EXHIBIT 4.4
RIGHTS AGREEMENT
DATED AS OF FEBRUARY 9, 1998
PRECEPT BUSINESS SERVICES, INC.
AND
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
AS RIGHTS AGENT
Table of Contents
Section Page
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1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Appointment of Rights Agent . . . . . . . . . . . . . . . . . . . . . .
3. Issue of Rights Certificates. . . . . . . . . . . . . . . . . . . . . .
4. Form of Rights Certificates . . . . . . . . . . . . . . . . . . . . . .
5. Countersignature and Registration . . . . . . . . . . . . . . . . . . .
6. Transfer, Split Up, Combination, and Exchange of Rights Certificates; .
Mutilated, Destroyed, Lost, or Stolen Rights Certificates. . . . .
7. Exercise of Rights; Purchase Price; Expiration Date of Rights . . . . .
8. Cancellation and Destruction of Rights Certificates . . . . . . . . . .
9. Reservation and Availability of Capital Stock . . . . . . . . . . . . .
10. Common Stock Record Date. . . . . . . . . . . . . . . . . . . . . . . .
11. Adjustment of Purchase Price, Number and Kind of Shares, or
Number of Rights . . . . . . . . . . . . . . . . . . . . . . . . .
12. Certificate of Adjusted Purchase Price or Number of Shares. . . . . . .
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. .
14. Fractional Rights and Fractional Shares . . . . . . . . . . . . . . . .
15. Rights of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . .
16. Agreement of Rights Holders . . . . . . . . . . . . . . . . . . . . . .
17. Rights Certificate Holder Not Deemed a Stockholder. . . . . . . . . . .
18. Concerning the Rights Agent . . . . . . . . . . . . . . . . . . . . . .
19. Merger or Consolidation or Change of Name of Rights Agent . . . . . . .
20. Duties of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . .
21. Change of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . .
22. Issuance of New Rights Certificates . . . . . . . . . . . . . . . . . .
23. Redemption and Termination. . . . . . . . . . . . . . . . . . . . . . .
24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . . .
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27. Supplement and Amendments . . . . . . . . . . . . . . . . . . . . . . .
28. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29. Determinations and Actions by the Board of Directors, etc.. . . . . . .
30. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . . . . .
31. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
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RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of February 9, 1998 (the "Agreement"),
between Precept Business Services, Inc., a Texas corporation (the "Company"),
and Continental Stock Transfer & Trust Company (the "Rights Agent").
BACKGROUND
On February 2, 1998 (the "Rights Dividend Declaration Date"), the Board
of Directors of the Company authorized and declared a dividend distribution
of one Right for each share of Class A common stock, par value $0.01 per
share, of the Company (the "Class A Common Stock") and of one Right for each
share of Class B common stock, par value, $.01 per share, of the Company (the
"Class B Common Stock"), each as outstanding at the Close of Business on
February 9, 1998 (the "Record Date"), and has authorized the issuance of one
Right (as such number may be adjusted pursuant to the provisions of SECTION
11(p)) for each share of Class A Common Stock and Class B Common Stock issued
between the Record Date (whether originally issued or delivered from the
Company's treasury) and the Distribution Date, each Right initially
representing the right to purchase one share of Class A Common Stock of the
Company upon the terms and subject to the conditions set forth below (the
"Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth in this Agreement, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Acquiring Person" means any Person that, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
more of the shares of Class A Common Stock then outstanding, but does not
include (i) the Company; (ii) any Subsidiary of the Company; (iii) any
employee benefit plan of the Company or of any Subsidiary of the Company;
(iv) any Person organized, appointed, or established by the Company for or
pursuant to the terms of any such plan; (v) any Person that becomes an
Acquiring Person pursuant to a Permitted Transaction; (vi) any Person that
has become an Acquiring Person inadvertently and, within five Business Days
of being requested by the Company to advise it regarding the same, certifies
to the Company that such Person acquired beneficial ownership of shares of
Class A Common Stock in excess of 14.9% inadvertently or without knowledge of
the terms of the Rights and such certification is accepted as true by a
Requisite Majority acting in good faith, and such Person divests as promptly
as practicable a
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sufficient amount of Class A Common Stock so that such Person would no longer
hold in excess of 14.9% of the Class A Common Stock then outstanding; (vii)
any Person that becomes an Acquiring Person solely as a result of a reduction
in the number of outstanding shares of Class A Common Stock in a transaction
that is approved by a Requisite Majority, provided that such Person will
immediately be an Acquiring Person in the event such Person thereafter
acquires any additional shares of Class A Common Stock (other than as a
result of a stock split or stock dividend) while the Beneficial Owner of 15%
or more of the shares of Class A Common Stock then outstanding; or (viii)
Xxxxxx Xxxxxx or any of his Affiliates.
(c) "Affiliate" and "Associate" have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act and in effect on the date of this Agreement.
(d) A Person will be deemed the "Beneficial Owner" of, and will be
deemed to "beneficially own," any securities that:
(i) 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 or upon the
occurrence of certain events) 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 will not be deemed the "Beneficial Owner" of, or to
"beneficially own," (A) securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange, (B)
securities issuable upon exercise of Rights at any time prior to the
occurrence of a Distribution Date, or (C) securities issuable upon exercise
of Rights, which 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) or SECTION 22 (the "Original Rights") or pursuant to SECTION
11(i) in connection with an adjustment made with respect to any Original
Rights;
(ii) 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 will not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this SECTION 1(d)(ii) as a
result of an agreement, arrangement, or understanding to vote such security
if such agreement, arrangement, or understanding: (1) 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 Regulations under the Exchange Act, and (2) is not also
then reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
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(iii) are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such Person) with which such
Person (or any of such Person's Affiliates or Associates) has any agreement,
arrangement, or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described
in the proviso in SECTION 1(d)(ii)), or disposing of any voting securities of
the Company; provided, however, that nothing in this SECTION 1(d) will cause
a Person engaged in business as an underwriter of securities to be the
"Beneficial Owner" of, or to "beneficially own," any securities acquired
through such Person's participation in good faith in a bona fide firm
commitment underwriting until the expiration of forty days after the date of
such acquisition.
(e) "Business Day" means 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.
(f) "Close of Business" on any given date will 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 will mean 5:00 p.m., New York, New York time, on the
next succeeding Business Day.
(g) "Common Stock" means the Class A common stock, par value $0.01 per
share, of the Company, or the Class B common stock, par value $0.01 per
share, of the Company, as the case may be; "Common Stock" when used with
reference to any Person other than the Company will 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.
(h) "Continuing Director" means (i) any member of the Board of
Directors of the Company who (i) is not an Acquiring Person or an Affiliate
or Associate of an Acquiring Person and (ii) was either a member of the Board
of Directors of the Company on the date of this Agreement or who subsequently
became a director of the Company and whose initial election or initial
nomination for election was approved by a majority of the Continuing
Directors then on the Board of Directors of the Company.
(i) "Distribution Date" means the Close of Business on the tenth
Business Day after the earlier to occur of (i) the Stock Acquisition Date or
(ii) the date any Person commences or publicly announces an intention to
commence a tender offer or exchange offer for the Class A Common Stock which
would result in, upon the consummation of such offer, the Person making such
offer, together with all of its Affiliates and Associates, being the
Beneficial Owner of 15% or more of the Class A Common Stock then outstanding
(including any such date that is after the date of this Agreement and prior
to the issuance of the Rights); provided, however, that if the tender offer
or exchange offer that gave rise to the Distribution Date is cancelled,
terminated or otherwise withdrawn within ten Business Days of its
announcement, such offer shall be deemed never to have been made and no
Distribution Date shall occur with respect thereto.
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(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Permitted Transaction" means a stock acquisition or a tender or
exchange offer pursuant to a definitive agreement by which a Person (who is
not at the time an Acquiring Person) would become an Acquiring Person and
which has been approved by a Requisite Majority prior to the execution of the
definitive agreement providing for the acquisition or the public announcement
of the offer, as the case may be.
(l) "Person" means any individual, firm, corporation, partnership,
limited liability company or other public or private entity.
(m) "Redemption Price" with respect to each Right means $0.01, as such
amount may from time to time be adjusted in accordance with SECTION 11. All
references herein to the Redemption Price means the Redemption Price as in
effect at the time in question.
(n) "Requisite Majority" means, at any time, the affirmative vote of a
majority of the Continuing Directors then in office.
