights Certificates) after the Distribution Date. Certificates
representing such shares of Common Stock shall also be deemed to be certificates
for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in the
Rights Agreement dated as of January
21, 2004, by and between Kitty Hawk, Inc. (the "COMPANY") and American
Stock Transfer & Trust Company, as Rights Agent (the "
RIGHTS
AGREEMENT"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in the
Rights
Agreement, such Rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the
Rights Agreement, as in
effect on the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances set forth in
the
Rights Agreement, Rights issued to, or held by, any Person who is,
was or becomes an Acquiring Person or any Affiliate or Associate
thereof (as such terms are defined in the
Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of (i) the Distribution Date, (ii) the Expiration Date, and (iii) the
Redemption Date, (x) the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone, (y) the
registered holders of such Common Stock shall also be the registered holders of
the associated Rights, and (z) the transfer of any of such certificates shall
also constitute the transfer of the Rights associated with such shares of Common
Stock. In the event that the Company purchases, or acquires any shares of Common
Stock after the Record Date but prior to the Distribution Date, any rights
associated with such shares of Common Stock shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
shares of Common Stock which are no longer outstanding.
Section 4. Form of Rights Certificates.
(a) Form; Date. The Rights Certificates (and the forms of
election to purchase and of assignment to be printed on the reverse thereof)
shall each be substantially in the
10
form set forth in Exhibit 2 hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed or any
securities association on whose interdealer quotation system the Rights may be
from time to time authorized for quotation, or to conform to usage. Subject to
the provisions of Section 11 (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights) and Section 22 (Issuance of New Rights
Certificates), the Rights Certificates, whenever distributed, shall be dated as
of the Record Date and on their face shall entitle the holders thereof to
purchase such number of one one-thousandths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one one-thousandth of a share is referred to herein as the "PURCHASE
PRICE"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Acquiring Person Legend. Any Rights Certificate issued
pursuant to Section 3(a) (Issuance of Rights Certificates -- Distribution Date;
Rights Certificates) or Section 22 (Issuance of New Rights Certificates) that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which is part of a plan, arrangement or understanding which has as a primary
purpose or effect avoidance of Section 7(e) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights) and any
Rights Certificate issued pursuant to Section 6 (Transfer, Split Up, Combination
and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates), Section 11 (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights) or Section 22 (Issuance of New Rights Certificates)
upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent feasible)
the following legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement dated as of January 21, 2004, by and
between Kitty Hawk, Inc. and American Stock Transfer & Trust Company,
as Rights Agent). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances
specified in Section 7(e) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights)
of such Agreement.
11
Section 5. Countersignature and Registration.
(a) Signatures. The Rights Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested to by
the Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates shall be countersigned by the
Rights Agent, either manually or by facsimile signature, and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Rights Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Rights Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by the Company with
the same force and effect as though the person who signed such Rights
Certificates had not ceased to be such officer of the Company; and any Rights
Certificates may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Registration and Transfer. Following the Distribution
Date, the Rights Agent will keep or cause to be kept, at its principal office or
offices designated as the appropriate place for surrender of Rights Certificates
upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights
evidenced on its face by each of the Rights Certificates and the date of each of
the Rights Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Procedure. Subject to the provisions of Section 4(b) (Form
of Rights Certificates -- Acquiring Person Legend), Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) and Section 14 (Fractional Rights and Fractional Shares), at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of one one-thousandths of a share of Preferred Stock (or,
following a Triggering Event, Common Stock, other securities, cash or other
assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitle such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Rights
Certificate or Certificates to be transferred, split up, combined or exchanged
at the principal office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the
12
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon, the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) Issuance of New Rights Certificates. Upon receipt by the
Company and the Rights Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Rights Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
them, and reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will execute
and deliver a new Rights Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Exercise. Subject to Section 7(e) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Termination of Acquiring Person's
Rights), the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein, including, without
limitation, the restrictions on exercisability set forth in Section 9(c)
(Reservation and Availability of Capital Stock -- Registration under the Act),
Section 11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments), Section 23(a) (Redemption and
Termination -- Redemption), and Section 24(b) (Exchange -- Effect of Exchange;
Procedure)) in whole or in part at any time after the Distribution Date upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate on the reverse side thereof duly executed, to the Rights Agent
at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price with respect to
the total number of one one-thousandths of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable and an amount equal to any applicable
transfer tax, at or prior to the earliest of (i) the Final Expiration Date, (ii)
the Redemption Date, or (iii) the expiration of the Rights pursuant to Section
13(d) (Consolidation, Merger or Sale or Transfer of Assets or Earning Power --
Exceptions) (the earliest of (i), (ii) and (iii) being herein referred to as the
"EXPIRATION DATE"). The payment of the Purchase Price and the applicable
transfer tax, if any (as such amount may be reduced pursuant to Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments)), may be made (x) in cash, (y) by certified
check, cashier's check or money order payable to the order of the Company, or
(z) by delivery of a certificate or certificates (with appropriate stock powers
executed in blank attached thereto) evidencing a number of shares of Common
Stock equal to the then Purchase Price divided by the closing price (as
determined pursuant to Section 11(d) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Current Market Price)) per share of Common
Stock on the Trading Day immediately preceding the date of such exercise. In the
event that the Company is obligated to issue other securities (including Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
Section
13
11(a) the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate. The Company reserves the right to require
prior to the occurrence of a Triggering Event that upon any exercise of Rights,
a number of Rights be exercised so that only whole shares of Preferred Stock
would be issued.
(b) Purchase Price. The Purchase Price for each one
one-thousandth of a share of Preferred Stock purchasable upon the exercise of a
Right shall initially be $10.00, and shall be subject to adjustment from time to
time as provided in Section 11 (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights) and Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event) and shall be payable in
accordance with paragraph (a) of this Section 7.
(c) Rights Agent Actions. Upon receipt of a Rights Certificate
representing exercisable Rights and the compliance by the holder of such Rights
Certificate with paragraph (a) of this Section 7, the Rights Agent shall,
subject to Section 20(k) (Duties of Rights Agent -- Exercise of Rights;
Consultation with Company), thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-thousandths of a share of Preferred Stock to be purchased and
the Company hereby irrevocably authorizes its transfer agent to comply with all
such requests, or (B) if the Company shall have elected to deposit the total
number of shares of Preferred Stock issuable upon exercise of the Rights
hereunder with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-thousandths of a share
of Preferred Stock as are to be purchased (in which case certificates for the
shares of Preferred Stock represented by such receipts shall be deposited by the
transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 (Fractional Rights and Fractional Shares), (iii)
after receipt thereof, deliver such certificates or depositary receipts to or
upon the order of the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, and (iv) after
receipt thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate.
(d) Partial Exercise. In case the registered holder of any
Rights Certificate shall exercise less than all the Rights evidenced thereby, a
new Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to, or upon the
order of the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder, subject to the provisions of
Section 14 (Fractional Rights and Fractional Shares).
(e) Termination of Acquiring Person's Rights. Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Flip-in Event, any Rights beneficially owned by (i) an Acquiring Person, or
an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after such Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or
14
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which is part of a plan, arrangement or understanding which has as a primary
purpose or effect the avoidance of this Section 7(e), shall become null and void
without any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company shall use all reasonable efforts to ensure
that the provisions of this Section 7(e) and Section 4(b) (Form of Rights
Certificates -- Acquiring Person Legend) are complied with, but shall have no
liability to any holder of Rights Certificates or other Person as a result of
its failure to make any determinations with respect to an Acquiring Person or
any of its respective Affiliates, Associates or transferees hereunder.
(f) Surrender of Rights Certificates; Identity of Beneficial
Owner. Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Rights Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Rights Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
15
Section 9. Reservation and Availability of Capital Stock.
(a) Reservation of Capital Stock. The Company will use its
best efforts to reserve and keep available out of its authorized and unissued
shares of Preferred Stock (and, following the occurrence of a Triggering Event,
out of its authorized and unissued shares of Common Stock and/or other
securities or out of its authorized and issued shares of Common Stock held in
its treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities) that, as
provided in this Agreement, including the rights of the Company under Section
11(a)(iii) (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights -- Certain Adjustments) to otherwise fulfill its obligations, will be
sufficient to permit the exercise in full of all outstanding Rights.
(b) Listing. So long as the shares of Preferred Stock (and,
following the occurrence of a Triggering Event, Common Stock and/or other
securities) issuable and deliverable upon the exercise of the Rights may be
listed on any national securities exchange or authorized for quotation on any
interdealer quotation system of any securities association, the Company shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
or quoted on such system upon official notice of issuance upon such exercise.
(c) Registration under the Act. The Company will use its best
efforts to (i) file, as soon as practicable following the earliest date after
the first occurrence of a Flip-in Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(iii) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Certain Adjustments), or as soon as is
required by law following the Distribution Date, as the case may be, a
registration statement on an appropriate form under the Act with respect to the
securities purchasable upon exercise of the Rights, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the 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 not to exceed ninety
(90) calendar days after the date set forth in clause (i) of the first sentence
of this Section 9(c), the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In addition,
if the Company shall determine that a registration statement is required
following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as a registration statement has
been declared effective. Notwithstanding any provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or a registration
statement shall not have been declared effective.
16
(d) Covenant Regarding Capital Stock. The Company will take
all such action as may be necessary to ensure that all one one-thousandths of a
share of Preferred Stock (and, following the occurrence of a Triggering Event,
Common Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable.
(e) Transfer Taxes and Charges. The Company will pay when due
and payable any and all federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Rights Certificates and
of any certificates for a number of one one-thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-thousandths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in respect of a name other than,
that of the registered holder of the Rights Certificates evidencing Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Rights Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate for a number of one one-thousandths of a share of Preferred Stock
(or Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated as of, the date upon which the Rights 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 Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of shares covered by
each Right and the
17
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) Certain Adjustments.
