EXHIBIT 4.2
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of March __, 2002 (the "Agreement"),
between Travelers Property Casualty Corp., a Connecticut corporation (the
"Company"), and EquiServe Trust Company, N.A., a national banking association
(the "Rights Agent").
W I T N E S S E T H
WHEREAS, on March __, 2002 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company authorized and declared a dividend
distribution of one Class A Right (as hereinafter defined) for each share of
Class A Common Stock, par value $.01 per share, and one Class B Right (as
hereinafter defined) for each share of Class B Common Stock, par value $.01 per
share (the Class A Common Stock and the Class B Common Stock together, the
"Common Stock"), outstanding, respectively, at the close of business on March
__, 2002 (the "Record Date"), and has authorized the issuance of one Class A
Right and one Class B Right, respectively (as such numbers may hereinafter be
adjusted pursuant to the provisions of Section 11(p) hereof), for each share of
Class A Common Stock and Class B Common Stock, respectively, issued between the
Record Date and the Distribution Date (as hereinafter defined), each Right (as
hereinafter defined) initially representing the right to purchase one
one-thousandth of a share of Series A Junior Participating Preferred Stock of
the Company having the rights, powers and
preferences set forth in the form of Certificate of Amendment setting forth the
amendment determining the terms thereof attached hereto as Exhibit A, upon the
terms and subject to the conditions hereinafter set forth (the Class A Rights
and the Class B Rights together, the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of shares of Common Stock which have the right to cast 15% or
more of the votes that may be cast by all outstanding shares for the election of
directors of the Company, but shall not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company, any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan, (iv)
Citigroup (provided that this clause (iv) shall be of no further force or effect
commencing the first time that Citigroup beneficially owns less than five
percent (5%) of the voting power of the outstanding shares of Common Stock
(excluding for such purposes shares of Common Stock beneficially owned by
Citigroup but not for its own account,
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including (in such exclusion) Beneficial Ownership which arises by virtue of
some entity that is an Affiliate of Citigroup being a sponsor or advisor of a
mutual or similar fund that beneficially owns shares of Common Stock), (v) any
Person who becomes the Beneficial Owner of shares of Common Stock which have the
right to cast 15% or more of the votes that may be cast by all outstanding
shares for the election of directors of the Company as a result of a reduction
in the number of shares of Common Stock outstanding due to the repurchase of
shares of Common Stock by the Company, unless and until such Person, after
becoming aware that such Person has become the Beneficial Owner of shares of
Common Stock which have the right to cast 15% or more of the votes that may be
cast by all outstanding shares for the election of directors of the Company
acquires beneficial ownership of additional shares or (vi) any Person who has
reported or is required to report such ownership (but less than 20%) on Schedule
13G under the Exchange Act (or any comparable or successor report) or on
Schedule 13D under the Exchange Act (or any comparable or successor report)
which Schedule 13D does not state any intention to or reserve the right to
control or influence the management or policies of the Company or engage in any
of the actions specified in Item 4 of such schedule (other than the disposition
of the Common Stock) and, within 10 Business Days of being requested by the
Company to ad vise it regarding the same, accurately certifies to the Company
that such Person acquired shares of Common Stock which have the right to cast
15% or more
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of the votes that may be cast by all outstanding shares for the election of
directors of the Company inadvertently or without knowledge of the terms of the
Rights and who, together with all Affiliates and Associates, as promptly as
practicable after becoming aware of the terms of the Rights, thereafter divested
shares of Common Stock beneficially owned by such Person until such Person is no
longer the Beneficial Owner of shares of Common Stock which have the right to
cast 15% or more of the votes that may be cast by all outstanding shares for the
election of directors of the Company; provided, however, that if the Person
requested to so certify fails to do so within 10 Business Days (unless extended
by the Board of Directors), then such Person shall become an Acquiring Person
immediately after such 10-Business Day period, as it may be so extended.
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act.
(d) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to acquire
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(whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding (whether
or not in writing) or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise; provided, however, that
a Person shall not 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 Triggering Event (as hereinafter defined), or
(C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such Person
or any of such Person's Affiliates or Associates prior to the Distribution
Date (as hereinafter defined) or pursuant to Section 3(a) or Section 22
hereof (the "Original Rights") or pursuant to Section 11(i) hereof in
connection with an adjustment made with respect to any Original Rights;
(ii) which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has the right to vote or
dispose of or has "beneficial ownership" of (as determined pursuant to
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Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether
or not in writing; provided, however, that a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," any security under
this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in response
to a 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 (B) is not reportable by such Person on Schedule 13D
under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof)
with which such Person (or any of such Person's Affiliates or Associates)
has any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except pursuant
to a revocable proxy as described in the proviso to subparagraph (ii) of
this paragraph (d)) or disposing of any voting securities of the Company;
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provided, however, that nothing in this paragraph (d) shall cause a Person
engaged in business as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition, and then only if
such securities continue to be owned by such Person at such expiration of forty
days; provided, however that any Affiliates, Associates or other Persons who may
be deemed representatives of Citigroup serving as directors of the Company shall
not be deemed to beneficially own securities held by Citigroup as a result of
(i) their serving as directors or taking any action in connection therewith or
(ii) discussing the status of Citigroup's shares with the Company, absent an
express agreement among Citigroup and such shareholders to act in concert with
one another as shareholders so as to cause, in the good faith judgment of the
Board of Directors, each such shareholder to be the Beneficial Owner of the
shares held by Citigroup or the other shareholders.
(e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close.
(f) "Citigroup" shall mean Citigroup Inc., all successors to
Citigroup Inc. by way of merger, consolidation or sale of all or substantially
all of its
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assets, and all corporations, partnerships, joint ventures, associations and
other entities in which the Citigroup Inc. owns (directly or indirectly) fifty
percent of the outstanding voting stock, voting power, partnership interests or
similar ownership interests, but shall not include the Company.
(g) "Citigroup Inc." shall mean Citigroup Inc., a Delaware
corporation, and all of its successors by way of merger, consolidation or sale
of all or substantially all of its assets.
(h) "Class A Rights Certificate" shall have the meaning set
forth in Section 3(a) hereof.
(i) "Class B Rights Certificate" shall have the meaning set
forth in Section 3(a) hereof.
(j) "Class A Common Stock" shall mean the Class A Common
Stock, par value $.01, of the Company.
(k) "Class B Common Stock" shall mean the Class B Common
Stock, par value $.01, of the Company.
(l) "Class A Right" shall mean the Right attached to each
share of Class A Common Stock.
(m) "Class B Right" shall mean the Right attached to each
share of Class A Common Stock.
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(n) "Close of business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 P.M., New York City time, on the next
succeeding Business Day.
(o) "Common Stock" shall have the meaning set forth in the
WHEREAS clause at the beginning of the Agreement, except that "Common Stock"
when used with reference to any Person other than the Company shall mean the
capital stock of such Person with the greatest voting power, or the equity
securities or other equity interest having power to control or direct the
management, of such Person.
(p) "Common Stock Equivalents" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(q) "Current Market Price" shall have the meaning set forth in
Section 11(d)(i) hereof.
(r) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(s) "Distribution Date" shall have the meaning set forth in
Section 3(a) hereof.
(t) "Equivalent Preferred Stock" shall have the meaning set
forth in Section 11(b) hereof.
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(u) "Equivalent Stock" shall have the meaning assigned to it
in Section 7.
(v) "Exchange Act" shall mean the Securities and Exchange Act
of 1934, as amended.
(w) "Exchange Ratio" shall have the meaning assigned to it in
Section 24.
(x) "Expiration Date" shall have the meaning set forth in
Section 7(a) hereof.
(y) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(z) "Person" shall mean any individual, firm, corporation,
partnership or other entity and shall include any successor by merger or
otherwise of such entity.
(aa) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company, and, to
the extent that there are not a sufficient number of shares of Series A Junior
Participating Preferred Stock authorized to permit the full exercise of the
Rights, any other series of preferred stock of the Company designated for such
purpose containing terms substantially similar to the terms of the Series A
Junior Participating Preferred Stock.
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(ab) "Principal Party" shall have the meaning set forth in
Section 13(b) hereof.
(ac) "Purchase Price" shall have the meaning set forth in
Section 4(a)(ii) hereof.
(ad) "Record Date" shall have the meaning set forth in the
WHEREAS clause at the beginning of this Agreement.
(ae) "Rights" shall have the meaning set forth in the WHEREAS
clause at the beginning of this Agreement.
(af) "Rights Agent" shall have the meaning set forth in the
parties clause at the beginning of this Agreement.
(ag) "Rights Certificates" shall mean the Class A Rights
Certificates and the Class B Rights Certificates.
(ah) "Rights Dividend Declaration Date" shall have the meaning
set forth in the WHEREAS clause at the beginning of this Agreement.
(ai) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) hereof.
(aj) "Section 13 Event" shall mean any event described in
clauses (x), (y) or (z) of Section 13(a) hereof.
(ak) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
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(al) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed or amended pursuant to Section 13(d) under
the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such.
(am) "Subsidiary" shall mean, with reference to any Person,
any corporation of which an amount of voting securities sufficient to elect at
least a majority of the directors of such corporation is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such Person.
(an) "Substitution Period" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ao) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(ap) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
(aq) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
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also be the holders of the Common Stock) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-rights agents as it may deem
necessary or desirable upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such co-Rights Agent.
Section 3. Issuance of Rights Certificates.