(o) "Rights Shares" means the shares of Class A Common Stock issuable
or issued upon the exercise of the Rights.
(p) "Section 11(a)(ii) Event" means any event described in SECTION
11(a)(ii).
(q) "Section 13 Event" means any event described in clauses (i), (ii),
or (iii) of SECTION 13(a).
(r) "Stock Acquisition Date" means the first date of public
announcement (which, for purposes of this definition, will include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become an
Acquiring Person.
(s) "Subsidiary" means, with reference to any Person, any entity of
which an amount of voting securities sufficient to elect at least a majority
of the directors or similar Persons of such entity is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such
Person.
(t) "Trading Day" means a day on which the principal national
securities exchange or quotation system on which the shares of Class A Common
Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Class A Common Stock are not listed or admitted
to trading on any national securities exchange, a Business Day.
(u) "Triggering Event" means any Section 11(a)(ii) Event or any Section
13 Event.
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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 of this Agreement, 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.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Prior to the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of this SECTION 3(a)) by the certificates for the
Class A Common Stock and/or Class B Common Stock, as the case may be,
registered in the names of the holders of the Class A Common Stock and/or
Class B Common Stock, as the case may be, (which certificates for Class A
Common Stock and/or Class B Common Stock, as the case may be, will be deemed
also to be certificates for Rights) and not by separate certificates, and
(ii) the Rights will be transferable only in connection with the transfer of
the underlying shares of Common Stock (Class A Common Stock or the Class B
Common Stock, as the case may be, including a transfer to the Company). 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
Class A and/or Class B Common Stock, as the case may be, as of 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 A (the "Rights Certificates"), evidencing one Right for each share of
Class A Common Stock and/or Class B Common Stock, as the case may be, so
held, subject to adjustment as provided in this Agreement. In the event that
an adjustment in the number of Rights per share of Class A Common Stock
and/or Class B Common Stock, as the case may be, has been made pursuant to
SECTION 11(p), at the time of distribution of the Rights Certificates, the
Company will make the necessary and appropriate rounding adjustments (in
accordance with SECTION 14(a)) 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) As soon as practicable following the Record Date, the Company will
send a copy of a Summary of Rights, in substantially the form of EXHIBIT B,
by first-class, postage prepaid mail, to each record holder of the Class A
Common Stock and/or Class B Common Stock, as the case may be, as of the Close
of Business on the Record Date, at the address of such holder shown on the
records of the Company. With respect to certificates for the Class A Common
Stock and/or Class B Common Stock, as the case may be, outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates for the Class A Common Stock and/or Class B Common Stock,
as the case may be, and the registered holders of the Class A Common Stock
and/or Class B Common Stock, as the case may be, will also be the registered
holders of the associated Rights. Until the earlier of the Distribution Date
or the Expiration Date (as defined in SECTION 7), the transfer of any
certificates representing shares of Class A Common Stock and/or Class B
Common Stock, as the case may be, in respect of which Rights have been issued
will also constitute
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the transfer of the Rights associated with such shares of Class A Common
Stock and/or Class B Common Stock, as the case may be.
(c) Rights will be issued in respect of all shares of Class A Common
Stock and/or Class B Common Stock, as the case may be, that are issued
(whether originally issued or from the Company's treasury) after the Record
Date but prior to the earlier of the Distribution Date or the Expiration
Date. Certificates representing such shares of Class A Common Stock and/or
Class B Common Stock, as the case may be, will also be deemed to be
certificates for Rights, and will bear the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER TO CERTAIN RIGHTS
AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN PRECEPT BUSINESS SERVICES,
INC. (THE "COMPANY") AND CONTINENTAL STOCK TRANSFER & TRUST COMPANY (THE
"RIGHTS AGENT") DATED AS OF FEBRUARY 9, 1998 (AS AMENDED FROM TIME TO
TIME, THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED
IN THIS CERTIFICATE 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. UNDER CERTAIN CIRCUMSTANCES SET FORTH
IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO IS,
WAS, OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (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 the shares of Class A Common Stock and/or Class B Common
Stock, as the case may be, issued after the Record Date, until the earlier of
(i) the Distribution Date or (ii) the Expiration Date, the Rights associated
with the Class A Common Stock and/or Class B Common Stock, as the case may
be, represented by such certificates will be evidenced by such certificates
alone and registered holders of Class A Common Stock and/or Class B Common
Stock, as the case may be, will also be the registered holders of the
associated Rights, and the transfer of any of such certificates will also
constitute the transfer of the Rights associated with the Class A Common
Stock and/or Class B Common Stock, as the case may be, represented by such
certificates.
(d) With respect to Rights associated with shares of Class B Common
Stock, such Rights shall be automatically extinguished and terminated to the
extent the associated shares of Class B
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Common Stock are converted into shares of Class A Common Stock, and upon such
conversion into Class A Common Stock, Rights are issued in association with
such Class A Common Stock. In this regard, upon conversion of Class B Common
Stock into Class A Common Stock in accordance with the provisions of the
Class B Common Stock, a Right shall be issued associated with such Class A
Common Stock in lieu of the Right associated with the converted Class B
Common Stock, which Right extinguished and terminated in accordance with the
immediately preceding sentence.
SECTION 4. FORM OF RIGHTS CERTIFICATES.
The Rights Certificates (and the forms of election to purchase and of
assignment to be printed on the reverse of the rights certificates) will each
be substantially in the form set forth in EXHIBIT A and may have such marks
of identification or designation and such legends, summaries, or endorsements
as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange or quotation system on which the
Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of SECTION 11 and SECTION 22, the Rights Certificates,
whenever distributed, will be dated as of the Record Date and on their face
will entitle the holders of such Rights Certificates to purchase such number
of shares of Class A Common Stock as is set forth in such Rights Certificates
at the price set forth in such Rights Certificates (such exercise price per
share, the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price will be
subject to adjustment as provided in this Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates will be executed on behalf of the Company
by its Chairman of the Board, its Chief Executive Officer, its Chief
Operating Officer, its President, or any Executive Vice President, either
manually or by facsimile signature, will have affixed thereto the Company's
seal or a facsimile thereof, and will be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by facsimile
signature. The Rights Certificates will be countersigned by the Rights
Agent, either manually or by facsimile signature and will not be valid for
any purpose unless so countersigned. In case any officer of the Company who
has signed any of the Rights Certificates ceases 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 Certificate may
be signed on behalf of the Company by any Person who, at the actual date of
the execution of such Rights Certificate, is 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.
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(b) 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 under this Agreement. Such books will show the names and addresses of
the respective holders of the Rights Certificates, the number of Rights
evidenced on the face 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) Subject to the provisions of SECTION 7(e) and SECTION 14, at any
time after the Distribution Date, and at or prior to the Expiration Date, any
Rights Certificate or Certificates may be transferred, split up, combined, or
exchanged for another Rights Certificate or Rights Certificates, entitling
the registered holder to purchase a like number of Rights Shares (or,
following a Triggering Event, preferred stock, other securities, cash, or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine, or exchange any Rights Certificate or Rights Certificates will make
such request in writing delivered to the Rights Agent, and will surrender the
Rights Certificate or Rights 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 will be
obligated to take any action whatsoever with respect to the transfer of any
such surrendered Rights Certificate until the registered holder has completed
and signed the certificate contained in the form of assignment on the reverse
side of such Rights Certificate and has provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company requests in good faith.
Thereupon, the Rights Agent will, subject to SECTION 4, 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 any Rights Certificate.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or
mutilation of a Rights Certificate, and, in case of loss, theft, or
destruction, of indemnity or security 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.
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SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to SECTION 7(e), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided in this Agreement including, without limitation, the restrictions on
exercisability set forth in SECTION 9(c), SECTION 11(a)(iii), SECTION 23(a)
and SECTION 24) 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 of the Rights Certificate
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 for each share of Class A Common Stock (or other
securities, cash or other assets, as the case may be) as to which such
surrendered Rights are then exercisable, at or prior to the earlier of (i)
the Close of Business on February 9, 2008 (the "Final Expiration Date"), (ii)
the time at which the Rights are redeemed as provided in SECTION 23 or (iii)
the time at which such rights are exchanged as provided in SECTION 24 (the
earlier of the times, the "Expiration Date")).
(b) The Purchase Price for each share of Class A Common Stock pursuant
to the exercise of a Right will initially be $50.00, subject to adjustment
from time to time as provided in SECTION 11, and SECTION 13(a). The Purchase
Price will be payable in accordance with SECTION 7(c).