(i) In the event the Company shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred
Stock payable in shares of Preferred Stock, (B) subdivide or split the
outstanding Preferred Stock, (C) combine the shares of the outstanding
Preferred Stock into a smaller number of shares, or (D) issue any
shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a) and Section 7(e) (Exercise of Rights; Purchase Price; Expiration
Date of Rights -- Termination of Acquiring Person's Rights), the
Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, split,
combination or reclassification, and the number and kind of shares of
Preferred Stock or capital stock, as the case may be, issuable on such
date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of
the aggregate adjusted Purchase Price then in effect necessary to
exercise a Right in full, the aggregate number and kind of shares of
Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date and at a time
when the Preferred Stock (or other capital stock, as the case may be)
transfer books of the Company were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, split, combination or reclassification. If an
event occurs which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event:
(A) (1) any Acquiring Person or any
Associate or Affiliate of any Acquiring Person, at any time
after the date of this Agreement, directly or indirectly,
shall merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or surviving
corporation of such merger or combination and the Common Stock
shall remain outstanding and unchanged, or (2) subject to
Section 23 (Redemption and Termination), any Person (other
than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any
such plan), alone or together with its Affiliates and
Associates, shall, at any time after the Rights Dividend
Declaration Date, become an Acquiring Person, unless the event
causing such Person to become an Acquiring Person is a
Flip-over Event, or is an acquisition of shares of Common
Stock pursuant to a tender offer or an exchange offer for all
outstanding shares of Common Stock at a price and on terms
determined by the Board, prior to the public announcement of
such
18
tender offer or exchange offer, after receiving advice from
one or more investment banking firms selected by the Board, to
be (a) at a price which is fair to the stockholders of the
Company (taking into account all factors which the Board deems
relevant including, without limitation, prices which could
reasonably be achieved if the Company or its assets were sold
on an orderly basis designed to realize maximum value) and (b)
otherwise in the best interests of the Company and its
stockholders, other than such Acquiring Person, its Affiliates
and its Associates; or
(B) during such time as there is an
Acquiring Person, there shall be any reclassification of
securities (including any reverse stock split), or
recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or
any other transaction or series of transactions involving the
Company or any of its Subsidiaries, other than a transaction
or transactions to which the provisions of Section 13(a)
(Consolidation, Merger or Sale or Transfer of Assets or
Earning Power -- Flip-over Event) apply (whether or not with
or into or otherwise involving an Acquiring Person) which has
the effect, directly or indirectly, of increasing by more than
1% the proportionate share of the outstanding shares of any
class of equity securities of the Company or any of its
subsidiaries, which is directly or indirectly beneficially
owned by any Acquiring Person or any Associate or Affiliate of
any Acquiring Person,
then, promptly following the occurrence of any such Flip-in Event
(whether described in Section 11(a)(ii)(A) or (B)), proper provision
shall be made so that each holder of a Right (except as provided below
and in Section 7(e) (Exercise of Rights; Purchase Price; Expiration
Date of Rights -- Termination of Acquiring Person's Rights)) shall
thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement,
in lieu of the number of one one-thousandths of a share of Preferred
Stock, such number of shares of Common Stock as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then
number of one one-thousandths of a share of Preferred Stock for which a
Right was exercisable immediately prior to the first occurrence of a
Flip-in Event, and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as the "Purchase
Price" for each Right and for all purposes of this Agreement) by 50% of
the Current Market Price per share of Common Stock on the date of such
first occurrence (such number of shares being referred to as the
"ADJUSTMENT SHARES").
(iii) In the event that the number of shares of
Common Stock that are authorized by the Company's Second Amended and
Restated Certificate of Incorporation, as amended, but not outstanding
or reserved for issuance for purposes other than upon exercise of the
Rights is not sufficient to permit the exercise in full of the Rights
in accordance with the foregoing subparagraph (ii) of this Section
11(a), the Company shall: (A) determine the excess of (1) the value of
the Adjustment Shares issuable upon the exercise of a Right (the
"CURRENT VALUE") over (2) the Purchase Price (such excess, the
"SPREAD"), and (B) with respect to each Right, subject to Section
7(e)(Exercise of Rights; Purchase Price; Expiration Date of Rights --
Termination
19
of Acquiring Person's Rights), make adequate provision to substitute
for the Adjustment Shares, upon payment of the applicable Purchase
Price, (1) cash, (2) a reduction in the Purchase Price, (3) Common
Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the
Board has deemed to have substantially the same dividend, voting and
liquidation rights as shares of Common Stock and are deemed in good
faith by the Board of Directors to have substantially the same value as
the shares of Common Stock (such shares of preferred stock being
referred to as "COMMON STOCK EQUIVALENTS")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing,
having an aggregate value equal to the Current Value (less the amount
of any reduction in the Purchase Price), where such aggregate value has
been determined by the Board based upon the advice of a nationally
recognized investment banking firm selected by the Board; provided,
however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) calendar
days following the first occurrence of a Flip-in Event (the date of
such Flip-in Event being referred to herein as the "FLIP-IN TRIGGER
DATE"), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the
Purchase Price, shares of Common Stock (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate
value equal to the Spread. If the Board shall determine in good faith
that it is likely that sufficient additional shares of Common Stock or
other equity securities could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) calendar day period set forth
above may be extended to the extent necessary, but not more than ninety
(90) calendar days after the Flip-in Trigger Date, in order that the
Company may seek stockholder approval for the authorization of such
additional shares (such period, the "SUBSTITUTION PERIOD"). To the
extent that the Company determines that some action need be taken
pursuant to the first and/or second sentences of this Section
11(a)(iii), the Company (x) shall provide, subject to Section 7(e),
that such action shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the expiration
of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution
to be made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has
been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect. For purposes of this
Section 11(a)(iii), the value of the shares of Common Stock shall be
the Current Market Price per share of the Common Stock on the Flip-in
Trigger Date and the value of any Common Stock Equivalent shall be
deemed to have the same value as the Common Stock on such date.
(iv) If the rules of the national securities
exchange, registered as such pursuant to Section 6 of the Exchange Act,
or of the national securities association, registered as such pursuant
to Section 15A of the Exchange Act, on which the Common Stock is
principally traded or quoted would prohibit such exchange or
association from listing or continuing to list, or from authorizing for
or continuing quotation and/or transaction reporting through an
inter-dealer quotation system, the Common Stock or other equity
securities of the Company if the Rights were to be exercised for shares
of Common Stock in accordance with subparagraph (ii) of this Section
11(a) because such
20
issuance would nullify, restrict or disparately reduce the per share
voting rights of holders of Common Stock, the Company shall: (A)
determine the Spread, and (B) with respect to each Right, make adequate
provision to substitute for the Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) equity securities of the Company, including, without
limitation, Common Stock Equivalents, other than securities which would
have the effect of nullifying, restricting or disparately reducing the
per share voting rights of holders of Common Stock, (4) debt securities
of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where
such aggregate value has been determined by the Board based upon the
advice of a recognized investment banking firm selected by the Board;
provided, however, if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty
(30) calendar days following the Flip-in Trigger Date, then the Company
shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, cash having
an aggregate value equal to the Spread. To the extent that the Company
determines that some action need be taken pursuant to the first
sentence of this Section 11(a)(iv), the Company (x) shall provide,
subject to Section 7(e) (Exercise of Rights; Purchase Price; Expiration
Date of Rights -- Termination of Acquiring Person's Rights), that such
action shall apply uniformly to all outstanding Rights and (y) may
suspend the exercisability of the Rights, but not longer than ninety
(90) calendar days after the Flip-in Trigger Date, in order to decide
the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iv), the value of
the shares of Common Stock shall be the Current Market Price per share
of the Common Stock on the Flip-in Trigger Date and the value of any
Common Stock Equivalent shall be deemed to have the same value as the
Common Stock on such date.
(b) Purchase Price Adjustment -- Capital Stock. In case the
Company shall fix a record date for the issuance of rights, options or warrants
to all holders of Preferred Stock entitling them to subscribe for or purchase
(for a period expiring within forty-five (45) calendar days after such record
date) shares of Preferred Stock (or shares having the same rights, privileges
and preferences as the shares of Preferred Stock ("EQUIVALENT PREFERRED STOCK"))
or securities convertible into Preferred Stock or Equivalent Preferred Stock at
a price per share of Preferred Stock or per share of Equivalent Preferred Stock
(or having a conversion price per share, if a security convertible into shares
of Preferred Stock or Equivalent Preferred Stock) less than the Current Market
Price per share of Preferred Stock on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock and/or
Equivalent Preferred Stock so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such Current Market Price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on
21
such record date, plus the number of additional shares of Preferred Stock and/or
Equivalent Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible). In
case such subscription price may be paid by delivery of consideration part or
all of which may be in a form other than cash, the value of such consideration
shall be as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on the
Rights Agent and the holders of the Rights. Shares of Preferred Stock owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) Purchase Price Adjustment -- Cash, Assets, etc. In case
the Company shall fix a record date for a distribution to all holders of
Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets (other than a
dividend payable in Preferred Stock, but including any dividend payable in stock
other than Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights Purchase Price Adjustment -- Capital Stock)), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Market Price per
share of Preferred Stock on such record date, less the fair market value (as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent) of the portion of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to a share of Preferred Stock and the denominator of which
shall be such Current Market Price per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is fixed, and
in the event that such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would have been in effect if such record
date had not been fixed.
(d) Current Market Price.