(a) Until the earlier of (i) the close of business on the
tenth Business Day after the Stock Acquisition Date (or, if the tenth Business
Day after the Stock Acquisition Date occurs before the Record Date, the close of
business on the Record Date), or (ii) the close of business on the tenth
Business Day (or such later date as the Board shall determine) after the date of
the commencement or the date of first public announcement with respect thereto,
by any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan) of a tender or exchange offer within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if upon consummation thereof, such Person would become an Acquiring Person
(the earlier of (i) and (ii) being herein referred to as the "Distribution
Date"), (x) the Class A Rights and the
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Class B Rights, respectively, will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for the Class A Common
Stock and the Class B Common Stock, respectively, registered in the names of the
holders of such class of Common Stock (which certificates for such class of
Common Stock shall be deemed also to be certificates for such Rights) and not by
separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying shares of Common Stock (including
transfers to the Company). The Company shall give the Rights Agent prompt
written notice of the Distribution Date. As soon as practicable after the
Distribution Date, and receipt of written notice of the Distribution Date from
the Company, the Rights Agent will, at the Company's expense, send by
first-class, postage-prepaid mail, to each record holder of Class A Common Stock
and Class B Common Stock, respectively, as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more right certificates, in substantially the form of Exhibit B
and C hereto, evidencing one Class A Right for each share of Class A Common
Stock (a "Class A Rights Certificate") and one Class B Right for each share of
Class B Common Stock (a "Class B Rights Certificate"), respectively, so held,
subject to adjustment as provided herein. In the event that any adjustment in
the number of Rights per share of Common Stock has been made pursuant to Section
11(p) hereof, at the time of distribution of the Rights Certificates, the
Company shall make the
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necessary and appropriate rounding adjustments (in accordance with Section 14(a)
hereof) 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) The Company will make available, as promptly as
practicable following the Record Date, a copy of a Summary of Rights, in
substantially the form attached hereto as Exhibit D (the "Summary of Rights") to
any holder of Rights who may so request from time to time prior to the
Expiration Date. With respect to certificates for the Class A Common Stock and
the Class B Common Stock , respectively, outstanding as of the Record Date, or
issued subsequent to the Record Date, unless and until the Distribution Date
shall occur, the Class A Rights and the Class B Rights will be evidenced by such
certificates for such class of Common Stock and the registered holders of the
Common Stock shall also be the registered holders of the associated Rights.
Until the earlier of the Distribution Date or the Expiration Date (as such term
is defined in Section 7(a) hereof), the transfer of any certificates
representing shares of Common Stock in respect of which Rights have been issued
shall also constitute the transfer of the Rights associated with such shares of
Common Stock.
(c) Rights shall be issued in respect of all shares of Common
Stock which are issued after the Record Date but prior to the earlier of the
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Distribution Date or the Expiration Date. Certificates representing such shares
of Class A Common Stock shall also be deemed to be certificates for the
associated Class A Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain Class A Rights as set forth in the Rights Agreement (the "Rights
Agreement"), between Travelers Property Casualty Corp. (the "Company")
and EquiServe Trust Company, N.A. (the "Rights Agent"), the terms of which
are hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Class A Rights will be evidenced
by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date of mailing, without
charge, promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Class A Rights
issued to, or held by, any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms are defined in
the Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void.
Certificates representing such shares of Class B Common Stock shall also be
deemed to be certificates for the associated Class B Rights, and shall bear the
following legend:
This certificate also evidences and entitles the holder hereof to
certain Class B Rights as set forth in the Rights Agreement (the "Rights
Agreement"), between Travelers Property Casualty Corp. (the "Company")
and EquiServe Trust Company, N.A. (the "Rights Agent"), the terms of which
are hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Class B 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
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Agreement, as in effect on the date of mailing, without charge, promptly
after receipt of a written request therefor. Under certain circumstances
set forth in the Rights Agreement, Class B Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, may become null and void.
With respect to such certificates containing the foregoing legends, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall each be
substantially in the forms set forth in Exhibit B and Exhibit C hereto for the
Class A Rights and the Class B Rights, respectively, and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any
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stock exchange on which the Rights may from time to time be listed, or to
conform to usage. The Right Certificates shall be in a machine printable format
and in a form reasonably satisfactory to the Rights Agent. Subject to the
provisions of Section 11 and Section 22 hereof, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of one one-thousandths
of a share of Preferred Stock as shall be set forth therein at the price set
forth therein (such exercise price per one one-thousandth of a share, the
"Purchase Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a),
Section 11(i) or Section 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate)
who becomes a transferee after the Acquiring Person becomes such, or (iii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such and receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement,
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arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect avoidance
of Section 7(e) hereof, and any Rights Certificate issued pursuant to Section 6
or Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Rights Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Rights Certificate are or were beneficially
owned by a Person who was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Rights Certificate and the Rights
represented hereby may become null and void in the circumstances specified
in Section 7(e) of the Rights Agreement.
Section 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Chief Operating Officer, its
President, any Vice Chairmen or any Vice President, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof which shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Rights
Certificates shall be countersigned by the Rights Agent, either manually or by
facsimile signature and shall not be valid for any purpose unless so counter
signed. In case any officer of the Company who shall have signed any of the
Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
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Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificates may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will
keep, or cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its face
by each of the Rights Certificates and the date of each of the Rights
Certificates.
Section 6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Section 4(b), Section 7(e)
and Section 14 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the Expiration
Date, any Rights Certificate
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or Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of one one-thousandths of a share of Preferred Stock (or,
following a Triggering Event, Class A Common Stock, Class B Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitles such holder (or former holder in the
case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing, signed by the registered holder with such signature
guaranteed in such manner as is reasonably satisfactory to the Rights Agent,
delivered to the Rights Agent, and shall surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged at the principal
office or offices of the Rights Agent designated for such purpose. Neither the
Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e), and Section 14 hereof, countersign and deliver to
the
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Person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Rights
Certificate if mutilated, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) Subject to Section 7(e) hereof, at any time after the
Distribution Date the registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein including,
without limitation, the restrictions on exercisability set forth in Section
9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part upon
surrender of the Rights Certificate,
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with the form of election to purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the principal office or offices of
the Rights Agent designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number of one one-thousandths
of a share (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) 5:00 P.M., New York City time, on March __, 2012, or such later date as
may be established by the Board of Directors prior to the expiration of the
Rights (such date, as it may be extended by the Board of Directors of the
Company) (the "Final Expiration Date"), or (ii) the time at which the Rights are
redeemed as provided in Section 23 and Section 24 hereof (the earlier of (i) and
(ii) being herein referred to as the "Expiration Date"). If at any time after
the Rights become exercisable hereunder but prior to the Expiration Date the
Company is prohibited by its certificate of incorporation from issuing Preferred
Stock upon the exercise of all of the outstanding Rights, the Company may issue
upon the exercise of the Rights shares of stock or other securities of the
Company of equivalent value to the Preferred Stock ("Equivalent Stock"), as
determined by the Board of Directors.
(b) The Purchase Price for each one one-thousandth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
$[__.00] ([____] dollars), and shall be subject to adjustment from time to time
as provided in
23
Section 11 and Section 13(a) hereof and shall be payable in accordance with
paragraph (c) below.
(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, with respect to each Right so exercised,
of the Purchase Price per one one-thousandth of a share of Preferred Stock (or
other shares, securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable transfer tax,
the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)
(A) requisition from any transfer agent of the shares of Preferred Stock (or
make available, if the Rights Agent is the transfer agent for such shares)
certificates for the total number of one one-thousandths of a share of Preferred
Stock to be purchased and the Company hereby irrevocably authorizes its transfer
agent to comply with all such requests, or (B) if the Company shall have elected
to deposit the total number of shares of Preferred Stock issuable upon exercise
of the Rights hereunder with a depositary agent, requisition from the depositary
agent depositary receipts representing such number of one one-thousandths of a
share of Preferred Stock as are to be purchased (in which case certificates for
the shares of Preferred Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company will direct the
depositary agent to comply with such request, (ii) requisition from the Company
24
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or, upon the order, of
the registered holder of such Rights Certificate, registered in such name or
names as may be designated 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) hereof) shall 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 Common
Stock) of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such other securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate. The Company reserves the right to
require prior to the occurrence of a Triggering Event that, upon any exercise of
Rights, a number of Rights be exercised so that only whole shares of Preferred
Stock would be issued.
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent and delivered to, or upon the order of, the
registered holder of such
25
Rights Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(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 (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to ensure that the provisions of this Section
7(e) and Section 4(b) hereof are complied with, but shall have no liability to
any holder of
26
Rights Certificates or any other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate and the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate
27
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Class A Common Stock and Class B Common Stock
and/or other securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, Class A Common Stock and Class B Common Stock
and/or other securities) that, as provided in this Agreement including Section
11(a)(iii) hereof, will be sufficient to permit the exercise in full of all
outstanding Rights.