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment of the Purchase Price for the shares of
Class A Common Stock (or other shares, securities, cash or other assets, as
the case may be) to be purchased and an amount equal to any applicable
transfer tax, the Rights Agent will, subject to SECTION 20(k), promptly (i)
(A) requisition from any transfer agent of the shares of Class A Common Stock
(or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the total number of shares of Class A Common Stock
to be purchased (the Company hereby irrevocably authorizing its transfer
agent to comply with all such requests) or (B) if the Company has elected to
deposit the shares of Class A Common Stock with a depository agent,
requisition from the depository agent depository receipts representing such
number of shares of Class A Common Stock as are to be purchased (in which
case certificates for the shares of Class A Common Stock represented by such
receipts will be deposited by the transfer agent with the depository agent)
and the Company will direct the depository 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; (iii) after receipt
of such certificates or depository receipts, cause such certificates or
depository receipts to be delivered to or upon the order of the registered
holder of such Rights Certificate, registered in such name or names as may be
designated 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. The payment of the Purchase Price (as such amount may be
reduced pursuant to SECTION 11(a)(iii)) will be made in cash or by certified
bank check or bank draft payable to the order of the Company. In the event
that the Company is obligated to issue other securities (including Class A
Common Stock) of the Company, pay cash, or distribute other property
9
pursuant to SECTION 11(a), the Company will make all arrangements necessary
so that such other securities, cash, or other property are available for
distributi on 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 Common Stock would be issued.
(d) If the registered holder of any Rights Certificate exercises less
than all the Rights evidenced by such certificate, a new Rights Certificate
evidencing the unexercised Rights will 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.
(e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by any Person referred to in CLAUSES (i) through (iii)
below will become null and void without any further action and no holder of
such Rights will have any rights whatsoever with respect to such Rights,
under any provision of this Agreement or otherwise: (i) an Acquiring Person
or an Associate or Affiliate of an Acquiring Person, (ii) a transferee from
an Acquiring Person (or from any Associate or Affiliate of an Acquiring
Person) that becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee from an Acquiring Person (or of any such Associate or
Affiliate) that 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 the Acquiring Person has any continuing agreement, arrangement, or
understanding regarding the transferred Rights or (B) a transfer that the
Board of Directors of the Company has determined is part of an agreement,
plan, arrangement, or understanding that has as a substantial purpose or
effect the avoidance of this SECTION 7(e). The Company will use reasonable
efforts to insure that the provisions of this SECTION 7(e) and SECTION 4(b)
are complied with, but will have no liability under this Agreement 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
Affiliates, Associates, or transferees.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company will be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this SECTION 7 unless such registered holder has (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 requests in good faith.
10
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange (or in connection with conversion
of Class B Common Stock into Class A Common Stock) will, if surrendered to
the Company or any of its agents, be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent,
will be cancelled by it, and no Rights Certificates will be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Company will deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent will so cancel and retire, any other Rights
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent will deliver all cancelled Rights
Certificates to the Company, or will, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case will deliver a
certificate of destruction to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company will use its best efforts to reserve and keep available
out of its authorized and unissued shares of Class A Common Stock (and/or or
other securities) or its authorized and issued shares of Class A Common Stock
(and/or or other securities) held in its treasury, the number of shares of
Class A Common Stock (and/or other securities) that will be sufficient to
permit the exercise in full of all outstanding Rights.
(b) So long as the shares of Class A Common Stock (and, following the
occurrence of a Triggering Event, Common Stock or other securities) issuable
and deliverable upon the exercise of the Rights may be listed on any national
securities exchange or automated quotation system, the Company will use its
reasonable 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 automated quotation system upon official notice of issuance upon
such exercise.
(c) The Company will use its best efforts to (i) file, as soon as
practicable following the first occurrence of a Section 11(a)(ii) 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), a
registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights or issued in an exchange pursuant to
SECTION 24 on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and (iii) cause
such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the 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 applicable state
securities laws in connection with the exercisability of the Rights. The
Company may temporarily suspend, for up to 90 days after the date described
in CLAUSE (i) 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
11
suspension, the Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension no longer remains in
effect. In addition, if the Company determines 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 will not be exercisable in any
jurisdiction if the requisite qualification in such jurisdiction has not been
obtained, the exercise of such Rights is not permitted under applicable law,
or a registration statement has not been declared effective.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Class A Common Stock (and/or
other securities) delivered upon exercise of Rights will, at the time of
delivery of the certificates for such shares upon payment of the Purchase
Price, be duly and validly authorized and issued and fully paid and
nonassessable.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may
be payable in respect of the issuance or delivery of the Rights Certificates
and any Class A Common Stock or other certificates issued upon the exercise
of Rights. The Company will not, however, be required to pay any transfer
tax that may be payable in respect of any transfer or delivery of Rights
Certificates to a Person other than, or the issuance or delivery of Class A
Common Stock (or other securities, as the case may be) in respect of a name
other than that of the registered holder of the Rights Certificates or to
issue or deliver any Class A Common Stock or other certificates in a name
other than that of the registered holder until such tax has 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. CLASS A COMMON STOCK RECORD DATE.
Each Person in whose name any Rights Share certificate is issued will,
for all purposes, be deemed to have become the record holder of such Rights
Shares represented thereby, and such certificate will be dated, on 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 Class A Common Stock (other securities, as the case may
be) transfer books of the Company are closed, such Person will be deemed to
have become the record holder of the Rights Shares on, and such certificate
will be dated, the next succeeding Business Day on which the Class A Common
Stock (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 Rights
Certificate holders will not be entitled to any stockholder rights with
respect to Rights Shares, including, without limitation, the right to vote,
to receive dividends or other distributions, or to exercise any preemptive
rights, and will not be entitled to receive any notice of any proceedings of
the Company, except as provided in this Agreement.
12
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 number of Rights outstanding are subject to adjustment from time to
time as provided in this SECTION 11.
(a) (i) In the event the Company at any time after the date of
this Agreement (A) declares a dividend on the Class A Common Stock payable in
shares of Class A Common Stock, (B) subdivides the outstanding Class A Common
Stock, (C) combines the outstanding Class A Common Stock into a smaller
number of shares, or (D) issues any shares of its capital stock in a
reclassification of the Class A Common Stock (including, without limitation,
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), the Purchase Price
in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Class A Common Stock or capital stock, as the
case may be, issuable on such date, will be proportionately adjusted so that
the holder of any Right exercised after such time will be entitled to
receive, upon payment of the Purchase Price then in effect, the aggregate
number and kind of shares of Class A Common Stock or capital stock, as the
case may be, that, if such Right had been exercised immediately prior to such
date and at a time when the Class A Common Stock 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, combination, or
reclassification. If an event occurs that 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) will be in addition to, and will be made prior to,
any adjustment required pursuant to SECTION 11(a)(ii). In the event that any
event referred to in this SECTION 11 occurs with respect to the Class B
Common Stock, an appropriate adjustment will be made with respect to the
Rights associated with such Class B Common Stock.
(ii) In the event that any Person, alone or together with its
Affiliates and Associates, at any time after the Rights Dividend Declaration
Date, becomes an Acquiring Person, then, proper provision will be made so
that each Right holder (except as provided in SECTION 7(e)) will thereafter
have the right to receive, upon exercise of such Right at the then current
Purchase Price in accordance with the terms of this Agreement, such number of
Rights Shares equal to the result obtained by (x) multiplying the then
current Purchase Price by the then number of Rights Shares for which a Right
is then exercisable and (y) dividing that product by 50% of the Current
Market Price (defined in SECTION 11(d)) per share of Class A Common Stock on
the date such Person became an Acquiring Person (such number of Rights
Shares, the "Adjustment Shares").