(i) For the purpose of any computation hereunder,
other than computations made pursuant to Section 11(a)(iii) (Adjustment
of Purchase Price; Number and Kind of Shares or Number of Rights --
Certain Adjustments), the Current Market Price per share of Common
Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii) the
Current Market Price per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of such
Common Stock for the ten (10) consecutive Trading Days immediately
following such date; provided, however, that in the event that the
Current Market Price per share of the Common Stock is determined during
a period following the announcement by the issuer of such Common Stock
of (A) a dividend or distribution on such Common Stock payable
22
in shares of such Common Stock or securities convertible into shares of
such Common Stock (other than the Rights), or (B) any subdivision,
combination or reclassification of such Common Stock and the
ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification shall not have
occurred prior to the commencement of the requisite thirty (30) Trading
Day or ten (10) Trading Day period, as set forth above, then, and in
each such case, the Current Market Price shall be properly adjusted to
take into account ex-dividend trading. The closing price for each
Trading Day shall be the last sale price, regular way, or, in case no
such sale takes place on such Trading Day, the average of the closing
bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the American Stock Exchange
or, if the shares of Common Stock are not listed or admitted to trading
on the American 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
shares of Common Stock are listed or admitted to trading or, if the
shares of Common Stock are not listed or admitted to trading on any
national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or such other
system then in use, or, if on any such date the shares of Common Stock
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 Stock selected by the Board. If on any such date
no market maker is making a market in the Common Stock, the fair value
of such shares on such date as determined in good faith by the Board
shall be used. The term "TRADING DAY" shall mean a day on which the
principal national securities exchange on which the shares of Common
Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, a Business Day. If the
Common Stock is not publicly held or not so listed or traded, Current
Market Price per share shall mean the fair value per share as
determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(ii) For the purpose of any computation hereunder,
the Current Market Price per share of Preferred Stock shall be
determined in the same manner as set forth above for the Common Stock
in clause (i) of this Section 11(d) (other than the last sentence
thereof). If the Current Market Price per share of Preferred Stock
cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in
clause (i) of this Section 11(d), the Current Market Price per share of
Preferred Stock shall be conclusively deemed to be an amount equal to
1,000 (as such number may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to the
Common Stock occurring after the date of this Agreement) multiplied by
the Current Market Price per share of the Common Stock. If neither the
Common Stock nor the Preferred Stock is publicly held or so listed or
traded, Current Market Price per share of the Preferred Stock shall
mean the fair value per share as determined in good faith by the Board,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all
23
purposes. For all purposes of this Agreement, the Current Market Price
of one one-thousandth of a share of Preferred Stock shall be equal to
the Current Market Price of one share of Preferred Stock divided by
1,000.
(e) Purchase Price Adjustment Threshold. Anything herein to
the contrary notwithstanding, no adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Purchase Price; provided however, that any
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights) shall be made to the nearest cent or to the
nearest hundredth of a share of Common Stock or other share or
one-hundred-thousandth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment, or
(ii) the Expiration Date.
(f) Equivalent Adjustments. If as a result of an adjustment
made pursuant to Section 11(a)(ii) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Certain Adjustments) or Section 13(a)
(Consolidation Merger or Sale or Transfer of Assets or Earning Power --
Flip-over Event) the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 with respect to the Preferred Stock shall apply on like terms to
any such other shares.
(g) Post-Adjustment Rights Issuances. All Rights originally
issued by the Company subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the adjusted Purchase Price,
the number of one one-thousandths of a share of Preferred Stock purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
(h) Preferred Stock Anti-Dilution. Unless the Company shall
have exercised its election as provided in Section 11(i) (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights -- Adjustment of Number of
Rights), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights -- Purchase Price Adjustment -- Capital
Stock) and Section 11(c) (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights -- Purchase Price Adjustment -- Cash, Assets, etc.),
each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-thousandths of a share of Preferred Stock (calculated to the
nearest one-hundred-thousandth) obtained by (i) multiplying (x) the number of
one one-thousandths of a share covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of such
24
Purchase Price, and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of such Purchase Price.
(i) Adjustment of Number of Rights. The Company may elect on
or after the date of any adjustment of the Purchase Price to adjust the number
of Rights, in lieu of any adjustment in the number of one one-thousandths of a
share of Preferred Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after the adjustment in the number of Rights shall be
exercisable for the number of one one-thousandths of a share of Preferred Stock
for which such Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one-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
such Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
This record date may be the date on which the Purchase Price is adjusted or any
day thereafter, but, if the Rights Certificates have been issued, shall be at
least ten (10) calendar days later than the date of the public announcement. If
Rights Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights Certificates
on such record date Rights Certificates evidencing, subject to Section 14
(Fractional Rights and Fractional Shares) the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.
(j) Rights Certificates. Irrespective of any adjustment or
change in the Purchase Price or the number of one one-thousandths of a share of
Preferred Stock issuable upon the exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one one-thousandth of a share of Preferred Stock and the
number of one one-thousandths of a share of such Preferred Stock which were
expressed in the initial Rights Certificates issued hereunder.
(k) Adjustment Below Par Value. Before taking any action that
would cause an adjustment reducing the Purchase Price below the then par or
stated value, if any, of the number of one one-thousandths of a share of
Preferred Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which is or may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable such number of one one-thousandths of a share of Preferred Stock
at such adjusted Purchase Price.
25
(l) Adjustment Effective as of Future Date; Exercise. In any
case in which this Section 11 (Adjustment of Purchase Price; Number and Kind of
Shares or Number of Rights) shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company
may elect to defer until the occurrence of such event the issuance to the holder
of any Right exercised after such record date the number of one one-thousandths
of a share of Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of one
one-thousandths of a share of Preferred Stock and other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due ▇▇▇▇ or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.
(m) Tax Adjustments. Anything in this Section 11 (Adjustment
of Purchase Price; Number and Kind of Shares or Number of Rights) to the
contrary notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly required by
this Section 11, as and to the extent that in its good faith judgment the Board
shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of any shares
of Preferred Stock at less than the Current Market Price, (iii) issuance wholly
for cash of shares of Preferred Stock or securities which by their terms are
convertible into or exchangeable for shares of Preferred Stock, (iv) stock
dividends or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Company to holders of its Preferred Stock
shall not be taxable to such stockholders.
(n) Restriction on Certain Transactions. The Company shall
not, at any time after the earlier of the Stock Acquisition Date or the
Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
(Adjustment of Purchase Price; Number and Kind of Shares or Number of Rights --
Restriction Against Diminishing Benefits of the Rights)), (ii) merge with or
into any other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o)), (iii) enter into a statutory share exchange
or similar transaction with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)), or (iv) sell or
transfer (or permit any Subsidiary to sell or transfer), in one transaction, or
a series of related transactions, assets, cash flow or earning power aggregating
more than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)), if (x) at the time of or immediately after such
consolidation, merger, statutory share exchange or similar transaction, or sale
there are any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger, statutory
share exchange or similar transaction, or sale, the stockholders of the Person
who constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power -- Flip-over Event) shall
26
have received a distribution of Rights previously owned by such Person or any of
its Affiliates and Associates.
(o) Restriction Against Diminishing Benefits of the Rights.
The Company covenants and agrees that, after the earlier of the Stock
Acquisition Date or the Distribution Date, it will not, except as permitted by
Section 23 (Redemption and Termination) or Section 27 (Supplements and
Amendments) take (or permit any Subsidiary to take) any action if at the time
such action is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) Common Stock Adjustments. Anything in this Agreement to
the contrary notwithstanding, in the event that the Company shall at any time
after the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide or split the outstanding shares of Common
Stock, or (iii) combine the outstanding shares of Common Stock into a smaller
number of shares, the number of Rights associated with each share of Common
Stock then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction, the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event. The adjustments
provided for in this Section 11(p) shall be made successively to the Common
Stock whenever such a dividend is declared or paid or such subdivision,
combination or consolidation is effected on such Common Stock.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 (Adjustment of Purchase
Price; Number and Kind of Shares or Number of Rights) and Section 13
(Consolidation, Merger or Sale or Transfer of Assets or Earning Power) the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Preferred Stock
and the Common Stock, a copy of such certificate, and (c) mail or cause the
Rights Agent to mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Common Stock) in accordance with Section 26
(Notices). The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) Flip-over Event. In the event that, following the Stock
Acquisition Date, directly or indirectly, (x) the Company shall consolidate
with, or merge with and into, or enter into a statutory stock exchange or
similar transaction with, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)(Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Restriction
Against
27
Diminishing Benefits of the Rights)), and the Company shall not be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction, (y) any Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)) shall
consolidate with, or merge with or into, or enter into a statutory stock
exchange or similar transaction with, the Company, and the Company shall be the
continuing or surviving corporation of such consolidation, merger or statutory
share exchange or similar transaction and, in connection with such
consolidation, merger or statutory share exchange or similar transaction, all or
part of the outstanding shares of Common Stock shall be changed into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one transaction or a
series of related transactions, assets, cash flow or earning power aggregating
more than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the Company
or any Subsidiary of the Company in one or more transactions each of which
complies with Section 11(o)), then, and in each such case (except as may be
contemplated by Section 13(d) (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power -- Exceptions)), (i) proper provision shall be made so
that: each holder of a Right, except as provided in Section 7(e) (Exercise of
Rights; Purchase Price; Expiration Date of Rights -- Termination of Acquiring
Person's Rights) shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the Principal
Party, not subject to any liens, encumbrances, rights of first refusal or other
adverse claims, as shall be equal to the result obtained by (A) multiplying the
then current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Flip-over Event (or, if a Flip-in Event has occurred prior to
the first occurrence of a Flip-over Event, multiplying the number of such one
one-thousandths of a share for which a Right was exercisable immediately prior
to the first occurrence of a Flip-in Event by the Purchase Price in effect
immediately prior to such first occurrence), and (B) dividing that product
(which, following the first occurrence of a Flip-over Event, shall be referred
to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the Current Market Price per share of the Common Stock of
such Principal Party on the date of consummation of such Flip-over Event; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by virtue
of such Flip-over Event, all the obligations and duties of the Company pursuant
to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the provisions of
Section 11 (Adjustment of Purchase Price; Number and Kind of Shares or Number of
Rights) shall apply only to such Principal Party following the first occurrence
of a Flip-over Event; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its Common Stock) in connection with the consummation of any such transaction
as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights; and (v) the
provisions of Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind
of Shares or Number of Rights -- Certain Adjustments) hereof shall be of no
effect following the first occurrence of any Flip-over Event. Notwithstanding
anything in this Agreement to the contrary, if a Flip-over Event shall occur
prior to the Distribution Date, then (i) the Rights shall survive
28
such Flip-over Event and shall not as a result thereof be cancelled, terminated
or otherwise cease to exist and (ii) the Distribution Date shall be deemed to
have occurred on the day immediately prior to the date of such Flip-over Event.