(b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Class A Common Stock and Class B Common
Stock and/or other securities) issuable and deliverable upon the exercise of the
Rights may be listed on any national securities exchange, the Company shall use
its best efforts to cause, from and after such time as the Rights become
exercisable,
28
all shares reserved for such issuance to be listed on such exchange upon
official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as
soon as practicable following the earliest date after 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) hereof, a registration statement under the Act, with respect
to the securities purchasable upon exercise of the Rights on an appropriate
form, (ii) cause such registration statement to become effective as soon as
practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date. The Company will
also take such action as may be appropriate under, or to ensure compliance with,
the securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights. The Company may temporarily suspend, for a period
of time not to exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the Rights in
order to prepare and file such registration statement and permit it to become
effective. Upon any such suspension, the Company shall issue a public
announcement (and shall provide written notice to the Rights Agent) stating that
the exercisability of the
29
Rights has been temporarily suspended, as well as a public announcement, in each
case with written notice to the Rights Agent, at such time as the suspension has
been rescinded. In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. The Rights Agent may assume
that any Right exercised is permitted to be exercised under applicable law and
shall have no liability for acting in reliance upon such assumption, except to
the extent the Rights Agent has received written notice to the contrary in
accordance with this Agreement. Notwithstanding any provision of this Agreement
to the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law, or a registration
statement shall not have been declared effective.
(d) The Company covenants and agrees that it will take all
such action as may be necessary to ensure that all one one-thousandths of a
share of Preferred Stock (and, following the occurrence of a Triggering Event,
Class A Common Stock, Class B Common Stock and/or other securities) delivered
upon exercise of Rights shall, at the time of delivery of the certificates for
such shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
30
(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
which may be payable in respect of the issuance or delivery of the Rights
Certificates and of any certificates for a number of one one-thousandths of a
share of Preferred Stock (or Class A Common Stock, Class B Common Stock and/or
other securities, as the case may be) upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or delivery of a number of one one-thousandths of a share
of Preferred Stock (or Class A Common Stock, Class B Common Stock and/or other
securities, as the case may be) in respect of a name other than that of the
registered holder of the Rights Certificates evidencing Rights surrendered for
exercise or to issue or deliver any certificates for a number of one
one-thousandths of a share of Preferred Stock (or Class A Common Stock, Class B
Common Stock and/or other securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any Rights until such tax
shall have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date. Each person in whose name
any certificate for a number of one one-thousandths of a share of Preferred
31
Stock (or Class A Common Stock and Class B Common Stock and/or other securities,
as the case may be) is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of such fractional shares of
Preferred Stock (or Class A Common Stock and Class B Common Stock and/or other
securities, as the case may be) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and all
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or Class A
Common Stock and Class B Common Stock and/or other securities, as the case may
be) transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares (fractional or otherwise) on, and
such certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Class A Common Stock and Class B Common Stock and/or other
securities, as the case may be) transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a shareholder of the Company with respect
to shares for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
32
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 shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares, or (D) issue any shares of its capital stock in
a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, 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 Preferred Stock or capital stock, as the
case may be, issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled
to receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of
33
shares of Preferred Stock or capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date and at a time
when the Preferred Stock 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 which would require an adjustment under both this Section
11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person or entity organized,
appointed or established by the Company for or pursuant to the terms of
any such plan), alone or together with its Affiliates and Associates,
shall, at any time after the Rights Dividend Declaration Date, become an
Acquiring Person, unless the event causing the requirements set forth in
the definition of "Acquiring Person" (set forth in Section 1 hereof) to be
met is a transaction set forth in Section 13(a) hereof, then, promptly
following the occurrence
34
of such event, proper provision shall be made so that each holder of a
Class A Right and each holder of a Class B Right, respectively, (except,
in both cases, as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, in
lieu (in both cases) of a number of one one-thousandths of a share of
Preferred Stock, such number of shares of Class A Common Stock and Class B
Common Stock, respectively, as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the then number of one
one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, and (y) dividing that product (which, following such
first occurrence, shall thereafter be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by 50% of the
Current Market Price (determined pursuant to Section 11(d) hereof) per
share of such class of Common Stock for which a Right is exercisable on
the date of such first occurrence (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number of shares of Common Stock
(either or both of Class A Common Stock or Class B
35
Common Stock) which are authorized by the Company's certificate of
incorporation but which are not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights, is not sufficient to
permit the exercise in full of all Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall (A) determine
the value of the Adjustment Shares issuable upon the exercise of a Right
(the "Cur rent Value"), and (B) with respect to each Right (subject to
Section 7(e) hereof), make adequate provision to substitute for the
Adjustment Shares, upon the exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) such class of Common Stock for which a Right is exercisable or
other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock, such as the Preferred
Stock, which the Board of Directors of the Company has deemed to have
essentially the same value or economic rights as shares of such class of
Common Stock for which a Right is exercisable (such shares of preferred
stock being referred to as "Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value (less the
amount of any reduction in
36
the Purchase Price), where such aggregate value has been determined by the
Board of Directors of the Company based upon the advice of a nationally
recognized investment banking firm selected by the Board of Directors of
the Company; provided, however, that if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(ii) Trigger Date"), then
the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, shares of
such class of Common Stock for which a Right is exercisable (to the extent
available) and then, if necessary, cash or shares of the other class of
Common Stock, which shares (of the class of Common Stock for which a Right
is exercisable and/or the other class of Common Stock) and/or cash having
an aggregate value equal to the Spread. For purposes of the preceding
sentence, the term "Spread" shall mean the excess of (i) the Current Value
over (ii) the Purchase Price. If the Board of Directors of the Company
determines in good faith that it is likely that sufficient
37
additional shares of Class A Common Stock and/or Class B Common Stock, as
the case may be, could be authorized for issuance upon exercise in full of
all Rights, the thirty (30) day period set forth above may be extended to
the extent necessary, but not more than ninety (90) days after the Section
11(a)(ii) Trigger Date, in order that the Company may seek shareholder
approval for the authorization of such additional shares (such thirty (30)
day period, as it may be extended, is herein called the "Substitution
Period"). To the extent that action is to be taken pursuant to the first
and/or third sentences of this Section 11(a)(iii), the Company (1) shall
provide, subject to Section 7(e) hereof, that such action shall 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 such shareholder approval for such authorization
of additional shares and/or to decide the appropriate form of distribution
to be made pursuant to such first sentence and to determine the value
thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. For purposes of this Section
11(a)(iii), the value of
38
each Adjustment Share shall be the Current Market Price (determined
pursuant to Section 11(d) hereof) per share of the class of Common Stock
for which a Right is exercisable on the Section 11(a)(ii) Trigger Date and
the per share or per unit value of any Common Stock Equivalent shall be
deemed to equal the Current Market Price per share of such class of Common
Stock on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Stock
entitling them to subscribe for or purchase (for a period expiring within
forty-five (45) calendar days after such record date) Preferred Stock (or shares
having the same rights, privileges and preferences as the shares of Preferred
Stock ("Equivalent Preferred Stock")) or securities convertible into Preferred
Stock or Equivalent Preferred Stock at a price per share of Preferred Stock or
per share of Equivalent Preferred Stock (or having a conversion price per share,
if a security convertible into Preferred Stock or Equivalent Preferred Stock)
less than the Current Market Price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of shares of Preferred Stock
which
39
the aggregate offering price of the total number of shares of Preferred
Stock and/or Equivalent Preferred Stock so to be offered (and/or the
aggregate initial conversion price of the convertible securities so to be
offered) would purchase at such Current Market Price, and the denominator
of which shall be the number of shares of Preferred Stock outstanding on
such record date, plus the number of additional shares of Preferred Stock
and/or Equivalent Preferred Stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by
delivery of consideration, part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall
be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Such adjustment
shall be made successively whenever such a record date is fixed, and in
the event that such rights or warrants are not so issued, the Purchase
Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of Preferred Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
continuing corporation), of cash (other than a regular quarterly cash dividend
out of the earnings
40
or retained earnings of the Company), assets (other than a dividend payable in
Preferred Stock, but including any dividend payable in stock other than
Preferred Stock) or evidences of indebtedness, or of subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the Current Market Price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock on
such record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights) of the portion of the cash, assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock, and the denominator of which shall be
such Current Market Price (as determined pursuant to Section 11(d) hereof) per
share of Preferred Stock. Such adjustments shall be made successively whenever
such a record date is fixed, and in the event that such distribution is not so
made, the Purchase Price shall be adjusted to be the Purchase Price which would
have been in effect if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii) hereof, the Current Market
41
Price per share on any date of such class of Common Stock for which a Right is
exercisable shall be deemed to be the average of the daily closing prices per
share of such class of Common Stock for which a Right is exercisable for the
thirty (30) consecutive Trading Days immediately prior to such date, and for
purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current
Market Price per share of such class of Common Stock on any date shall be deemed
to be the average of the daily closing prices per share of such class of Common
Stock for the ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the Current Market Price per share of
such class of Common Stock for which a Right is exercisable is determined during
a period following the announcement by its issuer of (A) a dividend or
distribution on such class of Common Stock payable in shares of Common Stock or
securities convertible into shares of Common Stock (other than the Rights), or
(B) any subdivision, combination or reclassification of such class of Common
Stock, and the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification shall not have
occurred prior to the commencement of the requisite thirty (30) Trading Day or
ten (10) Trading Day period, as set forth above, then, and in each such case,
the Current Market Price shall be properly adjusted to take into account
ex-dividend trading. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such
42
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 such class of 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 such class of
Common Stock are listed or admitted to trading or, if the shares of such class
of Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
or such other system then in use, or, if on any such date the shares of such
class of Common Stock are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in such class of Common Stock selected by the Board. If on any
such date no market maker is making a market in the class of Common Stock for
which a Right is exercisable, the fair value of such shares on such date as
determined in good faith by the Board shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the shares of the class of Common Stock for which a Right is exercisable are
listed or
43
admitted to trading is open for the transaction of business or, if the shares of
such class of Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day. If the class of Common Stock for which a
Right is exercisable is not publicly held or not so listed or traded, Current
Market Price per share shall mean the fair value per share as determined in good
faith by the Board, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes. Anything in this
Agreement to the contrary notwithstanding, if the Current Market Price per share
of the Class B Common Stock is otherwise determined to be lower than the Current
Market Price per share of the Class A Common Stock, then the Current Market
Price per share of the Class B Common Stock shall be deemed to equal the Current
Market Price per share of the Class A Common Stock.