(iii) In the event that the number of shares of Class A Common
Stock that are authorized by the Company's Articles of Incorporation but not
issued, or issued but not outstanding, are not sufficient to permit the
exercise in full of the Rights in accordance with SECTION 11(a)(ii), the
Company will, upon the exercise of a Right and payment of the applicable
Purchase Price, (A)
13
determine the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value"), and (B) with respect to each Right (subject to
SECTION 7(e)), make adequate provision to substitute for the Adjustment
Shares (1) cash, (2) a reduction in the Purchase Price, (3) other equity
securities of the Company (including, without limitation, shares, or units of
shares, of preferred stock), that a Requisite Majority has deemed to have
essentially the same rights, privileges and preferences as shares of Class A
Common Stock ("Class A 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, where such aggregate
value has been conclusively determined by a Requisite Majority based upon the
advice of a nationally recognized investment banking firm selected by a
Requisite Majority; provided, however, that if the Company has not made
adequate provision to deliver value pursuant to CLAUSE (B) above within 30
days following the first occurrence of a Section 11(a)(ii) Event, then the
Company will be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, shares of Class A
Common Stock (to the extent available) and then, if necessary, cash, which
shares or cash have an aggregate value equal to the Spread. The term
"Spread" means the excess of (i) the Current Value over (ii) the Purchase
Price. If the Board of Directors determines in good faith that it is likely
that sufficient additional shares of Class A Common Stock could be authorized
for issuance upon exercise in full of the Rights, the 30-day period set forth
above may be extended to the extent necessary, but not more than 90 days
after the Section 11(a)(ii) Trigger Date, in order that the Company may seek
stockholder approval for the authorization of such additional shares (such
30-day period, as it may be extended, being the "Substitution Period"). To
the extent that action is to be taken pursuant to this SECTION 11(a)(iii),
the Company (1) will provide, subject to SECTION 7(e), that such action will
apply uniformly to all outstanding Rights, and (2) may suspend the
exercisability of the Rights until the expiration of the Substitution Period
in order to seek any required stockholder approval or to decide the
appropriate form of distribution to be made and the value thereof. In the
event of any such suspension, the Company will issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended,
as well as a public announcement at such time as the suspension no longer
remains in effect. For purposes of this SECTION 11(a)(iii), the Current
Value of each Adjustment Share will be the Current Market Price per share of
the Class A Common Stock on the effective date of the Section 11(a)(ii) Event
and the per share or per unit value of any Class A Common Stock Equivalent
will be deemed to equal the Current Market Price per share of the Common
Stock on such date.
(b) In case the Company fixes a record date for the issuance of rights,
options or warrants to all holders of Class A Common Stock entitling them to
subscribe for or purchase (for a period expiring within 45 calendar days after
such record date) Class A Common Stock (and/or Class A Common Stock Equivalents)
(or securities convertible into Class A Common Stock) at a price per share of
Class A Common Stock (or having a conversion price per share, if a security
convertible into Class A Common Stock) less than the Current Market Price per
share of Class A Common Stock on such record date, the Purchase Price to be in
effect after such record date will be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, (i) the
numerator of which is the number of shares of Class A Common Stock outstanding
14
on such record date, plus the number of shares of Class A Common Stock that
the aggregate offering price of the total number of shares of Class A Common
Stock (and/or Class A Common Stock Equivalents) so to be offered (or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and (ii) the
denominator of which is the number of shares of Class A Common Stock
outstanding on such record date, plus the number of additional shares of
Class A Common Stock (and/or Class A Common Stock Equivalents) to be offered
for subscription or purchase (or into which the convertible securities so to
be offered are initially convertible). In the event that the number of
shares of Class A Common Stock issuable under the terms of a convertible
security, or the conversion or exercise price of such convertible security,
changes after the initial issuance of such convertible security, an
adjustment will be made to the Purchase Price that conforms with the
adjustment set forth in this SECTION 11(b). 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 will be as conclusively
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent
and will be binding on the Rights Agent and the holders of the Rights.
Shares of Class A Common Stock owned by or held for the account of the
Company will be deemed not to be outstanding for the purpose of any such
computation. Such adjustment will be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are not
so issued, the Purchase Price will be adjusted to be the Purchase Price that
would then be in effect if such record date had not been fixed.
(c) In case the Company fixes a record date for a distribution to all
holders of Class A Common 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 Class A Common Stock,
but including any dividend payable in stock other than Class A Common Stock)
or subscription rights or warrants (excluding those referred to in SECTION
11(b)), the Purchase Price to be in effect after such record date will be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, (i) the numerator of which is the Current
Market Price per share of Class A Common Stock on such record date, less the
fair market value (as conclusively determined in good faith by the Board of
Directors of the Company, whose determination will 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 Class A Common Stock and (ii) the
denominator of which is such Current Market Price per share of Class A Common
Stock. Such adjustments will be made successively whenever such a record
date is fixed, and in the event that such distribution is not so made, the
Purchase Price will be adjusted to be the Purchase Price that would have been
in effect if such record date had not been fixed.
(d) The "Current Market Price" per share of Class A Common Stock on any
date will be deemed to be the average of the daily closing prices per share of
such Class A Common Stock for the 30 consecutive Trading Days immediately prior
to such date; provided, however, that in the event
15
that the Current Market Price per share of the Class A Common Stock is
determined during a period following the announcement by the issuer of such
Class A Common Stock of (i) a dividend or distribution on such Class A Common
Stock payable in shares of such Class A Common Stock or securities
convertible into shares of such Class A Common Stock (other than the Rights),
or (ii) any subdivision, combination, or reclassification of such Class A
Common Stock, and the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination, or reclassification has
not occurred prior to the commencement of the requisite 30 Trading Day
period, as set forth above, then, and in each such case, the Current Market
Price will be properly adjusted to take into account ex-dividend trading.
The closing price for each day will be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if the shares of
Class A Common Stock are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the shares of Class A Common Stock are listed or
admitted to trading or, if the shares of Class A 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 NASDAQ or such other system
then in use, or, if on any such date the shares of Class A 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
Class A Common Stock selected by the Board of Directors. If on any such date
no market maker is making a market in the Class A Common Stock, the fair
value of such shares on such date as determined in good faith by the Board of
Directors will be used. If the Class A Common Stock is not publicly held or
not so listed or traded, Current Market Price per share will mean the fair
value per share as determined in good faith by the Board of Directors, the
determination of which will be described in a statement filed with the Rights
Agent and will be conclusive for all purposes.
(e) Anything in this Agreement to the contrary notwithstanding, no
adjustment in the Purchase Price will 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 that by reason of
this SECTION 11(e) are not required to be made will be carried forward and
taken into account in any subsequent adjustment. All calculations under this
SECTION 11 will be made to the nearest cent or to the nearest one-hundredth
of a share of Class A Common Stock. Notwithstanding the first sentence of
this SECTION 11(e), any adjustment required by this SECTION 11 will be made
no later than the earlier of (i) three (3) years from the date of the
transaction that mandates such adjustment or (ii) the Final Expiration Date.
(f) If, as a result of an adjustment made pursuant to SECTION 11(a)(ii) or
SECTION 13(a), the holder of any Right thereafter exercised becomes entitled to
receive any shares of capital stock other than Class A Common Stock, then the
number of such other shares so receivable upon exercise of any Right and the
Purchase Price will be subject to adjustment from time to time in a
16
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Class A Common Stock contained in SECTIONS 11(a), (b),
(c), (e), (g), (h), (i), (j), (k), (m), and (q) and the provisions of
SECTIONS 7, 9, 10, 13, and 14 with respect to the Class A Common Stock will
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price under this Agreement will evidence the
right to purchase, at the adjusted Purchase Price, the number of Rights
Shares purchasable from time to time under this Agreement, all subject to
further adjustment as provided in this Agreement.
(h) Unless the Company has exercised its election as provided in
SECTION 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in SECTIONS 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment will thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of Rights
Shares (calculated to the nearest one-hundredth) obtained by (i) multiplying
(x) the number of Rights Shares covered by a Right immediately prior to this
adjustment, by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained
by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of Rights Shares purchasable upon the exercise of a Right. Each
of the Rights outstanding after such an adjustment in the number of Rights
will be exercisable for the number of Rights Shares for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights will become that number of
Rights (calculated to the nearest one-hundredth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company will make a public announcement of its election
to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. 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, will be at least ten Business 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 will, 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, the additional Rights to which such holders are
entitled as a result of such adjustment, or, at the option of the Company,
will cause to be distributed to such holders of record in substitution and
replacement for the 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 are
entitled after such adjustment. Rights Certificates so to be distributed
will be issued, executed, and countersigned in the manner provided for in
this Agreement (and may bear, at the option of the Company, the
17
adjusted Purchase Price) and will be registered in the names of the holders
of record of Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
Rights Shares, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Rights Shares and the number of
Rights Shares that were expressed in the initial Rights Certificates issued
under this Agreement.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then stated value, if any, of the number of Rights
Shares, the Company will take any corporate action that may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue such number of fully paid and nonassessable Rights Shares at such adjusted
Purchase Price.