(b) Principal Party. "PRINCIPAL PARTY" shall mean
(i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a)
(Consolidation, Merger or Sale or Transfer of Assets or Earning Power
-- Flip-over Event), the Person that is the issuer of any securities
into which the shares of Common Stock are converted in such
consolidation, merger or statutory share exchange or similar
transaction, or, if there is more than one such issuer, the issuer of
the shares of Common Stock of which have the greatest aggregate market
value of shares outstanding and if no securities are so issued, (x) the
Person that is the other party to such consolidation, merger or
statutory share exchange or similar transaction if the Person survives
the merger, or, if there is more than one such Person, the Person the
shares of Common Stock of which have the greatest aggregate market
value of shares outstanding, or (y) if the Person that is the other
party to the merger does not survive the merger, the Person that does
survive the merger or (z) the Person resulting from the consolidation,
and
(ii) in the case of any transaction described in
clause (z) of the first sentence of Section 13(a) (Consolidation,
Merger or Sale or Transfer of Assets or Earning Power -- Flip-over
Event), the Person that is the party receiving the greatest portion of
the assets, cash flow or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives that same portion of the assets,
cash flow or earning power so transferred or if the Person receiving
the greatest portion of the assets or earning power cannot be
determined, whichever of such Persons as is the issuer of Common Stock
having the greatest aggregate market value of shares outstanding;
provided, however, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the total outstanding Common Stock having the greatest aggregate
market value.
(c) Supplemental Agreement. The Company shall not consummate a
Flip-over Event unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 (Consolidation, Merger or Sale or Transfer of Assets or Earning
Power) and unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the
29
terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of such Flip-over Event,
the Principal Party will
(i) prepare and file a registration statement under
the Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Act) until the
Expiration Date and take all such other action as may be necessary to
enable the Principal Party to issue the securities purchasable upon
exercise of the Rights, including but not limited to the registration
or qualification of such securities under all requisite securities laws
or jurisdictions of the various states and the listing of such
securities on such exchange and trading markets as may be necessary or
appropriate;
(ii) use its best efforts, if the Common Stock of the
Principal Party shall be listed or admitted to trading on the
New York
Stock Exchange or on another national securities exchange, to list or
admit to trading (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on the
New York
Stock Exchange or such securities exchange, or, if the Common Stock of
the Principal Party shall not be listed or admitted to trading on the
New York Stock Exchange or a national securities exchange, to cause the
Rights and the securities receivable upon exercise of the Rights to be
reported by such other system then in use;
(iii) will deliver to holders of the Rights
historical financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements for
registration on Form 10 (or any successor form) under the Exchange Act;
and
(iv) obtain waivers of any rights of first refusal or
preemptive rights in respect of the Common Stock of the Principal Party
subject to purchase upon exercise of outstanding Rights.
The provisions of this Section 13 (Consolidation, Merger or Sale or Transfer of
Assets or Earning Power) shall similarly apply to successive consolidations,
mergers or statutory share exchanges or similar transactions or sales or other
transfers. In the event that a Flip-over Event shall occur at any time after the
occurrence of a Flip-in Event, the Rights which have not theretofore been
exercised shall thereafter become exercisable in the manner described in Section
13(a) (Consolidation, Merger or Sale or Transfer of Assets or Earning Power --
Flip-over Event).
(d) Exceptions. Notwithstanding anything in this Agreement to
the contrary, Section 13 (Consolidation, Merger or Sale or Transfer of Assets or
Earning Power) shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) (Consolidation, Merger or Sale or
Transfer of Assets or Earning Power -- Flip-over Event) if (i) such transaction
is consummated with a Person or Persons who acquired shares of Common Stock
pursuant to a tender offer or exchange offer for all outstanding shares of
Common Stock which complies with the provisions of Section 11(a)(ii)(A)
(Adjustment of Purchase Price;
30
Number and Kind of Shares or Number of Rights -- Certain Adjustments) (or a
wholly-owned subsidiary of any such Person or Persons), (ii) the price per share
of Common Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such tender or exchange offer and (iii) the form of
consideration being offered in such transaction is the same as the form of
consideration paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such tender offer or exchange offer. Upon consummation of
any such transaction contemplated by this Section 13(d), all Rights hereunder
shall expire.
Section 14. Fractional Rights and Fractional Shares.
(a) Fractional Rights. The Company shall not be required to
issue fractions of Rights, except prior to the Distribution Date as provided in
Section 11(p) (Adjustment of Purchase Price; Number and Kind of Shares or Number
of Rights -- Common Stock Adjustments), or to distribute Rights Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there shall
be paid to the registered holders of the Rights Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price of the Rights for any Trading Day shall be the last sale price,
regular way, or, in case no such sale takes place on such Trading Day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the American Stock Exchange or,
if the Rights are not listed or admitted to trading on the American 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 the National Association of
Securities Dealers, Inc. Automated Quotation System 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 Board. If on any such
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board shall be used.
(b) Fractional Shares of Preferred Stock. The Company shall
not be required to issue fractions of shares of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock which may at the option of the Company, be evidenced by
depositary receipts) upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Preferred Stock (other than fractions which
are integral multiples of one one-thousandth of a share of Preferred Stock).
Interests in fractions of Preferred Stock in integral multiples of one
one-thousandth of a share of Preferred Stock 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,
however, that such agreement shall
31
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Stock represented by such depositary receipts. In lieu of
fractional shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share of Preferred Stock, the Company may pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one one-thousandth of a share of Preferred Stock. For purposes
of this Section 14(b), the current market value of one one-thousandth of a share
of Preferred Stock shall be one one-thousandth of the closing price of a share
of Preferred Stock (as determined pursuant to Section 11(d)(ii) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Current Market
Price) for the Trading Day immediately prior to the date of such exercise.
(c) Fractional Shares of Common Stock Following the occurrence
of a Triggering Event, the Company shall not be required to issue fractions of
shares of Common Stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares of Common Stock. In lieu of fractional shares
of Common Stock, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the current market value of one (1) share
of Common Stock. For purposes of this Section 14(c), the current market value of
one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d)(i) (Adjustment of Purchase Price;
Number and Kind of Shares or Number of Rights -- Current Market Price) for the
Trading Day immediately prior to the date of such exercise.
(d) Waiver of Fractional Rights and Shares. The holder of a
Right by the acceptance of the Right expressly waives his or her right to
receive any fractional Rights or any fractional shares upon exercise of a Right,
except as permitted by this Section 14 (Fractional Rights and Fractional
Shares).
Section 15. Rights of Action. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
32
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates
are transferable only on the registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) (Transfer, Split Up,
Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates -- Procedure) and Section 7(f) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Surrender of Rights Certificates;
Identity of Beneficial Owner), the Company and the Rights Agent may deem and
treat the person in whose name a Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the associated
Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Termination of Acquiring Person's
Rights), shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 (Notice of Certain Events)), or to receive dividends or
subscription rights, or otherwise, until
33
the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) Compensation. The Company shall 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
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability or expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted to be
done by the Rights Agent in connection with the acceptance and administration of
this Agreement, including the costs and expenses of defending against or
investigating any claim of liability in the premises.
(b) Reliance. The Rights Agent shall be protected and shall
incur no liability for or in respect of any action taken, suffered or omitted to
be taken by it in connection with its administration of this Agreement in
reliance upon any Rights Certificate or certificate for Common Stock or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 (Duties of Rights Agent).
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Successor. Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer business of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 (Change of Rights Agent). In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Rights Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Rights Certificates shall have the full force provided in
the Rights Certificates and in this Agreement.
(b) Prior Countersignatures. In case at any time the name of
the Rights Agent shall be changed and at such time any of the Rights
Certificates shall have been countersigned
34
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) Legal Counsel. The Rights Agent may consult with legal
counsel (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted to be taken by it in good faith and in
accordance with such opinion.
(b) Certification by the Company. Whenever in the performance
of its duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation, the identity
of any Acquiring Person and the determination of Current Market Price) be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
to the Rights Agent for any action taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.
(c) Liability for Negligence, etc. The Rights Agent shall be
liable hereunder only for its own negligence, bad faith or willful misconduct.
(d) Statements of Fact or Recitals. The Rights Agent shall not
be liable for or by reason of any of the statements of fact or recitals
contained in this Agreement or in the Rights Certificates or be required to
verify the same (except as to its countersignature on such Rights Certificates),
but all such statements and recitals are and shall be deemed to have been made
by the Company only.
(e) Agreement; Adjustments. The Rights Agent shall not be
under any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 (Adjustment of Purchase Price; Number and
Kind of Shares or Number of Rights) or Section 13 (Consolidation, Merger or Sale
or Transfer of Assets or Earning Power) 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 Rights Certificates after actual notice of any such adjustment);
nor shall it
35
by any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) Further Assurances. 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) Instructions. The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from the President, any Vice President, the Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company and to apply
to such persons for advice or instructions in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with the instructions of any such person.
(h) Dealing in Rights. The Rights Agent and any stockholder,
director, officer or employee of the Rights Agent may buy, sell or deal in any
of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) Agents; Reasonable Care. The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it or perform any duty
hereunder either itself or by or through its attorneys or agents, and the Rights
Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct; provided, however,
reasonable care was exercised in the selection and continued employment thereof.