(ii) For the purpose of any computation here under, the
Current Market Price per share of Preferred Stock shall be determined in
the same manner as set forth above for the Common Stock in clause (i) of
this Section 11(d) (other than the last two sentences thereof). If the
Current Market Price per share of Preferred Stock cannot be determined in
the manner provided above or if the Preferred Stock is not publicly held
or listed or traded in a manner described in clause (i) of this Section
11(d), the Current Market Price
44
per share of Preferred Stock shall be conclusively deemed to be an amount
equal to 1,000 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock occurring after the date of this Agreement) multiplied
by the Current Market Price per share of the Class A Common Stock. If
neither the Class A Common Stock nor the Preferred Stock is publicly held
or so listed or traded, Current Market Price per share of the Preferred
Stock shall mean the fair value per share as determined in good faith by
the Board, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the Current Market Price of a unit shall be
equal to the Current Market Price of one share of Preferred Stock divided
by 1,000.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share
of Common Stock or other
45
share or one-millionth of a share of Preferred Stock, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment, or
(ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right and the Purchase Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Stock contained in
Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m), and the
provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the Preferred
Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result
46
of the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-thousandths
of a share covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately prior to such adjustment of 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 one one-thousandths of a share of Preferred Stock
purchasable upon the exercise of a Right. Each of the Rights outstanding after
the adjustment in the number of Rights shall be exercisable for the number of
one one-thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public
47
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later than the date of the public
announcement. If Rights Certificates have been issued, upon each adjustment of
the number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after such
adjustment. Rights Certificates so to be distributed shall be issued, executed
and countersigned in the manner provided for herein (and may bear, at the option
of the Company, the adjusted Purchase Price) and shall be registered in the
names of the holders of record of Rights Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a share of Preferred Stock
48
issuable upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price per one
one-thousandth of a share and the number of one one-thousandth, of a share which
were expressed in the initial Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the number of
one one-thousandths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable such number of one one-thousandths of a share
of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of one one-thousandths of a share of Preferred Stock and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one one-thousandths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the
49
Company shall 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 shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Preferred Stock, (ii) issuance wholly for
cash of any shares of Preferred Stock at less than the Current Market Price per
share of Preferred Stock, (iii) issuance wholly for cash of shares of Preferred
Stock or securities which by their terms are convertible into or exchangeable
for shares of Preferred Stock, (iv) stock dividends or (v) issuance of rights,
options or warrants referred to in this Section 11, hereafter made by the
Company to holders of its Preferred Stock shall not be taxable to such
shareholders.
(n) The Company covenants and agrees that it shall not, at any
time after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction which complies with this
Section 11(n), (ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o) hereof), or
(iii) sell or transfer (or
50
permit any Subsidiary to sell or transfer), in one transaction, or a series of
related transactions, assets, cash flow or earning power aggregating more than
50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger or sale there are any rights, warrants or other
instruments or securities outstanding or agreements in effect which would
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately after
such consolidation, merger or sale, the share holders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have 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, Section 24 or
Section 27 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
diminish substantially or otherwise eliminate the benefits intended to be
afforded by the Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after the
Rights Dividend
51
Declaration Date and prior to the Distribution Date and in accordance with its
certificate of incorporation (i) declare a dividend on the outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
shares of Common Stock, or (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, the number of Rights associated with each share
of Common Stock then outstanding, or issued or delivered thereafter but prior to
the Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator which shall be the aggregate number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the aggregate number of shares of Common Stock
outstanding immediately following the occurrence of such event.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 and Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Common Stock, a copy of such certificate and (c) if a
Distribution Date has occurred, mail a brief summary thereof to each holder of a
Rights Certificate (or, if prior to the Distribution
52
Date, to each holder of a Certificate representing shares of Common Stock). The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
such adjustment unless and until it shall have received such certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets,
Cash Flow or Earning Power.
(a) In the event that, following the time an Acquiring Person
becomes such, directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), and the Company shall
not be the continuing or surviving corporation of such consolidation or merger,
(y) any Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof) shall consolidate with, or merge with or
into, the Company, and the Company shall be 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 Common Stock
shall be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer),
in one transaction or a series of related transactions, assets, cash flow or
earning power aggregating more than 50% of the assets, cash flow or earning
power of the Company
53
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) hereof), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable shares of Common Stock of the Principal Party
(as such term is hereinafter defined), not subject to any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the result
obtained by (1) multiplying the then current Purchase Price by the number of one
one-thousandths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a 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 one one-thousandths of a share 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 dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by (2) 50% of the Current
Market Price (determined pursuant to Section 11(d)(i) hereof) per share of the
Common Stock of such Principal Party on the date of consummation of such Section
54
13 Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof
shall be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause
(x) or (y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which shares of Common Stock of the Company
are converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer the Common Stock of which has the greatest
market value, and if no securities are so issued, (x) the Person that is
the other party to the merger or consolidation and that
55
survives said merger or consolidation or, if there is more than one such
Person, the Person the Common Stock of which has the greatest market value
or (y) if the Person that is the other party to the merger or
consolidation does not survive the merger or consolidation, the Person
that does survive the merger or consolidation (including the Company if it
survives); and
(ii) in the case of any transaction described in clause
(z) of the first sentence of Section 13(a), the Person that is the party
receiving the greatest portion of the assets, cash flow or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets, cash flow or earning power so transferred or
the Person receiving the greatest portion of the assets, cash flow or
earning power cannot be determined, whichever of such Persons as is the
issuer of Common Stock having the greatest market value of shares
outstanding;
provided, however, that in any such case, (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,
56
"Principal Party" shall refer to such other Person; and (2) in case such Person
is a Subsidiary, directly or indirectly, of more than one Person, the Common
Stocks of two or more of which are and have been so registered, "Principal
Party" shall refer to whichever of such Persons is the issuer of the Common
Stock having the greatest aggregate market value.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date of
any consolidation, merger or sale of assets cash flow or earning power mentioned
in paragraph (a) of this Section 13, the Principal Party will:
(i) prepare and file a registration statement under the
Act, with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all times
meeting the requirements of the Act) until the Expiration Date; and
57
(ii) take all such other action as may be necessary to
enable the Principal Party to issue the securities purchasable upon
exercise of the Rights, including but not limited to the registration or
qualification of such securities under all requisite securities laws of
jurisdictions of the various states and the listing of such securities on
such exchanges and trading markets as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
which comply in all respects with the requirements for registration on
Form 10 under the Ex change Act;
provided, however, that in no case may the Company consummate any such
consolidation, merger, sale or transfer if (i) at the time of or immediately
after such transaction there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (ii) prior to, simultaneously with or immediately after such
transaction, the shareholders of the Person who constitutes, or would
constitute, the Principal Party for purposes of Section 13 shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.
58
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights, except prior to the Distribution Date as provided in Section 11(p)
hereof, or to distribute Rights Certificates which evidence fractional Rights.
In lieu of such fractional Rights, the Company shall pay to the registered
holders of the Class A Rights Certificates or the Class B Rights Certificates,
as the case may be, 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 Class A Right or Class B Right, as the case may be. For
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price of the Class A Rights and the Class B Rights, as the case may be,
for any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if such 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
59
securities listed on the principal national securities exchange on which such
Rights are listed or admitted to trading, or if such Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date such 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 such Rights, selected by the Board of Directors
of the Company. If on any such date no such market maker is making a market in
such Rights, the current market value of such Rights on such date as determined
in good faith by the Board of Directors of the Company shall be used.
Notwithstanding the foregoing, if the current market value of a Class B Right is
otherwise determined to be lower than the current market value of a Class A
Right, then the current market value of a Class B Right shall be deemed to equal
the current market value of a Class A Right.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions
60
which are integral multiples of one one-thousandth of a share of Preferred
Stock). In lieu of fractional shares of Preferred Stock that are not integral
multiples of one one-thousandth of a share of Preferred Stock, the Company may
pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one one-thousandth of a share of Preferred Stock. For
purposes of this Section 14(b), the current market value of one one-thousandth
of a share of Preferred Stock shall be one one-thousandth of the closing price
of a share of Preferred Stock (as determined pursuant to Section 11(d)(ii)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the
Company shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one (1) share of such class of Common
Stock for which a Right is exercisable. For purposes of this Section 14(c), the
current market value of one share of Common Stock for which a Right is
exercisable shall be the closing price of one share of such class of Common
Stock (as determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
61
(d) The holder of a Right by the acceptance of the Rights
expressly waives any 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
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, any registered holder of the Common Stock), without the
consent of the Rights Agent or of the holder of any other Rights Certificate
(or, prior to the Distribution Date, any registered holder of the Common Stock),
may, in his own behalf and for his own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights evidenced by such
Rights Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.