(l) In any case in which this SECTION 11 requires that an adjustment in
the Purchase Price be made effective as of a record date for a specified event,
the Company may elect to defer until the occurrence of such event the issuance
to the holder of any Right exercised after such record date the number of Rights
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise over and above the number of Rights Shares 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 will deliver to such holder a due xxxx 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) Anything in this SECTION 11 to the contrary notwithstanding, the
Company will be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this SECTION 11, as and to
the extent that, in its good faith judgment, the Board of Directors of the
Company determines it to be advisable in order that any (i) consolidation or
subdivision of the Class A Common Stock, (ii) issuance wholly for cash of any
shares of Class A Common Stock at less than the current market price, (iii)
issuance wholly for cash of shares of Class A Common Stock or securities that by
their terms are convertible into or exchangeable for shares of Common Stock
and/or its Class B Common 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 Class A Common Stock and/or its Class B Common
Stock will not be taxable to such stockholders.
(n) The Company covenants and agrees that it will not, at any time after
the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with SECTION 11(o)),
(ii) merge with, from, or into any other Person (other than a Subsidiary of the
Company in a transaction that complies with SECTION 11(o)), or (iii) sell or
transfer (or permit any Subsidiary to sell or transfer), in one transaction, or
a series of related
18
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company or any of its
Subsidiaries in one or more transactions each of which complies with SECTION
11(o)), if (x) at the time of or immediately after such consolidation,
merger, or sale there are any rights, warrants, or other instruments or
securities outstanding or agreements in effect that could reasonably be
expected to substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with,
or immediately after, such consolidation, merger, or sale, the stockholders
of the Person that constitutes, or would constitute, the "Principal Party"
for purposes of SECTION 13(a) has received a distribution of Rights
previously owned by such Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by SECTION 23 or SECTION 27, 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) Notwithstanding anything in this Agreement to the contrary, in the
event that the Company at any time after the Rights Dividend Declaration Date
and prior to the Distribution Date (i) declares a dividend on the outstanding
shares of Class A Common Stock or Class B Common Stock, as the case may be,
payable in shares of Class A Common Stock or Class B Common Stock, as the case
may be, (ii) subdivides the outstanding shares of Class A Common Stock, or Class
B Common Stock, as the case may be, or (iii) combines the outstanding shares of
Class A Common Stock or Class B Common Stock, as the case may be, into a smaller
number of shares, the number of Rights associated with each share of Class A
Common Stock or Class B Common Stock, as the case may be, then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, will be
appropriately and proportionately adjusted so that the number of Rights
thereafter associated with each share of Class A Common Stock or Class B Common
Stock, as the case may be, following any such event will equal the result
obtained by multiplying the number of Rights associated with each share of Class
A Common Stock or Class B Common Stock, as the case may be, immediately prior to
such event by a fraction the numerator of which is the total number of shares of
Class A Common Stock or Class B Common Stock, as the case may be, outstanding
immediately prior to the occurrence of the event and the denominator of which is
the total number of shares of Class A Common Stock or Class B Common Stock, as
the case may be, outstanding immediately following the occurrence of such event.
(q) In the event that the Rights become exercisable following a Section
11(a)(ii) Event, the Company, by action of a Requisite Majority, may permit the
Rights, subject to SECTION 7(e), to be exercised for 50% of the shares of Class
A Common Stock (or cash or other securities or assets to be substituted for the
Adjustment Shares pursuant to SECTION 11(a)(iii)) that would otherwise be
purchasable under SECTION 11(a) in consideration of the surrender to the Company
of the Rights so exercised and without other payment of the Purchase Price.
Rights exercised under this SECTION 11(q) will be deemed to have been exercised
in full and will be cancelled.
19
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in SECTION 11 or SECTION 13, the
Company will (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 Class A Common
Stock and for the Class B Common Stock, a copy of such certificate, and (c) 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
Class A Common Stock and/or Class B Common Stock, as the case may be) in
accordance with SECTION 25. The Rights Agent will be fully protected in relying
on any such certificate and on any adjustment contained in such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER.
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly, (i) the Company consolidates with, or merges with, or into, any
other Person (other than a Subsidiary of the Company in a transaction that
complies with SECTION 11(o)), and the Company is not the continuing or surviving
Person of such consolidation or merger; (ii) any Person (other than a Subsidiary
of the Company in a transaction that complies with SECTION 11(o)) consolidates
with, or merges with, or into, the Company, and the Company is the continuing or
surviving corporation of such consolidation or merger and, in connection with
such consolidation or merger, all or part of the outstanding shares of Class A
Common Stock and/or Class B Common Stock, as the case may be, is changed into or
exchanged for stock or other securities of any other Person or cash or any other
property; or (iii) the Company sells or otherwise transfers (or one or more of
its Subsidiaries sells or otherwise transfers), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Company and its Subsidiaries (taken as a
whole) 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 contemplated by SECTION 13(d)), proper
provision will be made so that (A) each holder of a Right, except as provided in
SECTION 7(e) or SECTION 13(E), will thereafter have the right to receive, upon
the exercise of such Right 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 tradable shares of Common Stock of the Principal
Party (as defined below), not subject to any liens, encumbrances, preemptive
rights, rights of first refusal, or other adverse claims, as are equal to the
result obtained by (1) multiplying the then current Purchase Price by the number
of Rights Shares for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such Rights Shares for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect
immediately prior to such first occurrence), and (2) dividing that product
(which, following the first occurrence of a Section 13 Event, will be referred
to as the "Purchase Price" for
20
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 Section 13 Event; (B) such Principal Party will
thereafter be liable for, and will assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this
Agreement; (C) the term "Company" will thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of
SECTION 11 will apply only to such Principal Party following the first
occurrence of a Section 13 Event; (D) such Principal Party will 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 of this
Agreement will thereafter be applicable, as nearly as may be, in relation to
its shares of Common Stock thereafter deliverable upon the exercise of the
Rights; and (E) the provisions of SECTION 11(A)(II) will be of no effect
following the first occurrence of any Section 13 Event.
(b) "Principal Party" means
(i) in the case of any transaction described in CLAUSE (i) or (ii) of
the first sentence of SECTION 13(a), the Person that is the issuer of any
securities into which shares of Class A Common Stock and/or Class B Common
Stock, as the case may be, of the Company are converted in such merger or
consolidation, and if no securities are so issued, the Person that is the other
party to such merger or consolidation; and
(ii) in the case of any transaction described in CLAUSE (iii) of the
first sentence of SECTION 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions; 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" will refer to such other Person; and (2) in case
such Person is a Subsidiary, directly or indirectly, of more than one Person,
with Common Stock that is and has been so registered, "Principal Party" will
refer to whichever of such Persons is the issuer of the Common Stock having the
greatest aggregate market value.
(c) The Company will not consummate any such consolidation, merger, sale,
or transfer unless the Principal Party has a sufficient number of authorized
shares of its Common Stock that have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this SECTION 13 and
unless prior thereto the Company and such Principal Party have executed and
delivered to the Rights Agent a supplemental agreement providing for the
Principal Party to assume and perform the terms set forth in SECTIONS 13(a) and
(b) and further providing that, as soon as practicable after the date of any
consolidation, merger, or transfer mentioned in SECTION 13(a), the Principal
Party will
21
(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 Final Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that comply in all
respects with the requirements for registration on Form 10 under the Exchange
Act.
(d) In the event that the Rights become exercisable under SECTION 13(a),
the Company, by action of a Requisite Majority, may agree with the Principal
Party that the Principal Party may permit the Rights to be exercised for 50% of
the Common Shares of the Principal Party that would otherwise be purchasable
under SECTION 13(a), in consideration of the surrender to the Principal Party,
as the successor to the Company under SECTION 13(a)(ii), of the Rights so
exercised and without other payment of the Purchase Price. Rights exercised
under this SECTION 13(e) will be deemed to have been exercised in full and
cancelled.
(e) The provisions of this SECTION 13 will similarly apply to successive
mergers, consolidations, and sales or other transfers. In the event that a
Section 13 Event occurs at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights that have not theretofore been exercised will thereafter
become exercisable in the manner described in SECTION 13(a).
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company will not be required to issue fractions of Rights, except
prior to the Distribution Date as provided in SECTION 11(p), or to distribute
Rights Certificates that evidence fractional Rights. In lieu of such fractional
Rights, there will 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 will 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 day will be the last sale
price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading, or if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such
22
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 of Directors of the
Company. 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 conclusively determined
in good faith by the Board of Directors of the Company will be used.