(j) Expenses; Repayment Assurances. No provision of this
Agreement shall require the Rights Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of its rights if there shall be reasonable grounds
for believing that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(k) Exercise of Rights; Consultation with Company. If, with
respect to any Rights Certificate surrendered to the Rights Agent for exercise
or transfer, the certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been completed or
indicates an affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested exercise of
transfer without first consulting with the Company.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty (30) calendar
36
days' notice in writing mailed to the Company, and to each transfer agent of the
Common Stock and Preferred Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon thirty (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 Common Stock and Preferred Stock,
by registered or certified mail, and to the holders of the Rights Certificates
by first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (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 Rights Certificate
(who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then the registered holder of any Rights Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of any State of the United States, in good standing, which is
authorized under such laws to exercise stock transfer or corporate trust powers,
is subject to supervision or examination by federal or state authority and has
at the time of its appointment as Rights Agent a combined capital and surplus of
at least $50,000,000 or (b) an Affiliate of a corporation described in clause
(a) of this sentence. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and Preferred Stock, and mail a notice thereof in writing to
the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21 (Change of Rights Agent), or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by the Board to reflect any adjustment or change in the
Purchase Price and the number or kind or shares or other securities or property
purchasable under the Rights Certificates made in accordance with the provisions
of this Agreement. In addition, in connection with the issuance or sale of
shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to
shares of Common Stock so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement, or upon the exercise,
conversion or exchange of securities hereafter issued by the Company, in either
case outstanding as of the Distribution Date, and (b) may, in any other case, if
deemed necessary or appropriate by the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights Certificate shall be issued
if, and to the extent that, the Company shall be advised by counsel that such
issuance would create a significant risk of material, adverse tax consequences
to the Company or
37
the Person to whom such Rights Certificate would be issued, and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination.
(a) Redemption. The Company may, at its option, at any time
prior to the earlier of (i) the Stock Acquisition Date, or (ii) the Final
Expiration Date, redeem (the date of such redemption being referred to herein as
the "REDEMPTION DATE") all but not less than all of the then outstanding Rights
at a redemption price of $0.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "REDEMPTION PRICE"). The redemption of the Rights by the
Company may be made effective at such time, on such basis and with such
conditions as the Board in its sole discretion may establish. The Company may,
at its option, pay the Redemption Price in cash, shares of Common Stock (based
on the Current Market Price of the Common Stock at the time of redemption) or
any other form of consideration deemed appropriate by Board.
(b) Effect of Redemption; Procedure. Immediately upon the
action of the Company ordering the redemption of the Rights and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price for each Right so held. Promptly after the
Redemption Date, the Company shall (i) give notice of such redemption to the
Rights Agent, (ii) give public notice of such redemption; provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such redemption, and (iii) mail notice of such redemption to the
holders of the then outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the Transfer Agent for the Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made. Amounts
payable shall be rounded down to the nearest $0.01.
Section 24. Exchange.
(a) Right to Exchange. The Company may, at its option, at any
time and from time to time after the first occurrence of a Flip-in Event,
exchange all or part of the then outstanding and exercisable Rights (other than
Rights which have become void as provided in Section 7(e) (Exercise of Rights;
Purchase Price; Expiration Date of Rights -- Termination of Acquiring Person's
Rights)) for the Exchange Number of shares of Common Stock, shares or units of
Preferred Stock which the Board has determined to be a Common Stock Equivalent,
units of other property or any combination thereof as determined by the Board.
Notwithstanding the foregoing, the Company shall not be empowered to effect such
exchange at any time after any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or any such Subsidiary or
any entity holding shares of Common Stock for or pursuant to any such plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of Common Stock then outstanding.
The
38
exchange of the Rights by the Company may be made effective at such time, on
such basis and with such conditions as the Board in its sole discretion may
establish.
(b) Effect of Exchange; Procedure. Immediately upon the action
of the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24, evidence of which shall have been filed with the Rights Agent
and without any further action and without any notice, the right to exercise
such Rights will terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock, Common Stock
Equivalents or units of other property equal to the number of such Rights held
by such holder multiplied by the Exchange Number. Promptly after the action of
the Company ordering the exchange of the Rights, the Company shall (i) file
evidence of such action with the Rights Agent, (ii) give public notice of such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange, and (iii) mail notice of
such exchange to the holders of such Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange of Rights shall
be effected pro rata based on the number of Rights (other than Rights which have
become void as provided in Section 7(e) (Exercise of Rights; Purchase Price;
Expiration Date of Rights -- Termination of Acquiring Person's Rights)) held by
each holder of Rights.
(c) Common Stock Equivalents. In any exchange pursuant to this
Section 24, the Company, at its option, may substitute Common Stock Equivalents
for Common Stock exchangeable for Rights, at the initial rate of one share of
Common Stock Equivalent for each share of Common Stock, as appropriately
adjusted to reflect adjustments in the voting rights of the Common Stock
pursuant to the Company's Second Amended and Restated Certificate of
Incorporation, as amended, so that the share of Common Stock Equivalent
delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.
(d) Insufficient Common Stock. In the event that the number of
shares of Common Stock which are authorized by the Company's Second Amended and
Restated Certificate of Incorporation, as amended, but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights is not
sufficient to permit any exchange of such Rights for Common Stock in accordance
with this Section 24, the Company may, at its option, take all such action as
may be necessary to authorize additional shares of Common Stock for issuance
upon such exchange.
(e) Fractional Shares. Upon the action of the Company ordering
the exchange of any Rights pursuant to paragraph (a) of this Section 24, the
Company shall not be required to issue fractions of shares or to distribute
certificates which evidence fractional shares. In lieu of such fractional
shares, the Company may pay to the registered holders of the Rights Certificates
with regard to which such fractional shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of one
share of Common Stock. For purposes of this Section 24, the current market value
of one share of Common Stock shall be the closing price of one share of Common
Stock (as determined pursuant to Section 11(d)(i) (Adjustment of
39
Purchase Price; Number and Kind of Shares or Number of Rights -- Current Market
Price)) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24, and the value of any Common Stock Equivalent shall be deemed
to have the same current market value as the Common Stock on such date.
Section 25. Notice of Certain Events.
(a) Preferred Stock Transactions, etc. In case the Company
shall propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company);
(ii) to offer to the holders of Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or shares of stock
of any class or any other securities, rights or options; (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock); (iv) to effect
any consolidation with, merger into or with, or statutory share exchange or
similar transaction with, any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) (Adjustment of
Purchase Price; Number and Kind of Shares or Number of Rights -- Restriction
against Diminishing Benefits of the Rights)), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one transaction or a series of related transactions, of more
than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)); (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the shares
of Common Stock payable in Common Stock or to effect a subdivision, combination
or consolidation of the shares of Common Stock (by reclassification or otherwise
than by payment of dividends in Common Stock), then, in each such case, the
Company shall give to each holder of a Rights Certificate, to the extent
feasible and in accordance with Section 26 (Notices), a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, statutory share exchange or similar
transaction, sale, transfer, liquidation, dissolution, or winding up is to take
place and the date of participation therein by the holders of the shares of
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least
twenty (20) calendar days prior to the record date for determining holders of
the shares of Preferred Stock for purposes of such action, and in the case of
any such other action, at least twenty (20) calendar days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of the shares of Preferred Stock, whichever shall be the earlier.
(b) Other Transactions. In case any of the events set forth in
Section 11(a)(ii) (Adjustment of Purchase Price; Number and Kind of Shares or
Number of Rights -- Certain Adjustments) shall occur, then, in any such case,
(i) the Company shall as soon as practicable thereafter give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 26
(Notices), a notice of the occurrence of such event, which shall specify the
event and the consequences of the event to holders of Rights under Section
11(a)(ii), and (ii) all
40
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company shall be sufficiently given or made if sent by facsimile
(with receipt confirmed) or by first-class mail, postage prepaid, addressed
(until another address is filed in writing with the Rights Agent) as follows:
Kitty Hawk, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
P.O. Box 612787
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
Strategic Planning, General Counsel
and Corporate Secretary
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇)▇▇▇-▇▇▇▇
Subject to the provisions of Section 21 (Change of Rights Agent), any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by facsimile (with receipt confirmed) or by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
American Stock Transfer & Trust Company
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. For so long as the Rights are
redeemable, and subject to the penultimate sentence of this Section 27, the
Company may, and the Rights
41
Agent shall, if the Company so directs, supplement or amend any provision of
this Agreement without the approval of any holders of certificates representing
shares of Common Stock or, on and after the Distribution Date, the holders of
Rights Certificates. At any time when the Rights are no longer redeemable and
subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates; provided,
however, that no such supplement or amendment may (i) adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of any such Person) or, prior to the Distribution
Date, holders of certificates representing shares of Common Stock; (ii) cause
this Agreement again to become amendable other than in accordance with this
sentence; or (iii) cause the Rights again to become redeemable. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price, the
Final Expiration Date, the Purchase Price, or the number of one one-thousandths
of a share of Preferred Stock for which a right is exercisable; provided,
however, that at any time prior to (i) a Stock Acquisition Date or (ii) the date
that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 15% (or, in the case of
Resurgence greater than 30.0%, or, in the case of Everest greater than 24.7%,
or, in the case of Stockton greater than 20.0%, in each case, for so long as it
is an Exempted Person) or more of the shares of Common Stock then outstanding
the Board may amend this Agreement to increase the Purchase Price or extend the
Final Expiration Date. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Stock.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act. The Board shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations
42
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by the Board in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board to any liability to
the holders of the Rights.
Section 30. Periodic Review. The TIDE Committee (as hereinafter
defined) of the Board of Directors of the Company shall review and evaluate this
Rights Agreement in order to consider whether the maintenance of this Rights
Agreement continues to be in the best interests of the Company and its
stockholders, at least every three (3) years, or sooner if any Person shall have
made a proposal to the Company, or taken any other action, that, if effective,
could cause such Person to become an Acquiring Person hereunder, if a majority
of the members of the TIDE Committee shall deem such review and evaluation
appropriate after giving due regard to all relevant circumstances. Following
each such review, the TIDE Committee will communicate its conclusions to the
full Board of Directors of the Company, including any recommendation in light
thereof as to whether this Rights Agreement should be modified or the Rights
should be redeemed. The "TIDE COMMITTEE" shall be appointed by the Board of
Directors of the Company and shall be comprised of at least three (3) directors
of the Company who are not officers, employees or Affiliates of the Company.
Section 31. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 32. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board determines
in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement, the
right of redemption set forth in Section 23 (Redemption and Termination) shall
be reinstated and shall not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board.
Section 33. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State; provided, however, that the
rights, duties, responsibilities and obligations of the Rights Agent shall be
governed and construed in accordance with the laws of the State of
New York.
43
Section 34. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 35. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
44
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.