62
Section 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the person in whose name a
Rights Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Common Stock certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be required to be affected by any notice to the
contrary; and
63
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any liability to
any holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of one
one-thousandths of a share of Preferred Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a shareholder of the Company or any right to vote for
the election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in Section
64
25 hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Rights Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent such
reasonable compensation as shall be agreed to in writing by the Company and the
Rights Agent for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any 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 by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim (whether asserted by the Company, a
holder of Rights, or any other Person) of liability in the premises, including
reasonable attorney's fees and expenses.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate
65
for Common Stock or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, instruction, direction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
(c) The provisions of this Section 18 shall survive the
expiration of the Rights and the termination of this Agreement.
(d) Notwithstanding anything in this Agreement to the
contrary, in no event shall the Rights Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
the loss or damage and regardless of the form of the action.
Section 19. Merger or Consolidation or Change of Name of Rights
Agent.
(a) Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer or other shareholder
services business of the Rights Agent or any successor Rights Agent, shall be
the successor to the Rights Agent under this Agreement
66
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; but only if such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
counter signed but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
67
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations expressly imposed by this Agreement, and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent, upon the following terms and conditions, by all of which the Company and
the holders of Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its
selection (who may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person and
the determination of current market price or Current Market Price) be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may (except with regard to matters requiring the
approval or concurrence of Citigroup Inc.) be deemed to be conclusively proved
and established by a certificate signed by the Chairman of the Board of
Directors, the Chief Executive Officer, the President, the Chief Operating
Officer, any Vice Chairmen, any Vice President, the Controller, the Secretary or
Assistant Secretary or the Treasurer of the Company and delivered to the Rights
Agent;
68
and subject to the aforesaid, such certificate shall be full authorization to
the Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate. With respect to
matters requiring the approval or concurrence of Citigroup Inc., a certificate
to such effect signed by the Chairman of the Board of Directors, the Chief
Executive Officer, the President, the Chief Operating Officer, any Vice
Chairmen, any Vice President, the Controller, the Secretary or Assistant
Secretary or the Treasurer of Citigroup Inc. shall be full authorization to the
Rights Agent to the extent the authorization, approval or concurrence of
Citigroup Inc. is required for any action taken or suffered in good faith by the
Rights Agent under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct; provided, however, that
the Rights Agent shall not be liable for any indirect, special, consequential or
punitive damages.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
69
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due authorization and execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Sections 11, 13 or 24 hereof or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Rights Certificates after actual notice
of any such adjustment); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock, Preferred Stock or other security to be issued pursuant to this
Agreement or any Rights Certificate or as to whether any shares of Common Stock,
Preferred Stock or other security will, when so issued, be validly authorized
and issued, fully paid and nonassessable, nor shall the Rights Agent be
responsible for the legality of the terms hereof.
(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
70
be required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board of Directors, the Chief Executive Officer, the
President, the Chief Operating Officer, any Vice Chairmen, any Vice President,
the Controller, the Secretary or Assistant Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions. Any application
by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this
71
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct; provided, however, reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has either
not been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
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(l) The Company agrees to give the Rights Agent prompt written
notice of any event or ownership which would prohibit the exercise or transfer
of the Right Certificates.
Section 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Company, and to
each transfer agent of the Common Stock and Preferred Stock, by registered or
certified mail, and, if such resignation occurs after the Distribution Date, to
the registered holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon thirty
(30) days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock, by registered or certified mail, and, if such removal occurs
after the Distribution Date, to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his Rights Certificate for inspection by the Company),
then any registered holder of any Rights Certificate may apply to any
73
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a legal business entity organized and doing business under the laws
of the United States or of any state of the United States, in good standing,
which is authorized under such laws to exercise corporate trust or stock
transfer shareholder services powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$100,000,000 or (b) an affiliate of a legal business entity described in clause
(a) of this sentence, which is authorized to perform such services and is
subject to the supervision described therein. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Stock, and, if
such appointment occurs after the Distribution Date, mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any
74
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Rights Certificates. Notwithstanding any
of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by the Board of Directors to reflect any adjustment
or change in the Purchase Price and the number or 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 Common Stock following the Distribution
Date and prior to the redemption or expiration of the Rights, the Company (a)
shall, with respect to shares of Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, granted or
awarded as of the Distribution Date, or upon the exercise, conversion or
exchange of securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate number and class
of Rights in connection with such issuance or sale; provided, however, that (i)
no such Rights Certificate shall be issued if, and to the extent that, the
Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Rights Certificate would be issued,
75
and (ii) no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption and Termination.
(a) The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) such time as any Person first becomes an
Acquiring Person, or (ii) the Final Expiration Date, as provided herein, elect
to redeem all but not less than all of the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"). Notwithstanding anything contained in this Agreement to
the contrary, the Rights shall not be exercisable after the first occurrence of
a Section 11(a)(ii) Event until such time as the Company's right of redemption
hereunder has expired. The Company may, at its option, pay the Redemption Price
in cash, shares of the relevant Common Stock for which a Right is exercisable
(based on the Current Market Price, as defined in Section 11(d)(i) hereof, of
the relevant Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors, including shares of
the other class of Common Stock; provided, however that the Redemption Price
shall first be paid in shares of the relevant Common Stock for which a Right is
exercisable to the extent of the authorized shares of the relevant Common Stock
for which a Right is exercisable (excluding all
76
such shares that are outstanding or reserved for issuance for purposes other
than the exercise of the Rights).
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, evidence of which shall have
been filed with the Rights Agent and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and 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 Common Stock. Any notice which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of redemption will state the
method by which the payment of the Redemption Price will be made.
Section 24. Exchange.
(a) The Board of Directors of the Company may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Class A Rights and Class B Rights (which
shall not include Class A Rights and Class B Rights that have become void
pursuant to the
77
provisions of Section 7(e) hereof) for Class A Common Stock and Class B Common
Stock, respectively, at an exchange ratio of one share of Class A Common Stock
and Class B Common Stock per Class A Right and Class B Right, respectively,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors of the Company shall not be empowered to effect such
exchange at any time after any Person who is an Acquiring Person, together with
all Affiliates and Associates of such Person, becomes the Beneficial Owner of
shares of Common Stock which have the right to cast 50% or more of the votes
that may be cast by all outstanding shares for the election of directors of the
Company.
(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 that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such
78
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Stock for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute Preferred Stock (or Equivalent Preferred Stock, as
such term is defined in paragraph (b) of Section 11 hereof) for Common Stock
exchangeable for Rights, at the initial rate of one one-thousandth of a share of
Preferred Stock (or Equivalent Preferred Stock) for each share of Common Stock,
as appropriately adjusted to reflect stock splits, stock dividends and other
similar transactions after the date hereof.
(d) In the event that there shall not be sufficient shares of
Common Stock 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 shares of Common Stock for
issuance upon exchange of the Rights.
79
(e) The Company shall not be required to issue fractions of
shares of Common Stock or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of such fractional shares of Common Stock, there
shall be paid to the registered holders of the Rights Certificates with regard
to which such fractional shares of Common Stock would otherwise be issuable, an
amount in cash equal to the same fraction of the Current Market Value of a whole
share of Common Stock. For the purposes of this subsection (e), the Current
Market Value (as determined pursuant in Section 11(d)(i) hereof) per share of
Common Stock shall be the closing price of a share of Common Stock (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for 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 shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), or (ii) to offer to the holders of Preferred
Stock rights or warrants to subscribe for or to purchase any additional shares
of Preferred Stock or shares of stock of any class or any other securities,
rights or options, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
80
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series of related transactions,
of more than 50% of the assets, cash flow or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 26 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or 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 Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action
81
or the date of participation therein by the holders of the shares of Preferred
Stock whichever shall be the earlier.
(b) In case any of the events set forth in Section 11(a)(ii)
hereof shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 26. Notices. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Rights
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing by the Company with the Rights Agent) as follows:
Travelers Property Casualty Corp.
Xxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Secretary
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
82
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, ad dressed (until another address is
filed in writing by the Rights Agent with the Company) as follows:
EquiServe Trust Company, N.A.
_______________
_______________
Attention: [Tenders and Exchanges Administration]
Notices or demands authorized by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Rights Certificate (or,
if prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock..
Section 27. Supplements and Amendments. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect without the approval of any holders of the Rights. At
any time when the Rights are no longer redeemable, except as provided in the
penultimate sentence of this Section 27, the Company may, and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights
83
Certificates in order to (i) cure any ambiguity, (ii) correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, (iii) shorten or lengthen any time period hereunder or (iv)
change or supplement the provisions hereof in any manner which the Company may
deem necessary or desirable; provided that no such supplement or amendment shall
adversely affect the interests of the holders of Rights as such (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person), and no
such amendment may cause the Rights to become redeemable or cause the Agreement
again to become amendable other than in accordance with this sentence.
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price. Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment.
Anything in this Agreement to the contrary notwithstanding, (i) no supplement or
amendment of any provision of this Agreement shall be effected without the prior
written consent of Citigroup Inc. unless Citigroup beneficially owns (excluding
for such purposes shares of Common Stock beneficially owned by Citigroup but not
for its own account, including (in such exclusion) Beneficial Ownership which
arises by virtue of some entity that is an Affiliate of Citigroup being a
sponsor or advisor of a mutual or similar fund that beneficially owns shares of
Common Stock) shares of
84
Common Stock representing less than twenty percent (20%) of the voting power of
the outstanding shares of Common Stock at the time of such supplement or
amendment, and (ii) no supplement or amendment of the definition of "Acquiring
Person" (set forth in Section 1 hereof) shall be effected without the prior
written consent of Citigroup Inc. unless Citigroup beneficially owns (excluding
for such purposes shares of Common Stock beneficially owned by Citigroup but not
for its own account, including (in such exclusion) Beneficial Ownership which
arises by virtue of some entity that is an Affiliate of Citigroup being a
sponsor or advisor of a mutual or similar fund that beneficially owns shares of
Common Stock) less than five percent (5%) of the voting power of the outstanding
shares of Common Stock at the time of such supplement or amendment. Upon the
delivery of a certificate from Chairman of the Board of Directors, the Chief
Executive Officer, the President, the Chief Operating Officer, any Vice
Chairmen, any Vice President, the Controller, the Secretary or Assistant
Secretary or the Treasurer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of the underlying Common Stock.