(b) The Company will not be required to issue fractions of shares of Class
A Common Stock upon exercise of the Rights or to distribute certificates that
evidence fractional shares of Class A Common Stock. In lieu of fractional
shares of Class A Common Stock, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as provided in this
Agreement an amount in cash equal to the same fraction of the Current Market
Price of one share of Class A Common Stock as of the Trading Day immediately
prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Rights, expressly
waives the right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this SECTION 14.
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 Class A Common Stock and/or
Class B Common Stock, as the case may be,); and any registered holder of any
Rights Certificate (or, prior to the Distribution Date, of the Class A Common
Stock and/or Class B Common Stock, as the case may be), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of the Class A Common Stock and/or Class B Common Stock,
as the case may be), may, on its own behalf and for its own benefit, enforce,
and may institute and maintain any suit, action, or proceeding against the
Company to enforce, or otherwise act in respect of, its 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 will be entitled to specific performance of the
obligations under this Agreement and injunctive relief against actual or
threatened violations of the obligations under this Agreement of any Person
subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS.
Every holder of a Right by accepting the Rights consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
23
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Class A 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) and SECTION 7(f), 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 certificate for Class A Common
Stock and/or Class B Common Stock, as the case may be), is registered as the
absolute owner of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated certificate
for Class A Common Stock and/or Class B Common Stock, as the case may be, made
by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent, will be affected by
any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent will have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree, or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory, or administrative agency or
commission, or any statute, rule, regulation, or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company will use its
reasonable 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 will be entitled to vote or
receive dividends or be deemed for any purpose the holder of the number of
shares of Class A Common Stock or any other securities of the Company that may
at any time be issuable on the exercise of the Rights represented thereby, nor
will anything contained in this Agreement 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, 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), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate have been exercised in accordance
with the provisions of this Agreement.
SECTION 18. CONCERNING THE RIGHTS AGENT.
24
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it under this Agreement and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties under
this Agreement. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss, liability, or expense, incurred without
gross 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, without
limitation, the costs and expenses of defending against any claim of liability.
Anything to the contrary notwithstanding, in no event shall the Rights Agent be
liable for special, indirect, consequential or incidental loss or damage of any
kind.
(b) The Rights Agent will be protected and will incur no liability for or
in respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Class A 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.
SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into or with which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent is a party, or any corporation succeeding to the
corporate trust or stockholder services business of the Rights Agent or any
successor Rights Agent, will be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of SECTION 21. In case at the time such successor Rights Agent
succeeds to the agency created by this Agreement, any of the Rights Certificates
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 have not 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 will have the full force provided in the Rights Certificates and in
this Agreement.
(b) In case at any time the name of the Rights Agent is changed and at
such time any of the Rights Certificates have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Rights Certificates so countersigned; and in case
25
at that time any of the Rights Certificates have not 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
will 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 of such Rights
Certificates, will be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent deems it necessary or desirable that any fact or matter (including,
without limitation, the identity of any Acquiring Person or Adverse Person and
the determination of "Current Market Price") be proved or established by the
Company prior to taking or suffering any action under this Agreement, such fact
or matter (unless other evidence in respect of such fact or matter is
specifically prescribed in this Agreement) may be deemed to be conclusively
proved and established by a certificate signed by the Chairman of the Board, the
Chief Executive Officer, the Chief Operating Officer, the President, any
Executive Vice President, the Treasurer, any Assistant Treasurer, the Secretary,
or any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate will be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent will be liable under this Agreement only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the 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 will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery of this Agreement
(except the due execution of this Agreement by the Rights Agent) or in respect
of the validity or execution of any Rights Certificate (except its
countersignature); nor will it be responsible for any breach by the Company of
any covenant or condition contained in this Agreement or in any Rights
Certificate; nor will it be responsible for any adjustment required under the
provisions of SECTION 11 or SECTION 13, or
26
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 will it by any
act under this Agreement be deemed to make any representation or warranty as
to the authorization or reservation of any shares of Common Stock to be
issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock will, when so issued, be validly authorized or
issued, fully paid, or nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge, and
deliver or cause to be performed, executed, acknowledged, and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this Agreement
from the Chairman of the Board, the Chief Executive Officer, the Chief Operating
Officer, the President, any Executive Vice President, the Secretary, any
Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it will not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any 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, 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 in this Agreement will preclude the Rights Agent from
acting in any other capacity for the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
vested by this Agreement in it or perform any duty under this Agreement either
itself or by or through its attorneys or agents, and the Rights Agent will not
be answerable or accountable for any act, default, neglect, or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect, or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment of such Person.
(j) No provision of this Agreement will 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 under this Agreement or in the exercise of its
rights if there are reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
27
(k) If, with respect to any Right 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 or 2 of such
certificate, the Rights Agent will 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 30 days' notice in writing mailed to
the Company, and to each transfer agent of the Class A Common Stock and/or Class
B Common 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 30 days' notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Class A Common Stock and/or Class B Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent resigns or is removed or otherwise
becomes incapable of acting, the Company will appoint a successor to the Rights
Agent. If the Company fails to make such appointment within a period of 30 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 will, with such notice, submit such
holder's Rights Certificate for inspection by the Company), then any 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, will be a
corporation organized and doing business under the laws of the United States or
a State of the United States, in good standing, that is authorized under such
laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$25,000,000. After appointment, the successor Rights Agent will be vested with
the same powers, rights, duties, and responsibilities as if it had been
originally named as Rights Agent without further act or deed, except that the
predecessor Rights Agent will deliver and transfer to the successor Rights Agent
any property at the time held by it under this Agreement and execute and deliver
any further assurance, conveyance, act, or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company will file
notice of such appointment in writing with the predecessor Rights Agent and each
transfer agent of the Class A Common Stock and/or Class B Common Stock, and mail
a notice of such appointment in writing to the registered holders of the Rights
Certificates. Failure to give any notice provided for in this SECTION 21,
however, or any defect in such notice, will not affect the legality or validity
of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
28
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, in its discretion, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number, kind or
class of 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 Class A Common
Stock and/or shares of Class B Common Stock following the Distribution Date and
prior to the Expiration Date, the Company (a) will, with respect to shares of
Class A Common Stock and/or shares of Class B Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, granted or awarded as of the Distribution Date, or upon the
exercise, conversion, or exchange of securities issued by the Company, and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Rights Certificates representing the appropriate
number of Rights in connection with such issuance or sale; provided, however,
that (y) no such Rights Certificate will be issued if, and to the extent that,
the Company is advised by counsel that such issuance would create a significant
risk of material adverse tax consequences to the Company or the Person to whom
such Rights Certificate would be issued, and (z) no such Rights Certificate will
be issued if, and to the extent that, appropriate adjustment has otherwise been
made in lieu of the issuance of such Rights Certificate.
SECTION 23. REDEMPTION AND TERMINATION.
(a) The Company may, at its option, by action of a Requisite Majority, at
any time prior to the earlier of (i) such time as a Person becomes an Acquiring
Person, or (ii) the Final Expiration Date, redeem all but not fewer than all the
then outstanding Rights at the Redemption Price (the date of such redemption,
the "Redemption Date"), and the Company, at its option, may pay the Redemption
Price either in cash or Class A Common Stock or other securities of the Company,
deemed by the Board of Directors, in the exercise of its sole discretion, to be
at least equivalent in value to the Redemption Price.
(b) Immediately upon the action of a Requisite Majority ordering the
redemption of the Rights, evidence of which has been filed with the Rights Agent
and without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
will be to receive the Redemption Price. Promptly after the action of a
Requisite Majority ordering the redemption of the Rights, the Company will give
notice of such redemption to the Rights Agent and to the holders of the then
outstanding Rights by mailing such notice to all such holders at each holder's
last address as it appears upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Class A Common Stock or Class B Common Stock, as the case may be. Each such
notice of redemption will state the
29
method by which the payment of the Redemption Price will be made. Any notice
that is mailed in the manner in this Agreement provided will be deemed given,
whether or not the holder receives such notice. In any case, failure to give
such notice by mail, or any defect in the notice, to any particular holder of
Rights shall not affect the sufficiency of the notice to other holders of
Rights.