KITTY HAWK, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Title: Vice President, General Counsel
-------------------------------
and Secretary
-------------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: Vice President
-------------------------------
45
EXHIBIT 1
CERTIFICATE OF
DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES A PREFERRED STOCK
OF
KITTY HAWK, INC.
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary of Kitty Hawk, Inc. (the
"CORPORATION"), a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "GCL"), in accordance with the
provisions of Section 103 of the GCL, DO HEREBY CERTIFY
That pursuant to the authority conferred upon the Board of Directors
(the "BOARD") by the Second Amended and Restated Certificate of Incorporation of
the Corporation, as amended, the said Board on January 21, 2004, adopted the
following resolutions creating a series of 120,000 shares of Preferred Stock,
par value $.01 per share, designated as Series A Preferred Stock:
RESOLVED, that, pursuant to the authority vested in the Board in
accordance with the provisions of its Second Amended and Restated Certificate of
Incorporation, as amended, the Board does hereby create, authorize and provide
for the issuance upon the exercise of the Corporation's Preferred Stock Purchase
Rights, of a series of Preferred Stock of the Corporation, and does hereby fix
and state that the designations, amounts, powers, preferences and relative and
other special rights and the qualifications, limitations or restrictions thereof
are as follows:
Series A Preferred Stock
Section 1. Designation and Amount. The shares of such series shall be
designated as Series A Preferred Stock and the number of shares constituting
such series shall be 120,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock in preference to the holders of Common Stock,
par value $0.000001 per share (the "COMMON STOCK"), and of any other stock of
the Corporation ranking junior to the Series A Preferred Stock with respect to
dividends shall be entitled to receive, when, as and if declared by the Board
out of funds legally available for that purpose, quarterly dividends payable in
cash on the 1st day of March, June, September and December (each such date being
referred to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $0.001 or (b) subject to the
provision for adjustment hereinafter set forth, one thousand (1,000) times the
aggregate per share amount of all
cash dividends, and one thousand (1,000) times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock, since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock. In the
event the Corporation shall at any time after January 21, 2004 (the "RIGHTS
DECLARATION DATE") (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
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 Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $0.001 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is prior to the record
date for the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
may fix a record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than sixty (60) days prior
to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to one thousand (1,000) votes which each
share of Common Stock is entitled to vote. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare any dividend on Common
Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock, or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders of
shares of Series A Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation. Except as otherwise provided herein or by law,
the holders of the shares of Series A Preferred Stock shall not be entitled to
vote as a separate class on any matters submitted to a vote of the stockholders.
(C) Except as set forth herein, holders of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to, the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a parity
with the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board) to all holders of
such shares upon such terms as the Board, after consideration of the respective
annual dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board, subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of Common Stock or of shares of
any other stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless, prior
thereto, the holders of shares of Series A Preferred Stock shall have received
an amount equal to the greater of (i) $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment and (ii) an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock (the "SERIES A LIQUIDATION PREFERENCE") or (2) to the holders of shares of
stock ranking on a parity upon liquidation, dissolution or winding up with the
Series A Preferred Stock, except distributions made ratably on the Series A
Preferred Stock 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 Corporation shall at any time after
the Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of the preceding sentence shall 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.
Section 7. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock,
securities, cash or any other property, then in any
such case the shares of Series A Preferred Stock shall 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 thousand (1,000)
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 Corporation shall at any
time after the Rights Declaration Date (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock,
or (ii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series A Preferred Stock shall 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.
Section 8. Redemption. The outstanding shares of Series A Preferred
Stock may be redeemed at the option of the Board as a whole, but not in part, at
any time, or from to time to time, at a cash price per share equal to one
hundred five percent (105%) of (i) the product of the Adjustment Number (as such
term is hereinafter defined) times the Average Market Value (as such term is
hereinafter defined) of the Common Stock, plus (ii) all dividends which on the
redemption date have accrued on the shares to be redeemed and have not been
paid, or declared and a sum sufficient for the payment thereof set apart,
without interest. The "Adjustment Number" is one thousand (1,000) (as
appropriately adjusted as set forth in the last sentence of Section 6 to reflect
such events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock). The "Average Market Value" is the average of the closing
sale prices of the Common Stock during the thirty (30) day period immediately
preceding the date before the redemption date on the
New York Stock Exchange,
or, if such stock is not listed on such Exchange, on the Composite Tape for
American Stock Exchange Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the principal United States securities exchange registered
under the Securities Exchange Act of 1934, as amended, on which such stock is
listed, or, if such stock is not listed on any such exchange, the average of the
closing sale prices with respect to a share of Common Stock during such thirty
(30) day period, as quoted on the National Association of Securities Dealers,
Inc. Automated Quotations System or any system then in use, or if no such
quotations are available, the fair market value of the Common Stock as
determined by the Board in good faith.
Section 9. Ranking. The Series A Preferred Stock shall rank (a) senior
to all Common Stock and (b) junior to all other series of preferred stock with
respect to the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.
Section 10. Amendment. The Second Amended and Restated Certificate of
Incorporation of the Corporation, as amended, shall not be further amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. At the Corporation's sole discretion,
Series A Preferred Stock may be issued in fractions of a share which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
********
IN WITNESS WHEREOF, I have executed and subscribed this Certificate of
Designation and do affirm the foregoing as true as of [_______, 2004].
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Secretary
EXHIBIT 2
[FORM OF RIGHTS CERTIFICATE]
Certificate No. R____ ______ Rights
NOT EXERCISABLE AFTER THE EARLIER OF JANUARY 20, 2014, OR SUCH DATE AS THE
RIGHTS REPRESENTED HEREBY ARE REDEEMED BY KITTY HAWK, INC. (THE "CORPORATION").
THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE SUBJECT TO REDEMPTION, AT
THE OPTION OF THE CORPORATION, AT $0.001 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT DATED AS OF JANUARY 21, 2004, BY AND BETWEEN THE CORPORATION
AND AMERICAN STOCK TRANSFER & TRUST COMPANY, AS RIGHTS AGENT (THE "RIGHTS
AGREEMENT"). UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY
SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY
BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) (EXERCISE OF
RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS -- TERMINATION OF ACQUIRING
PERSON'S RIGHTS) OF SUCH AGREEMENT.](1)
RIGHTS CERTIFICATE
KITTY HAWK, INC.
This certifies that ____________________________, or its, his or her
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 January 21, 2004
(the "RIGHTS Agreement"), between Kitty Hawk, Inc., a Delaware corporation (the
"CORPORATION"), and American Stock Transfer & Trust Company (the "RIGHTS
AGENT"), to purchase from the Corporation at any time prior to 5:00 P.M. (New
York, New York time) on January 20, 2014 at the office or offices of the Rights
Agent designated for such purpose, or its successors as Rights Agent, one
one-thousandth (1/1,000) of a fully paid, nonassessable share of Series A
Preferred Stock (the "SERIES A PREFERRED STOCK") of the Corporation, at a
purchase price of $10.00 per one one-thousandth (1/1,000) of a share (the
"PURCHASE PRICE"), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and related Certificate duly executed. The
number of Rights evidenced by this Rights Certificate (and the
--------
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
number of shares 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
____________, ____, based on the Series A Preferred Stock as constituted at such
date. The Corporation reserves the right to require prior to the occurrence of a
Triggering Event (as such term is defined in the Rights Agreement) that upon any
exercise of Rights, a number of Rights be exercised so that only whole shares of
Series A Preferred Stock would be issued.
Upon the occurrence of a Flip-in Event (as such term is defined in the
Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate or
any such Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of an Acquiring Person or its Associate or Affiliate who becomes a
transferee after such Acquiring Person or its Associate or Affiliate becomes
such, or (iii) under certain circumstances specified in the Rights Agreement, a
transferee of an Acquiring Person or its Associate or Affiliate who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such,
such Rights shall become null and void and no holder hereof shall have any right
with respect to such Rights from and after the occurrence of such Flip-in Event.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Series A Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Corporation and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-thousandths of a share of Series A
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights for which this Rights Certificate is not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Corporation at its option at a
redemption price of $0.001
per Right at any time prior to the earlier of (a) the Stock Acquisition Date (as
such term is defined in the Rights Agreement) or (b) the Final Expiration Date
(as such term is defined in the Rights Agreement) and (ii) may be exchanged in
whole or in part for Series A Preferred Stock, shares of the Corporation's
Common Stock, par value $0.000001 per share, other property or any combination
thereof.
In addition, the Rights may be exchanged, in whole or in part, for
shares of the Common Stock, or shares of Common Stock equivalents of the
Corporation having substantially the same dividend, voting and liquidation
rights as shares of Common Stock and are deemed in good faith by the Board of
Directors to have substantially the same value as the shares of Common Stock.
Immediately upon the action of the Board of Directors of the Corporation
authorizing any such exchange, and without any further action or any notice, the
Rights (other than Rights which are not subject to such exchange) will terminate
and the Rights will only enable holders to receive the shares issuable upon such
exchange.
No fractional shares of Series A Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one one-thousandth (1/1,000) of a share of Series A
Preferred Stock, which may, at the election of the Corporation, be evidenced by
depositary receipts), but a cash payment will be made in lieu thereof, as
provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of shares of Series A
Preferred Stock or of any other securities of the Corporation which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Corporation or any right to vote
for the election of directors or upon any matter submitted to stockholders of
the Corporation at any meeting thereof, or to give or withhold consent to any
corporate action or to receive notice of meetings or other actions affecting
stockholders of the Corporation (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal.
Dated as of _________________
ATTEST: KITTY HAWK, INC.
By: By:
----------------------------- ---------------------------------
Secretary Title:
--------------------------
Countersigned:
RIGHTS AGENT
By:
-----------------------------
Authorized Signature
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Rights Certificate.)
FOR VALUE RECEIVED, ___________________________________________________________
hereby sells, assigns and transfers unto ______________________________________
-------------------------------------------------------------------------------
(PLEASE PRINT NAME AND ADDRESS OF TRANSFEREE)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ____________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Corporation, with full power of substitution.