Notwithstanding anything herein to the contrary, this Agreement may not be
amended at a time when the Rights are not redeemable. Notwithstanding any other
provision hereof, the Rights Agent's consent must be obtained regarding any
85
amendment or supplement pursuant to this Section 27 which alters the Rights
Agent's rights or duties.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors,
etc. For all purposes of this Agreement, any calculation of the number of shares
of Common Stock or of any other class of capital stock outstanding at any
particular time, including for purposes of determining the particular percentage
of the voting power of the outstanding shares of Common Stock of which any
Person is the Beneficial Owner, shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) (as in effect on the date of this Agreement) of
the General Rules and Regulations under the Exchange Act. The Board of Directors
of the Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board of Directors of the Company or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement); provided, however, that no action,
calculation, interpretation or
86
determination of the Board of Directors shall limit the rights of Citigroup
hereunder pursuant to Section 27. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Company in good faith, shall, subject to the rights of
Citigroup Inc. aforesaid, (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 of the Company, or any of the directors on the
Board of Directors of the Company to any liability to the holders of the Rights.
Section 30. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent, Citigroup Inc. (to the extent provided in Section 27 herein) and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent, Citigroup Inc. (to the
extent provided in Section 27 herein) 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
87
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board 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 hereof shall be reinstated and
shall not expire until the close of business on the tenth Business Day following
the date of such determination by the Board of Directors of the Company.
Section 32. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Connecticut and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts
made and to be performed entirely within such State.
Section 33. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
88
Section 34. Descriptive Headings. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
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.
Attest: TRAVELERS PROPERTY CASUALTY CORP.
By By
-------------------------------- --------------------------------------
Name: Name:
Title: Title:
Attest: EQUISERVE TRUST COMPANY, N.A.
By By
-------------------------------- --------------------------------------
Name: Name:
Title: Title:
89
Exhibit A
CERTIFICATE OF AMENDMENT DETERMINING THE TERMS OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
TRAVELERS PROPERTY CASUALTY CORP.
The Amended and Restated Certificate of Incorporation of Travelers
Property Casualty Corp. is amended to add a new Section K to Article FOURTH as
set forth below:
K. Series A Junior Participating Preferred Stock. The Series A
Junior Participating Preferred Stock shall have the number of shares and the
preferences, limitations and relative rights set forth in this Section K.
(i) Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall be 3,000,000.
(ii) Dividends and Distributions.
(a) Subject to the prior and superior rights of the holders
of any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series A Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the 31st day of March, the 30th day of June, the 30th day of
September and the 31st day of December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
(one dollar) or (b) subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares of
Class A Common Stock, par value $.01, per share or Class B Common Stock, par
value $.01 per share (the "Class B Common Stock," and the Class A Common Stock
and the Class B Common Stock together, the "Common Stock") or a subdivision of
the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Quarterly Dividend
Payment Date, or, with
respect to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Series A Junior Participating Preferred
Stock. In the event the Corporation shall at any time after March __, 2002 (the
"Rights Declaration Date") (x) declare any dividend on Common Stock payable in
shares of Common Stock, (y) subdivide the outstanding Common Stock, or (z)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the amount to which holders of shares of Series A Junior
Participating Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(b) The Corporation shall declare a dividend or distribution
on the Series A Junior Participating Preferred Stock as provided in Paragraph
(a) above immediately after it declares a dividend or distribution on the
Common Stock (other than a dividend payable in shares of either class of Common
Stock); provided that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $1.00 (one dollar) per share on the Series A Junior Participating Preferred
Stock shall nevertheless be payable on such subsequent Quarterly Dividend
Payment Date.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series A Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Junior Participating
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Junior Participating Preferred Stock entitled to receive payment of a
dividend or
2
distribution declared thereon, which record date shall be no more than thirty
(30) days prior to the date fixed for the payment thereof.
(iii) Voting and Related Rights. The holders of shares of Series A
Junior Participating Preferred Stock shall have the following rights:
(a) Subject to the provision for adjustment hereinafter set
forth and to the rights of the holders of the Class B Common Stock under Article
TENTH, each share of Series A Junior Participating Preferred Stock shall entitle
the holder thereof to 1,000 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at any time
after the Rights Declaration Date (x) declare any dividend on Common Stock
payable in shares of Common Stock, (y) subdivide the outstanding Common Stock,
or (z) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the number of votes per share to which holders of shares
of Series A Junior Participating Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were out standing immediately prior to such event.
(b) Except as otherwise provided herein or by law, the
holders of shares of Series A Junior Participating Preferred Stock and the
holders of shares of Common Stock shall vote together as one class on all
matters submitted to a vote of shareholders of the Corporation.
(c) (v) If at any time dividends on any Series A Junior
Participating Preferred Stock shall be in arrears in an amount equal to six (6)
quarterly dividends thereon, the occurrence of such contingency shall xxxx the
beginning of a period (herein called a "default period") which shall extend
until such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all shares of
Series A Junior Participating Preferred Stock then outstanding shall have been
declared and paid or set apart for payment. During each default period, all
holders of Preferred Stock (including holders of the Series A Junior
Participating Preferred Stock) with dividends in arrears in an amount equal to
six (6) quarterly dividends thereon, voting as a class, irrespective of series,
shall have the right to elect two (2) directors.
(w) During any default period, such voting right of
the holders of Series A Junior Participating Preferred Stock may be
exercised ini-
3
tially at a special meeting called pursuant to subparagraph (x) of this
Paragraph (c) or at any annual meeting of shareholders, and thereafter at
annual meetings of shareholders, provided that such voting right shall not
be exercised unless the holders of one-third in number of shares of
Preferred Stock outstanding shall be present in person or by proxy. The
absence of a quorum of the holders of Common Stock shall not affect the
exercise by the holders of Preferred Stock of such voting right. At any
meeting at which the holders of Preferred Stock having such right to elect
directors shall exercise such voting right initially during an existing
default period, they shall have the right, voting as a class, to elect
directors to fill such vacancies, if any, in the Board of Directors as may
then exist up to two (2) directors or, if such right is exercised at an
annual meeting, to elect two (2) directors. If the number which may be so
elected at any special meeting does not amount to the required number,
the holders of the Preferred Stock having such right to elect directors
shall have the right to make such increase in the number of directors as
shall be necessary to permit the election by them of the required number.
After the holders of the Preferred Stock shall have exercised their right
to elect directors in any default period and during the continuance of
such period, the number of directors shall not be increased or decreased
except by vote of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking senior to or pari
passu with the Series A Junior Participating Preferred Stock.
(x) Unless the holders of Preferred Stock shall,
during an existing default period, have previously exercised their right
to elect directors, the Board of Directors may order, or any shareholder
or shareholders owning in the aggregate not less than fifteen percent
(15%) of the total number of out standing shares of Preferred Stock having
such right to elect directors, irrespective of series, may request, the
calling of a special meeting of the holders of Preferred Stock having such
right to elect directors, which meeting shall thereupon be called by the
Chairman of the Board, the Vice Chairman of the Board, the Chairman of the
Executive Committee, the President or the Secretary of the Corporation.
Notice of such meeting and of any annual meeting at which holders of
Preferred Stock are entitled to vote pursuant to this Paragraph (c)(x)
shall be given to each holder of record of Preferred Stock by mailing a
copy of such notice to him or her at his or her last address as the same
appears on the books of the Corporation. Such meeting shall be called for
a time not earlier than 20 days and not later than 60 days after such
order or request or in default of the calling of such meeting within 60
days after such order or request, such meeting may be called on similar
4
notice by any shareholder or shareholders owning in the aggregate not less
than fifteen percent (15%) of the total number of shares of Preferred
Stock having such right to elect directors outstanding. Notwithstanding
the provisions of this Paragraph (c)(x), no such special meeting shall be
called during the period within 60 days immediately preceding the date
fixed for the next annual meeting of the shareholders.
(y) In any default period, the holders of Common
Stock, and other classes of stock of the Corporation if applicable, shall
continue to be entitled to elect the whole number of directors until the
holders of Preferred Stock shall have exercised their right to elect two
(2) directors voting as a class, after the exercise of which right (1) the
directors so elected by the holders of Preferred Stock shall continue in
office until their successors shall have been elected by such holders or
until the expiration of the default period, and (2) any vacancy in the
Board of Directors may (except as provided in Paragraph (c)(w) of this
Section (iii)) be filled by vote of a majority of the remaining directors
theretofore elected by the holders of such capital stock (Common or
Preferred) which elected the director whose office shall have become
vacant. References in this Paragraph (c) to directors elected by the
holders of particular capital stock shall include directors elected by
such directors to fill vacancies as provided in clause (z) of the
foregoing sentence.