SECTION 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any time
after a Triggering Event, exchange all or part of the then outstanding and
exercisable Rights (which will not include Rights that have become void pursuant
to the provisions of SECTION 7(e) hereof) for shares of Class A Common Stock,
each Right being exchangeable for one share of Class A Common Stock,
appropriately adjusted to reflect any transaction specified in SECTION 11(a)(i)
occurring after the Record Date (such number of shares of Class A Common Stock
issuable in exchange for one Right being referred to herein as the "Exchange
Shares"). Notwithstanding the foregoing, the Board of Directors 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 of its Subsidiaries or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such Plan),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Class A Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this SECTION
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive the Exchange Shares. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice that 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 of the
Class A Common Stock for Rights will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of SECTION 7(e) hereof)
held by each holder of Rights.
(c) In the event that there shall not be sufficient Class A Common Stock
issued but not outstanding, or authorized but unissued, to permit any exchange
of Rights as contemplated in accordance with this SECTION 24, the Company shall
take all such action as may be necessary to authorize additional Class A Common
Stock for issuance upon exchange of the Rights or shall take such other action
specified in SECTION 11(a)(iii) hereof.
30
(d) The Company shall not be required to issue fractions of shares of
Class A Common Stock to distribute certificates which evidence fractional Class
A Common Stock. In lieu of such fractional shares, the Company shall pay to the
registered holders of the Right 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 Price of a whole share of Class A Common
Stock. For the purposes of this SUBSECTION (d), the Current Market Value of a
whole share of Class A Common Stock shall be determined as of the Trading Day
immediately prior to the date of exchange pursuant to this SECTION 24.
SECTION 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company proposes, at any time after the Distribution Date,
(i) to pay any dividend payable in stock of any class to the holders of Class A
Common Stock or Class B Common Stock or to make any other distribution to the
holders of Class A Common Stock or Class B Common Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company), or
(ii) to offer to the holders of Class A Common Stock or Class B Common Stock
rights or warrants to subscribe for or to purchase any additional shares of
Class A Common Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Class A Common
Stock or Class B Common Stock (other than a reclassification involving only the
subdivision of outstanding shares), or (iv) to effect any consolidation or
merger into, or with any other Person (other than a Subsidiary of the Company in
a transaction that complies with SECTION 11(o)), 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 or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company or any
of its Subsidiaries in one or more transactions each of which complies with
SECTION 11(o)), or (v) to effect the liquidation, dissolution or winding up of
the Company, then, in each such case, the Company will give to each holder of a
Rights Certificate, to the extent feasible and in accordance with SECTION 26, a
notice of such proposed action, which will 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, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Class A Common Stock
and/or Class B Common Stock, if any such date is to be fixed, and such notice
will be so given in the case of any action covered by CLAUSE (i) or (ii) above
at least 20 days prior to the record date for determining holders of the shares
of Class A Common Stock and/or Class B Common Stock for purposes of such action,
and in the case of any such other action, at least 20 days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of the shares of Class A Common Stock and/or Class B Common Stock,
whichever is the earlier.
(b) In case of a Triggering Event, then (i) the Company will as soon as
practicable give to each holder of a Rights Certificate, to the extent
feasible and in accordance with SECTION 26, a notice of the occurrence of
such event, which will specify the event and the consequences of the
31
event to holders of Rights under this Agreement, and (ii) all
references in SECTION 25(a) to Class A Common Stock or to Class B Common
Stock will be deemed thereafter to refer to other securities, if appropriate.
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
will be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Precept Business Services, Inc.
0000 Xxxxxxx Xxxxxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: General Counsel
with a copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Subject to the provisions of SECTION 21, 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 will be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
Continental Stock Transfer & Trust Company
000 Xxxx 00xx Xxxxxx
Xxxxx, Xxxxx 75___
Attention: General Counsel
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 Class A Common Stock and/or Class B Common Stock) will be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company.
SECTION 27. SUPPLEMENT AND AMENDMENTS.
32
The Company, by action of its Board of Directors, and the Rights Agent may
from time to time supplement or amend this Agreement without the approval of any
holders of Rights in order to cure any ambiguity, to correct or supplement any
provision contained in this Agreement that may be defective or inconsistent with
any other provisions in this Agreement, or to make any other provisions in
regard to matters or questions arising under this Agreement that the Company and
Rights Agent may deem necessary or desirable and that will be consistent with,
and for the purpose of fulfilling, the objectives of the Board of Directors in
adopting this Agreement; provided, however, that following the Distribution
Date, this Agreement shall not be amended in any manner that would adversely
affect the basic economic terms of the Rights; provided, further, that, once the
Rights are no longer redeemable in accordance with SECTION 23 of this Agreement,
no amendment to this Agreement may have the effect of making the Rights
redeemable.
SECTION 28. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Rights Agent will bind and inure to the benefit of their
respective successors and assigns under this Agreement.
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 Class A Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Class A Common Stock of which any Person is the Beneficial Owner, will be made
in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date of this
Agreement. The Board of Directors of the Company (with, where specifically
provided for in this Agreement, the concurrence of the Continuing Directors)
will have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors
(with, where specifically provided for in this Agreement, the concurrence of the
Continuing Directors) 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 (a) interpret the provisions of this Agreement, and (b) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of CLAUSE (y) below,
all omissions with respect to the foregoing) that are done or made by the Board
of Directors (with, where specifically provided for in this Agreement, the
concurrence of the Continuing Directors) in good faith, will (x) be final,
conclusive, and binding on the Company, the Rights Agent, the holders of the
Rights, and all other parties, and (y) not subject the Board of Directors or the
Continuing Directors to any liability to the holders of the Rights.
SECTION 30. BENEFITS OF THIS AGREEMENT.
33
Nothing in this Agreement will be construed to give to any Person other
than the Company, the Rights Agent, and the registered holders of the 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; and this Agreement will 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 31. SEVERABILITY.
If any term, provision, covenant, or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void, or
unenforceable, the remainder of the terms, provisions, covenants, and
restrictions of this Agreement will remain in full force and effect and will in
no way be affected, impaired, or invalidated; provided, however, that
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 of Directors of the Company
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 will be reinstated and will not
expire until the Close of Business on the tenth Business Day following the date
of such determination by the Board of Directors. Without limiting the
foregoing, if any provision requiring action by a Requisite Majority is held by
any court of competent jurisdiction or other authority to be invalid, void, or
unenforceable, such determination will then be made by the Board of Directors of
the Company in accordance with applicable law and the Company's articles of
incorporation and by-laws.
SECTION 32. GOVERNING LAW.
THIS AGREEMENT, EACH RIGHT, AND EACH RIGHTS CERTIFICATE ISSUED UNDER THIS
AGREEMENT WILL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF
TEXAS AND FOR ALL PURPOSES WILL 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.
SECTION 33. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each of
such counterparts will for all purposes be deemed to be an original, and all
such counterparts will together constitute but one and the same instrument.
34
SECTION 34. INTERPRETATION.
Descriptive headings of the several Sections of this Agreement are inserted
for convenience only and will not control or affect the meaning or construction
of any of the provisions of this Agreement. References in this Agreement to
Sections and Exhibits are references to the Sections of and Exhibits to this
Agreement unless the context requires otherwise. In this Agreement, the word
"or" is not exclusive.
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.
PRECEPT BUSINESS SERVICES, INC.
By: ___________________________________________
Name: _________________________________________
Title: ________________________________________
35
CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
By: ___________________________________________
Name: _________________________________________
Title: ________________________________________
36
Exhibit A
to Rights Agreement
Certificate No. R-
[FORM OF RIGHTS CERTIFICATE]
________ Rights
NOT EXERCISABLE AFTER FEBRUARY 9, 2008 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID.
Rights Certificate
PRECEPT BUSINESS SERVICES, INC.
This certifies that _____________, or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions, and conditions of the Rights
Agreement, dated as of February 9, 1998 (as amended from time to time, the
"Rights Agreement"), between Precept Business Services, Inc., a Texas
corporation (the "Company"), and Continental Stock Transfer & Trust Company (the
"Rights Agent"), to purchase from the Company at any time prior to 5:00 p.m.
(Dallas, Texas time) on February 9, 2008 at the office or offices of the Rights
Agent designated for such purpose, or its successors as Rights Agent, one fully
paid, nonassessable share of Class A Common Stock (the "Common Stock") of the
Company, at a purchase price of $50.00 per 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 number of shares that may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of _____________
based on the Common Stock as constituted at such date. As provided in the
Rights Agreement, the Purchase Price and the number and kind of shares of Common
Stock or other securities, that 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.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
incorporated herein by reference and made a part of this certificate 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
37
Rights Agent, the Company, and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability
of such Rights under the certain 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. All capitalized terms not otherwise defined have the meaning
set forth in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person,
(ii) a transferee of any such Acquiring Person, Associate, or Affiliate, or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of a Person who, after such transfer, became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person, such Rights will become
null and void and no holder of this certificate will have any right with
respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.