Dated:
---------------------- --------------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:
---------------------- --------------------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: KITTY HAWK, INC.
The undersigned hereby irrevocably elects to exercise _______________
Rights represented by this Rights Certificate to purchase the shares of Series A
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Corporation or of any other person which may be issuable upon
the exercise of the Rights) and requests that certificates for such shares 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 shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security or other identifying number
--------------------------------------------------------------------------------
(PLEASE PRINT NAME AND ADDRESS)
--------------------------------------------------------------------------------
Dated:
---------------------- --------------------------------------------
Signature
Signature Guaranteed:
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being acquired or exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such
terms are defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:
---------------------- --------------------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
EXHIBIT 3
[Letter to Stockholders]
, 2004
--------------- ------
Dear Kitty Hawk Stockholder:
On January 21, 2004, your Board of Directors adopted a Stockholder Rights
Plan designed to prevent a potential acquiror from gaining control of the
Company without fairly compensating all of the Company's stockholders.
The Rights will initially trade with shares of the Company's Common Stock
and will have no impact on the way in which the Company's shares are traded.
There are no separate certificates or market for the Rights.
The Rights will not separate from the Common Stock until the earlier of
(1) ten business days after a public announcement that a person has acquired 15%
(subject to certain exceptions as set forth in the Rights Plan) or more of the
shares of the Company's Common Stock or (2) ten business days (or any later date
determined by the Company's Board of Directors) after a person makes a tender or
exchange offer for 15% (subject to certain exceptions as set forth in the Rights
Plan) or more of the shares of the Company's Common Stock. The Rights Plan
provides limited exemptive relief to certain of the Company's existing
significant stockholders and their subsequent transferees.
Many other public companies have adopted similar plans, indicating
widespread agreement that such plans can help Directors deflect coercive and
inadequate offers.
A summary of the terms of the Rights is included with this letter.
Sincerely,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Chief Executive Officer, President and Director
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On January 21, 2004, the Board of Directors (the "BOARD") of Kitty
Hawk, Inc. ("KITTY HAWK") declared a dividend distribution to its stockholders
of record at the close of business on February 2, 2004, of one preferred stock
purchase right (a "RIGHT") for each outstanding share of Common Stock, par value
$0.000001 per share (the "COMMON STOCK"), that will entitle the registered
holder to purchase from Kitty Hawk one one-thousandth (1/1,000) of a share of
Series A Preferred Stock, par value $0.01 per share (the "PREFERRED Stock"), at
a purchase price of $10.00 per one one-thousandth (1/1,000) of a share, subject
to adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "RIGHTS AGREEMENT") between Kitty Hawk and American Stock
Transfer & Trust Company, as Rights Agent (the "RIGHTS AGENT"). Initially
capitalized terms used but not defined herein have the meanings set forth in the
Rights Agreement.
Separation and Distribution of Rights; Exercisability. Initially, the
Rights will be attached to all certificates representing shares of Common Stock
then outstanding, and no separate Rights certificates will be distributed. The
Rights will separate from the Common Stock upon the earlier of:
o ten (10) business days following a public
announcement that a person or group of affiliated or
associated persons has acquired, or obtained the
right to acquire, beneficial ownership of 15% or more
of the shares of Common Stock then outstanding
(subject to certain exceptions discussed below and as
set forth in the Rights Agreement) (such person is
referred to as an "ACQUIRING PERSON"); or
o ten (10) business days (or some later date as
determined by the Board) following the commencement
of a tender or exchange offer that would result in a
person or group beneficially owning 15% or more of
the shares of Common Stock then outstanding (or, in
the case of Resurgence Asset Management, L.L.C.,
greater than 30.0%, in the case of Everest Capital
Limited, greater than 24.7% or in the case of
Stockton, LLC, greater than 20.0%, in each case, for
so long as it is an Exempted Person) (subject to
additional exceptions as set forth in the Rights
Agreement).
The date the Rights separate from the Common Stock is referred to as the
"DISTRIBUTION DATE."
Until the Distribution Date, (i) the Rights will be evidenced by and
transferred with, and only with, the Common Stock certificates, (ii) new Common
Stock certificates issued after February 2, 2004 will contain a notation
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by those
certificates. Pursuant to the Rights Agreement, Kitty Hawk reserves the right to
require prior to the occurrence of a Triggering Event (as hereinafter defined)
that, upon any exercise of Rights, a number of Rights be exercised so that only
whole shares of Preferred Stock will be issued.
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on January 20, 2014, unless earlier redeemed by
Kitty Hawk as described below.
As soon as practicable after the Distribution Date, Rights certificates
will be mailed to the holders of record of Common Stock as of the close of
business on the Distribution Date and, after that, the separate Rights
certificates will represent the Rights. Except in connection with shares of
Common Stock issued or sold pursuant to the exercise of stock options under any
employee plan or arrangements, or upon the exercise, conversion or exchange of
securities issued by Kitty Hawk in the future, or as otherwise determined by the
Board, only shares of Common Stock issued prior to the Distribution Date will be
issued with Rights.
Exemption for Certain Significant Stockholders and Subsequent
Transferees. The Rights Agreement provides some exemptive relief to Resurgence
Asset Management, L.L.C., Everest Capital Limited and Stockton, LLC, who each
beneficially owned on January 21, 2004 more than 15% of ▇▇▇▇▇ ▇▇▇▇'▇ Common
Stock (the "SIGNIFICANT STOCKHOLDERS") and their subsequent transferees. The
Rights Agreement provides that none of these Significant Stockholders will be an
"Acquiring Person" and trigger the poison pill based on their existing
beneficial ownership of Common Stock. In addition, each of the Significant
Stockholders will be able to acquire up to, but not exceeding, the lesser of (a)
an additional five percent of Common Stock (excluding any Investor Shares
(defined below)) and (b) such number of additional shares which, when added to
the person's existing beneficial ownership, equals 30% of the Common Stock
(including any Investor Shares). The exercise of warrants by the Significant
Stockholders will not trigger the poison pill because they are already deemed to
beneficially own the shares of Common Stock that may be purchased upon exercise
of the warrants. The exemption for a Significant Stockholder will terminate when
it no longer beneficially owns at least 15% of the Common Stock.
In addition, the exemptive relief will apply to a limited extent to
subsequent transferees of Common Stock held by the Significant Stockholders. If
a person acquires Common Stock from a Significant Stockholder ("INVESTOR
SHARES"), the Investor Shares will not be included in calculating whether the
person beneficially owns 15% of the Common Stock and trigger the poison pill if,
within five (5) Business Days after the acquisition of any Investor Shares, the
transferee has delivered written notice to the Company or disclosed in its
public filings with the SEC that the transferee meets the following conditions:
(1) the person does not beneficially own five percent or more of the
Common Stock (excluding for this purpose any Investor Shares);
(2) the person owns at least 15% of the outstanding Common Stock
(including Investor Shares); and
(3) the person does not beneficially own more than 30% of the shares of
Common Stock (including any Investor Shares).
If at any time following the transfer, the transferee does not meet one
of the conditions described above, the Investor Shares would no longer be
treated as Investor Shares under the
Rights Agreement and the transferee would no longer have the benefit of the
exemptive relief. Subclause (3) above caps any one person's ownership of Common
Stock, regardless of the source of the shares. Any shares sold into the market
would no longer be treated as Investor Shares acquired from a Significant
Stockholder and, as a result, would thereafter be included in the calculation of
the beneficial ownership level. The exemptive relief would apply to subsequent
transfers of Investor Shares but would expire when the Investor Shares were
transferred to a transferee that did not meet the conditions set forth above.
Flip-in Events. Each holder of a Right (other than the Acquiring Person
and any associate or affiliate thereof) will have the right to receive, upon
exercise, Common Stock (or, in some circumstances, cash, property or other
securities of Kitty Hawk) having a value equal to two times the purchase price
of the Right, as the case may be, if:
o any person becomes an Acquiring Person (except
pursuant to specified exceptions, including an offer
made for all outstanding shares of Common Stock at a
price and upon terms and conditions that the Board
determines to be in the best interests of Kitty Hawk
and its stockholders);
o Kitty Hawk is the surviving corporation in a merger
with an Acquiring Person and the Common Stock is not
changed or exchanged; or
o during the time that there is an Acquiring Person, an
event occurs that results in increasing the Acquiring
Person's beneficial ownership of shares of Common
Stock by more than 1%.
Notwithstanding any of the foregoing, following the occurrence of any of the
events described in this paragraph, all Rights that are, or (under some
circumstances specified in the Rights Agreement) were, beneficially owned by any
Acquiring Person will be null and void. The events described in this paragraph
are referred to as "FLIP-IN EVENTS."
For example, at a purchase price of $10.00 per Right, each Right not
owned by an Acquiring Person (or by some related parties or transferees)
following an event set forth in the preceding paragraph would entitle its holder
to purchase $20.00 worth of Common Stock (or other consideration, as noted
above) for $10.00.
Flip-over events. At any time following a public announcement that a
person has become an Acquiring Person, each holder of a Right (except Rights
which previously have been voided as set forth above) will have the right to
receive, upon exercise, common stock of an acquiring company having a value
equal to two times the purchase price of the Right if any of the following
occur:
o Kitty Hawk enters into a merger in which Kitty Hawk
is not the surviving corporation;
o Kitty Hawk is the surviving corporation in a merger
pursuant to which all or part of the outstanding
shares of Common Stock are changed into or exchanged
for stock or other securities of any other person or
cash or any other property; or
o more than 50% of the combined assets, cash flow or
earning power of Kitty Hawk and its subsidiaries is
sold or transferred (in each case other than some
consolidations with, mergers with and into, or sales
of assets, cash flow or earning power by or to
subsidiaries of Kitty Hawk as specified in the Rights
Agreement).
The events described in this paragraph are referred to as "FLIP-OVER EVENTS."
Flip-in events and Flip-over events are referred to collectively as "TRIGGERING
EVENTS."