(z) Immediately upon the expiration of a default
period, (1) the right of the holders of Preferred Stock having the right
as a class to elect directors shall cease, (2) the term of any directors
elected by the holders of Preferred Stock as a class shall terminate, and
(3) the number of directors shall be such number as may be provided for in
the Certificate of Incorporation or Bylaws irrespective of any increase
made pursuant to the provisions of Paragraph (c)(w) of this Section (iii)
(such number being subject, however, to change thereafter in any manner
provided by law or in the Certificate of Incorporation or Bylaws). Any
vacancies in the Board of Directors effected by the provisions of clauses
(1) and (2) in the preceding sentence may be filled by a majority of the
remaining directors.
(d) Except as set forth herein, holders of Series A Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
5
(iv) Certain Restrictions.
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Junior Participating Preferred Stock as
provided in Section (ii) are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
A Junior Participating Preferred Stock outstanding shall have been paid in full,
the Corporation shall not:
(w) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Junior
Participating Preferred Stock;
(x) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Stock, except dividends paid ratably on
the Series A Junior Participating Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(y) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series
A Junior Participating Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such
parity stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation or
winding up) to the Series A Junior Participating Preferred Stock; or
(z) purchase or otherwise acquire for consideration
any shares of Series A Junior Participating Preferred Stock, or any shares
of stock ranking on a parity with the Series A Junior Participating
Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of
6
the respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under Paragraph (a) of
this Section (iv), purchase or otherwise acquire such shares at such time and in
such manner.
(v) Reacquired Shares. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
(vi) Liquidation, Dissolution or Winding Up. (a) Upon any
liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series A Junior Participating Preferred Stock
shall have received an amount equal to $1,000 per share of Series A
Participating Preferred Stock, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
both classes of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (x) the Series A
Liquidation Preference by (y) 1,000 (as appropriately adjusted as set forth in
subparagraph (z) below to reflect such events as stock splits, stock dividends
and recapitalizations with respect to the Common Stock) (such number in clause
(y), the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding shares of Series A Junior Participating Preferred Stock and Common
Stock, respectively, holders of Series A Junior Participating Preferred Stock
and holders of shares of both classes of Common Stock shall receive their
ratable and proportionate share of the remaining assets to be distributed in the
ratio of the Adjustment Number to 1 with respect to such Preferred Stock and
Common Stock, on a per share basis, respectively.
7
(b) In the event, however, that there are not sufficient
assets available to permit payment in full of the Series A Liquidation
Preference and the liquidation preferences of all other series of Preferred
Stock, if any, which rank on a parity with the Series A Junior Participating
Preferred Stock, then such remaining assets shall be distributed ratably to the
holders of the Series A Junior Participating Preferred Stock and such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of both classes of Common Stock.
(c) In the event the Corporation shall at any time after the
Rights Declaration Date (x) declare any dividend on Common Stock payable in
shares of Common Stock, (y) subdivide the outstanding Common Stock, or (z)
combine the outstanding Common Stock into a smaller number of shares, then in
each such case the Adjustment Number in effect immediately prior to such event
shall be adjusted by multiplying such Adjustment Number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(vii) Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 1,000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (x) declare any dividend on Common Stock payable in shares of
Common Stock, (y) subdivide the outstanding Common Stock, or (z) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
8
(viii) No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
(ix) Ranking. The Series A Junior Participating Preferred Stock
shall rank junior to all other series of the Corporation's Preferred Stock as to
the payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
(x) Amendment. At any time when any shares of Series A Junior
Participating Preferred Stock are outstanding, this Section K of Article FOURTH
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series A Junior
Participating Preferred Stock, voting separately as a voting group.
(xi) Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holder's fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series A Junior Participating Preferred Stock.
9
Exhibit B
Form of Class A Rights Certificate
Certificate No. RA- ________ Rights
NOT EXERCISABLE AFTER MARCH , 2012 UNLESS EXTENDED PRIOR THERETO BY
THE BOARD OF DIRECTORS OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT (AS DEFINED HEREIN). 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. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
----------
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
CLASS A RIGHTS CERTIFICATE
TRAVELERS PROPERTY CASUALTY CORP.
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 March __, 2002 (the "Rights Agreement"), between
Travelers Property Casualty Corp., a Connecticut corporation (the "Company"),
and EquiServe Trust Company, N.A., a national banking association (the "Rights
Agent"), to purchase from the Company at any time prior to 5:00 P.M. (New York
City time) on March __, 2012 (unless such date is extended prior thereto by the
Board of Directors) at the office or offices of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one-thousandth of a fully
paid, non-assessable share of Series A Junior Participating Preferred Stock
(the "Preferred Stock") of the Company, at a purchase price of $_____ per one
one-thousandth of a share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Class A Rights evidenced by
this Class A Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per one
one-thousandth of a share set forth above, are the number and Purchase Price as
of ______ __, 2002, based on the Preferred Stock as constituted at such date.
The Company reserves the right to require prior to the occur-
2
rence of a Triggering Event (as such term is defined in the Rights Agreement)
that a number of Class A Rights be exercised so that only whole shares of
Preferred Stock will be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Class A Rights evidenced by this Class
A Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), (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
Class A Rights shall become null and void and no holder hereof shall have any
right with respect to such Class A Rights from and after the occurrence of such
Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Preferred Stock or other securities which may be
purchased upon the exercise of the Class A Rights evidenced by this Class A
Rights Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events.
This Class A Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are
3
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Class A Rights Certificates and
the Class B Rights Certificates, which limitations of rights include the
temporary suspension of the exercisability of such Class A Rights under the
specific circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file with the Secretary of the Company and are also available
upon written request.
This Class A 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 Class A Rights
Certificate or Class A Rights Certificates of like tenor and date evidencing
Class A Rights entitling the holder to purchase a like aggregate number of one
one-thousandths of a share of Preferred Stock as the Class A Rights evidenced by
the Class A Rights Certificate or Class A Rights Certificates surrendered shall
have entitled such holder to purchase. If this Class A Rights Certificate shall
be exercised in part, the holder shall be entitled to receive upon surrender
hereof another Class A Rights Certificate or Class A Rights Certificates for the
number of whole Class A Rights not exercised.
Subject to the provisions of the Rights Agreement, the Class A
Rights evidenced by this Class A Rights Certificate may be redeemed by the
Company at its
4
option at a redemption price of $.01 per Right at any time prior to the earlier
of the close of business on (i) the tenth Business Day following the Stock
Acquisition Date (as such time period may be extended pursuant to the Rights
Agreement), and (ii) the Final Expiration Date. In addition, under certain
circumstances following the Stock Acquisition Date the Rights may be exchanged,
in whole or in part, for shares of the Common Stock, or shares of preferred
stock of the Company having essentially the same value or economic rights as
such shares. 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 which are not subject to such exchange)
will terminate and the Rights will only enable holders to receive the shares
issuable upon such exchange.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Class A Right or Class A Rights evidenced hereby (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Class A Rights Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be
5
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give
consent to or withhold consent from any corporate action, or, to receive notice
of meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Class A Right or Class A Rights evidenced by this Class A Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Class A Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
6
WITNESS the facsimile signature of a duly authorized officer of the
Company and its corporate seal.
Dated as of _________ __, ____
Attest: TRAVELERS PROPERTY
CASUALTY CORP.
___________________________ By:__________________________
Secretary Title:
[SEAL]
Countersigned:
EQUISERVE TRUST COMPANY, N.A.
By:_______________________
Authorized Signature
7
FORM OF REVERSE SIDE OF CLASS A RIGHTS CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Class A Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
this Class A Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
Attorney, to transfer the within Class A Rights Certificate on the books of the
within named Company, with full power of substitution.
Dated: ,
------------------ ----- -----------------------
Signature
Signature Guaranteed:
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
To: TRAVELERS CASUALTY PROPERTY CORP.:
The undersigned hereby irrevocably elects to exercise
Class A Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Class A Rights (or such other
securities of the Company or of any other person which may be issuable upon the
exercise of the Class A 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 Class A Rights shall not be all the Rights
evidenced by this Class A Rights Certificate, a new Class A Rights Certificate
for the balance of such Class A Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
---------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
Dated: ,
--------------- ------ -------------------------
Signature
Signature Guaranteed:
CLASS A CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Class A Rights evidenced by this Class A Rights Certificate
[ ] are [ ] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Class A Rights evidenced by this Class A
Rights Certificate from any Person who is, was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
Dated: ,
----------------- ------ ------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Class A Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
Exhibit C
FORM OF CLASS B RIGHTS CERTIFICATE
Certificate No. RB- ________ Rights
NOT EXERCISABLE AFTER MARCH __, 2012 UNLESS EXTENDED PRIOR THERETO
BY THE BOARD OF DIRECTORS OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT (AS DEFINED HEREIN). UNDER CERTAIN CIRCUMSTANCES, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED
IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
----------
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
CLASS B RIGHTS CERTIFICATE
TRAVELERS PROPERTY CASUALTY CORP.