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 shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered have
entitled such holder to purchase. If this Rights Certificate is exercised in
part, the holder will be entitled to receive upon surrender of this
certificate another Rights Certificate or Rights Certificates for the number
of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.01 per Right. In addition, in certain circumstances
the Rights may be exchanged, in whole or in part, for shares of the Common
Stock. Immediately upon the action of the Board of Directors of the Company
authorizing any such exchange, and without any further action or any notice,
the Rights (other than Rights that are not subject to such exchange) will
terminate and the Rights will only enable holders to receive the shares
issuable upon such exchange. Under certain circumstances set forth in the
Rights Agreement, the decision to redeem the Rights will require the
concurrence of a majority of the Continuing Directors.
No fractional shares of Common Stock will be issued upon the exercise
of any Right or Rights evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate will be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock
or of any other securities of the Company that may at any time be issuable on
the exercise hereof, nor will anything contained in the Rights Agreement or
herein be construed to confer upon the holder of this 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
38
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 the Rights
Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Rights Certificate have been
exercised as provided in the Rights Agreement.
This Rights Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of: ____________
PRECEPT BUSINESS SERVICES, INC.
By: ___________________________________________
Name: _________________________________________
Title: ________________________________________
Countersigned:
______________________________
By: CONTINENTAL STOCK TRANSFER & TRUST
COMPANY
Name: _________________________________________
Title: ________________________________________
39
[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 transfer 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 Company, 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, or
transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ]did [ ] did not acquire the Rights evidenced by this 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:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
40
FORM OF ELECTION TO PURCHASE
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.
To: PRECEPT BUSINESS SERVICES, INC.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Class A
Common Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person that 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 are not all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights will be
registered in the name of and delivered to:
* Please insert social security or other identifying number: ______________
Please print name and address:___________________________________________
_____________________________________________________________________________.
Dated: ______________
Signature
Signature Guaranteed:
41
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person
or an Adverse Person or an Affiliate or Associate of any such Acquiring
Person or an Adverse Person (as such terms are defined pursuant to the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ]did [ ] did not acquire the Rights evidenced by this Rights Certificate
from any Person who is, was or became an Acquiring Person or Adverse Person
or an Affiliate or Associate of an Acquiring Person or an Adverse Person.
Dated:_______________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
42
Exhibit B
to Rights Agreement
SUMMARY OF RIGHTS TO PURCHASE SHARES OF
PRECEPT BUSINESS SERVICES, INC.
CLASS A COMMON STOCK
On February 2, 1998 the Board of Directors of Precept Business
Services, Inc. (the "Company") declared a dividend of one common share
purchase right (a "Right") for each outstanding share of Class A common
stock, $0.01 par value (the "Class A Common Stock") and for each share of
Class Common Stock, $0.01 value (the "Class B Common Stock"), of the Company.
The dividend was made on February 9, 1998 (the "Record Date") to the
stockholders of record at the close of business on that date. Each Right
entitles the registered holder to purchase from the Company one share of
Class A Common Stock of the Company, at a price of $50.00 (the "Purchase
Price"), subject to adjustment. The description and terms of the Rights are
set forth in a Rights Agreement dated as of February 9, 1998 (the "Rights
Agreement") between the Company and Continental Stock Transfer & Trust
Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten 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 outstanding Class A Common Stock (an "Acquiring Person") or (ii)
ten Business Days following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer, the consummation of
which would result in the beneficial ownership by a person or group of 15% or
more of such outstanding Class A Common Stock (the earlier of such dates
being the "Distribution Date"), the Rights will be evidenced, with respect to
any of the certificates for Class A Common Stock and/or Class B Common Stock
outstanding as of the Record Date, by such certificates for Class A Common
Stock and/or Class B Common Stock with a copy of this Summary of Rights
attached to the certificate. Rights will be issued in respect of all shares
of Class A Common Stock and/or Class B Common Stock, as the case may be, that
are issued (whether originally issued or from the Company's treasury) after
the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Class A Common Stock and/or
Class B Common Stock, as the case may be. Until the Distribution Date (or
earlier redemption or expiration of the Rights), new certificates issued
after the Record Date upon transfer or new issuance of Class A Common Stock
and/or Class B Common Stock, as the case may be, will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Class A Common Stock and/or Class B Common
Stock, as the case may be, outstanding even without such notation or a copy
of this Summary of Rights being attached to such Certificate, will also
constitute the transfer of the Rights
43
associated with the Class A Common Stock and/or Class B Common Stock, as the
case may be, represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
(the "Right Certificates") will be mailed to holders of record of the Class A
Common Stock and/or Class B Common Stock, as the case may be, as of the close
of business on the Distribution Date and such separate Right Certificates
alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on February 9, 2008 (the "Final Expiration Date"), unless the
Final Expiration Date is extended or unless the Rights are earlier redeemed
by the Company, in each case, as described below.
The Purchase Price payable and the number of shares of Common Stock or
other securities or property issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (i) in the event of a
stock dividend on, or a subdivision, combination, or reclassification of, the
Class A Common Stock, (ii) upon the grant to holders of the Class A Common
Stock of certain rights or warrants to subscribe for or purchase Class A
Common Stock at a price or securities convertible into Class A Common Stock
with a conversion price less than the then current market price of the Class
A Common Stock; (iii) upon the distribution to holders of the Class A Common
Stock of evidences of indebtedness or assets or of subscription rights or
warrants (other than those referred to above); or (iv) upon any of the
foregoing happens with respect to the Class B Common Stock.
In the event that any person or entity becomes an Acquiring Person (the
beneficial owner of 15% or more of the Class A Common Stock), provision will
be made so that each holder of a Right, other than Rights beneficially owned
by the Acquiring Person (which will then be void), will have the right to
receive upon exercise that number of shares of Class A Common Stock having a
market value of two times the applicable exercise price of the Right.
The Rights Agreement excludes from the definition of Acquiring Person,
Persons who certify to the Company that they inadvertently acquired in excess
of 14.9% of the outstanding Class A Common Stock and thereafter divest such
excess Class A Common Stock or who acquire 15% or more of the Class A Common
Stock in a Permitted Transaction. A "Permitted Transaction" is a stock
acquisition or tender or exchange offer pursuant to a definitive agreement
which would result in a person beneficially owning 15% or more of the Class A
Common Stock and which has been approved by the Board of Directors (including
a majority of the Directors not in association with an Acquiring Person)
prior to the execution of the agreement or the public announcement of the
offer.
In the event that the Company is acquired in a merger or other business
combination transaction, or 50% or more of its consolidated assets or earning
power are sold, proper provisions will be made so that each holder of a Right
will have the right to receive, upon the exercise of the Right at the then
applicable exercise price, that number of shares of common stock of the
acquiring
44
company that at the time of such transaction will have a market value of two
times the applicable exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Class A Common Stock will be
issued and, in lieu of such fractional shares, an adjustment in cash will be
made based on the market price of the Class A Common Stock on the last
trading day prior to the date of exercise.
After a person becomes an Acquiring Person, the Company's Board of
Directors may exchange the Rights, other than those Rights owned by the
Acquiring Person, in whole or in part, at an exchange ratio of one share of
Class A Common Stock per Right, subject to adjustment. However, the Board of
Directors cannot conduct an exchange at any time after any Person, together
with its Affiliates and Associates, becomes the Beneficial Owner of 50% or
more of the outstanding Class A Common Stock.
At any time prior to any Person becoming an Acquiring Person, a
Requisite Majority may redeem the Rights in whole, but not in part, at a
price of $0.01 per Right (the "Redemption Price"). In addition, the Board of
Directors may extend or reduce the period during which the Rights are
redeemable, so long as the Rights are redeemable at the time of such
extension or reduction. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an
amendment to extend the Final Expiration Date, except that from and after the
Distribution Date no such amendment may adversely affect the economic
interests of the holders of the Rights.
Until a Right is exercised, the holder of the Right, as such, will have
no rights as a stockholder of the Company, including, without limitation, the
right to vote, or to receive dividends.
45