Anti-dilution Adjustments; Fractional Shares. The applicable purchase
price payable, the number of shares of Preferred Stock or other securities or
property issuable upon the exercise of the Rights, and the number of applicable
Rights outstanding are subject to adjustment from time to time to prevent
dilution:
o in the event of a stock dividend on, or a
subdivision, combination or reclassification of,
Preferred Stock;
o if the holders of Preferred Stock are granted rights,
options or warrants to subscribe for the applicable
Preferred Stock or securities convertible into the
applicable Preferred Stock at less than the current
market price of the applicable Preferred Stock; or
o upon the distribution to holders of Preferred Stock
of evidences of indebtedness, cash (excluding regular
quarterly cash dividends), assets (other than
dividends payable in Preferred Stock) or subscription
rights or warrants (other than those referred to in
the bullet point immediately above).
The number of outstanding Rights are also subject to adjustment in the event of
a stock dividend on, or a subdivision or combination of Common Stock. With some
exceptions, no adjustment in the purchase price relating to a Right will be
required until cumulative adjustments amount to at least one percent (1%) of the
purchase price relating to the Right.
No fractional shares of Preferred Stock are required to be issued
(other than fractions which are integral multiples of one one-thousandth
(1/1,000) of a share of Preferred Stock) and, in lieu of the issuance of
fractional shares, Kitty Hawk may make an adjustment in cash based on the market
price of the Preferred Stock on the trading date immediately prior to the date
of exercise.
Dividend, Liquidation and Redemption Rights of the Preferred Stock.
Each share of Preferred Stock will be entitled, when, as and if declared, to a
minimum preferential quarterly dividend payment equal to the greater of $0.001
per share and an aggregate amount of 1,000 times the dividend declared per share
of Common Stock (other than stock dividends payable in Common Stock). Upon
liquidation, the holders of Preferred Stock will be entitled to the greater
of (1) a minimum preferential liquidation payment of $1,000 per share (plus any
accrued but unpaid dividends) and (2) an aggregate payment equal to 1,000 times
the payment to be made per share of Common Stock. Each share of Preferred Stock
will have 1,000 times the number of votes each share of the Common Stock has on
matters the respective class is entitled to vote on, which will be voted
together with Common Stock. Upon any merger, consolidation or other transaction
in which shares of Common Stock are converted or exchanged, each share of
Preferred Stock will be entitled to receive 1,000 times the amount received per
share of Common Stock. These rights are protected by customary antidilution
provisions.
At any time, or from time to time, the Board may redeem the outstanding
shares of Preferred Stock, in whole but not in part, at a cash price per share
equal to one hundred five percent (105%) of (i) 1,000 (subject to adjustment)
times the average market value of Common Stock plus (ii) all accrued and unpaid
dividends of the Preferred Stock as of the redemption date.
Because of the nature of the dividend, liquidation and voting rights of
Preferred Stock, the value of the one one-thousandth interest in a share of
Preferred Stock purchasable upon exercise of each Right, should approximate the
value of one share of Common Stock.
Exchange of the Rights. At any time after the occurrence of a Flip-in
Event and prior to the acquisition by a person or group of 50% or more of the
shares of Common Stock then outstanding, the Board may, without payment of the
purchase price by the holder, exchange the Rights, in whole or in part, as
follows:
o one Right (other than the Rights owned by the
Acquiring Person or group, which will become void)
for one-half the number of shares of Common Stock,
one one-thousandths of a share of Preferred Stock or
shares or other units of other property for which a
Right is exercisable immediately prior to the time of
the action of the Board to exchange the Rights.
Redemption of the Rights. At any time until a public announcement that
a person has become an Acquiring Person, Kitty Hawk may redeem all, but not less
than all, of the Rights at a price of $0.001 per Right (payable in cash, shares
of Common Stock or other consideration deemed appropriate by the Board and
subject to adjustment). Immediately upon the action of the Board ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of these Rights will be to receive the $0.001 redemption price.
No Rights as Stockholder. Until a Right is exercised, the holder will
have no rights as a stockholder of Kitty Hawk, including, without limitation,
the right to vote or to receive dividends.
Amendment of the Rights Agreement. Other than those provisions relating
to the principal economic terms of the Rights, any of the provisions of the
Rights Agreement may be amended by the Board at any time during the period in
which the Rights are redeemable. At any time when the Rights are no longer
redeemable, the provisions of the Rights Agreement may be amended by the Board
only if the amendment does not adversely affect the interest of holders of
Rights (excluding the interest of any Acquiring Person) or cause the Rights to
become redeemable again.
Periodic Review. The Board will appoint a committee (the "TIDE
COMMITTEE") that is comprised of at least three (3) directors of Kitty Hawk who
are not officers, employees or affiliates of Kitty Hawk, to review and evaluate
the Rights Agreement, at least every three (3) years or sooner if any person
shall become an Acquiring Person, in order to consider whether the maintenance
of the Rights Agreement continues to be in the best interests of Kitty Hawk and
its stockholders. Following each such review, the TIDE Committee will
communicate its conclusions to the full Board, including any recommendation as
to whether the Rights Agreement should be modified or the Rights should be
redeemed.
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 filed
in January 2004. A copy of the Rights Agreement is available free of charge from
the Rights Agent. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference.
(KITTY HAWK LETTERHEAD)
EXHIBIT 4
FOR IMMEDIATE RELEASE
CORPORATE CONTACT: MEDIA CONTACT:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
Vice President Strategic Planning, Corporate Communications
General Counsel & Corporate Secretary Kitty Hawk, Inc.
Kitty Hawk, Inc. ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
▇▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
KITTY HAWK, INC. ADOPTS STOCKHOLDER RIGHTS PLAN
DALLAS, TEXAS, January 21, 2004 -- Kitty Hawk, Inc. [OTCBB: KTHK.OB] (the
"Company") today announced that its Board of Directors has adopted a Stockholder
Rights Plan (the "Plan").
The Plan creates a dividend of one right for each outstanding share of the
Company's common stock. The rights will be represented by, and will trade with,
the Company's common stock. Currently, there are no separate certificates or
market for the rights.
The rights do not separate from the common stock unless one or both of the
following conditions are met: (1) a public announcement that a person has
acquired 15% or more of the Company's common stock or (2) a tender or exchange
offer is made which, if completed, would result in the bidder beneficially
owning 15% or more of the Company's common stock. The Plan provides limited
exemptive relief to certain of the Company's existing significant stockholders
and their subsequent transferees.
Should either of the aforementioned conditions be met and the rights become
exercisable, each right will entitle the holder thereof to buy 1/1,000th of a
share of the Company's Series A Preferred Stock at an exercise price of $10.00.
Each share of the Series A Preferred Stock will essentially be the economic
equivalent of one share of common stock.
- - more - -
Under certain circumstances the rights entitle the holders to buy the Company's
stock at a 50% discount. In the event that (1) the Company is the surviving
corporation in a merger or other business combination with an entity that owns
15% or more of the Company's outstanding stock; (2) any person shall acquire
beneficial ownership of 15% of the Company's outstanding stock; or (3) there is
any type of recapitalization of the Company that results in an increase by more
than 1% the proportionate share of equity securities of the Company owned by a
person who owns 15% or more of the Company's outstanding stock, each right
holder will have the option to buy for the purchase price common stock of the
Company having a value equal to two times the purchase price of the right.
Under certain circumstances the rights entitle the holders to buy shares of the
acquiror's common stock at a 50% discount. In the event that, at any time after
a person has acquired 15% or more of the Company's common stock, (1) the Company
enters into a merger or other business combination transaction in which the
Company is not the surviving corporation; (2) the Company is the surviving
corporation in a transaction in which all or part of the common stock is
exchanged for cash, property or securities of any other person; or (3) more than
50% of the assets, cash flow or earning power of the Company is sold, each right
holder will have the option to buy for the purchase price stock of the acquiring
company having a value equal to two times the purchase price of the right.
The rights may be redeemed by the Company for $0.001 per right at any time until
the first public announcement of the acquisition of beneficial ownership of 15%
of the Company's common stock.
The distribution of the rights will be made to stockholders of record as of
February 2, 2004. Stockholders of record will receive a separate mailing
describing the Plan and a copy of the Plan containing all the provisions of the
new rights will be filed with the Securities and Exchange Commission on or about
January 26, 2004. The Company's Plan is similar to those adopted by many other
companies.
- - more - -
While the Plan is not being adopted in response to any specific threat to
acquire control of the Company, the rights distributed under the Plan are
intended to enable all stockholders to realize the long-term value of their
investment in the Company by protecting them in the event of an unfair or
coercive takeover attempt. While the rights may not prevent a takeover, they
should encourage anyone seeking to acquire the Company to negotiate with the
Board prior to attempting the takeover.
As a recognized leader in air cargo customer service, Kitty Hawk is the premier
provider of mission-critical, scheduled overnight transportation service to
approximately 60 cities across North America including, Alaska, Hawaii and
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇. With more than 30 years experience in the aviation and
air freight industry, Kitty Hawk plays a key role in the global supply chain and
serves the logistics needs of more than 1500 freight forwarders, integrated
carriers and major airlines with its fleet of B727 freighter aircraft, ground
truck-network as well as its 239,000 square-foot cargo warehouse and sort
facility at its Fort ▇▇▇▇▇, Indiana hub.
This release contains forward-looking statements relating to future business
expectations. Business plans may change as circumstances warrant. Actual results
may differ materially as a result of factors over which the company has no
control. Such factors include, but are not limited to: world wide business and
economic conditions; changes in our business strategy or development plans;
product demand and the rate of growth in the air cargo industry; the financial
costs and operating limitations imposed by the unionization of our workforce;
the impact of competitors and competitive aircraft; the cost and availability of
aircraft or replacement parts; the ability to attract and retain new and
existing customers; the cost and availability of jet fuel; increased foreign
political instability and acts of war or terrorism; normalized aircraft
operating costs and reliability; and changes in government regulation and
policies. The Company undertakes no obligation to update or revise any
forward-looking statements contained in this release for events or circumstances
after the date on which such forward-looking statements are made. New factors
emerge from time to time, and it is not possible for the Company to predict all
such factors.
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