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 March __, 2002 (the "Rights Agreement"), between
Travelers Property Casualty Corp., a Connecticut corporation (the "Company"),
and EquiServe Trust Company, N.A., a a national banking association (the "Rights
Agent"), to purchase from the Company at any time prior to 5:00 P.M. (New York
City time) on March __, 2012 (unless such date is extended prior thereto by the
Board of Directors) at the office or offices of the Rights Agent designated for
such purpose, or its successors as Rights Agent, one one-thousandth of a fully
paid, non-assessable share of Series A Junior Participating Preferred Stock
(the "Preferred Stock") of the Company, at a purchase price of $_______ per one
one-thousandth of a share (the "Purchase Price"), upon presentation and
surrender of this Rights Certificate with the Form of Election to Purchase and
related Certificate duly executed. The number of Class B Rights evidenced by
this Class B Rights Certificate (and the number of shares which may be purchased
upon exercise thereof) set forth above, and the Purchase Price per one
one-thousandth of a share set forth above, are the number and Purchase Price as
of ___________ __, ____, based on the Preferred Stock as constituted at such
date. The Company reserves the right to require prior to the occurrence of a
Triggering Event (as such term is defined in the Rights Agreement) that a number
of Class B Rights be exercised so that only whole shares of Preferred Stock will
be issued.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Class B Rights evidenced by this Class
B Rights Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement), (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
Class B Rights shall become null and void and no holder hereof shall have any
right with respect to such Class B Rights from and after the occurrence of such
Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Preferred Stock or other securities which may be
purchased upon the exercise of the Class B Rights evidenced by this Class B
Rights Certificate are subject to modification and adjustment upon the happening
of certain events, including Triggering Events.
This Class B Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Class B Rights
Certificates and the Class A Rights Certificates, which limitations of rights
include the temporary suspension of the exercisability of such Class B Rights
under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file with the Secretary of the Company and
are also available upon written request.
This Class B 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 Class B Rights
Certificate or Class B Rights Certificates of like tenor and date evidencing
Class B Rights entitling the holder to purchase a like aggregate number of one
one-thousandths of a share of Preferred Stock as the Rights evidenced by the
Class B Rights Certificate or Class B Rights Certificates surrendered shall have
entitled such holder to purchase. If this Class B Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender hereof
another Class B Rights Certificate or Class B Rights Certificates for the number
of whole Class B Rights not exercised.
Subject to the provisions of the Rights Agreement, the Class B
Rights evidenced by this Class B Certificate may be redeemed by the Company at
its option at a redemption price of $.01 per Right at any time prior to the
earlier of the close of business on (i) the tenth Business Day following the
Stock Acquisition Date (as such time period may be extended pursuant to the
Rights Agreement), and (ii) the Final Expiration Date. In addition, under
certain circumstances following the Stock Acquisition Date the Rights may be
exchanged, in whole or in part, for shares of the Common Stock, or shares of
preferred stock of the Company having essentially the same value or economic
rights as such shares. 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 which are not subject to such
exchange) will terminate and the Rights will only enable holders to receive the
shares issuable upon such exchange.
No fractional shares of Preferred Stock will be issued upon the
exercise of any Class B Right or Class B Rights evidenced hereby (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock, which may, at the election of the Company, be evidenced by
depositary receipts), but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Class B Rights Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give consent to or withhold consent from any corporate
action, or, to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Class B Right or Class
B Rights evidenced by this Class B Rights Certificate shall have been exercised
as provided in the Rights Agreement.
This Class B Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of a duly authorized officer of the
Company and its corporate seal.
Dated as of _________ __, _____
Attest: TRAVELERS PROPERTY
CASUALTY CORP.
___________________________ By:__________________________
Secretary Title:
[SEAL]
Countersigned:
EQUISERVE TRUST COMPANY, N.A.
By:_______________________
Authorized Signature
FORM OF REVERSE SIDE OF CLASS B RIGHTS CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Class B Rights Certificate.)
FOR VALUE RECEIVED
hereby sells, assigns and transfers unto
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address of transferee)
this Class B Rights Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint __________________
Attorney, to transfer the within Class B Rights Certificate on the books of the
within named Company, with full power of substitution.
Dated: __________________, _____ _________________________
Signature
Signature Guaranteed:
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Rights Certificate.)
To: Travelers Property Casualty Corp.:
The undersigned hereby irrevocably elects to exercise __________
Class B Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Class B Rights (or such other
securities of the Company or of any other person which may be issuable upon the
exercise of the Class B 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 Class B Rights shall not be all the Rights
evidenced by this Class B Rights Certificate, a new Class B Rights Certificate
for the balance of such Class B Rights shall be registered in the name of and
delivered to:
Please insert social security
or other identifying number
-----------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print name and address)
Dated: ,
--------------- ------ ------------------------------
Signature
Signature Guaranteed:
CLASS B CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Class B Rights evidenced by this Class B Rights Certificate
[ ] are [ ] are not being exercised by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as
such terms are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Class B Rights evidenced by this Class B
Rights Certificate from any Person who is, was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person.
Dated:
--------------, ---- ------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature to the foregoing Election to Purchase and Certificate
must correspond to the name as written upon the face of this Class B Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
Exhibit D
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On March __, 2002, the Board of Directors of Travelers Property
Casualty Corp. (the "Company") declared a dividend distribution of one Class A
Right for each outstanding share of Class A Common Stock and one Class B Right
for each outstanding share of Class B Common Stock, to the shareholder of record
at the close of business on March __, 2002 (the "Record Date") and authorized
the issuance of one Class A Right and one Class B Right (the Class A Rights and
Class B Rights together, the "Rights") for each share of Class A Common Stock
and Class B Common Stock (the Class A Common Stock and the Class B Common Stock
together, the "Common Stock"), respectively, issued after the Record Date. Each
Right entitles the registered holder to purchase from the Company a unit
consisting of one one-thousandth of a share (a "Unit") of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock"), at a Purchase Price of ____ per Unit, subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and EquiServe Trust Company, N.A., as
Rights Agent.
Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Class A
Rights Certificates or Class B Rights Certificates (the Class A Rights
Certificates and the Class B Rights Certificates together, the "Rights
Certificates") will be distributed. Subject to certain exceptions specified in
the Rights Agreement, the Rights will separate from the underlying Common Stock
and a Distribution Date will occur upon the earlier of (i) 10 business days
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") (but excluding Citigroup, Inc.
("Citigroup") and its subsidiaries) has acquired beneficial ownership of shares
of Common Stock representing 15% or more of the voting power of the shares of
Common Stock outstanding (the "Stock Acquisition Date"), other than as a result
of repurchases of stock by the Company or certain inadvertent actions by
institutional or certain other shareholders or (ii) 10 business days (or such
later date as the Board shall determine) after the date of commencement or the
date of first public announcement with respect thereto (whichever is earlier) of
a tender offer or exchange offer that would result in a person or group becoming
an Acquiring Person.
Until the Distribution Date, (i) the Rights will be evidenced by the
underlying Common Stock certificates and will be transferred with and only with
such Common Stock certificates, (ii) new Common Stock certificates issued after
the Record Date will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for Common
Stock outstanding will also constitute the transfer of the Rights associated
with the Common Stock represented by such certificates. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the occurrence of
a Triggering Event (as defined below) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Preferred Stock will
be issued.
The Rights are not exercisable until the Distribution Date and will
expire at 5:00 P.M. (New York City time) on March __, 2012, unless earlier
redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of the class of Common Stock
into which such Rights are exercisable (as set forth below) as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
In the event that a Person becomes an Acquiring Person, each holder
of a Class A Right and Class B Right, respectively, will thereafter have the
right to receive, upon exercise, Class A Common Stock and Class B Common Stock,
respectively, (or, in certain circumstances cash, property or other securities
of the Company) having a Current Market Price (as defined in the Rights
Agreement) equal to two times the exercise price of such Right. The Exercise
Price is the Purchase Price times the number of shares of such class of Common
Stock associated with each such Right. Notwithstanding any of the foregoing,
following the occurrence of the event set forth in this paragraph, all Rights
that are, or (under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person will be null and void. However,
Rights are not exercisable following the occurrence of the event set forth above
until such time as the Rights are no longer redeemable by the Company as set
forth below.
For example, at an exercise price of $100 per Right, each Class A
Right not owned by an Acquiring Person (or by certain related parties) following
an event set forth in the preceding paragraph would entitle its holder to
purchase $200 worth (based on its Current Market Price) of Class A Common Stock
(or other consideration, as noted above) for $100. Assuming that the Class A
Common Stock had a per share value of $50 at such time, the holder of each valid
Class A Right would be entitled to purchase 4 shares of Class A Common Stock for
$100. A similar example would apply with respect to Class B Rights.
In the event that, at any time following the Stock Acquisition Date,
(i) the Company engages in a merger or other business combination transaction in
which the Company is not the surviving corporation, (ii) the Company engages in
a merger or other business combination transaction in which the Company is the
surviving corporation and the Common Stock of the Company is changed or
exchanged, or (iii) 50% or more of the Company's assets, cash flow or earning
power is sold or transferred, each holder of a Right (except Rights which have
previously been voided as set forth above) shall thereafter have the right to
receive, upon exercise, common stock of the acquiring company having a Current
Market Price equal to two times the exercise price of the Right. The events set
forth in this paragraph and in the second preceding paragraph are referred to as
the "Triggering Events."
The Purchase Price payable, and the number of Units of Preferred
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
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities at
less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. No fractional Units will be issued and, in lieu thereof, an adjustment in
cash will be made based on the market price of the Preferred Stock on the last
trading date prior to the date of exercise.
At any time until such time as any Person becomes an Acquiring
Person, the Company may redeem the Rights in whole, but not in part, at a price
of $.01 per Right (payable in cash, the relevant class of Common Stock for which
a Right is exercisable or other consideration deemed appropriate by the Board of
Directors).
Until a Right is exercised, the holder thereof, as such, will have
no rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
should not be taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other consideration) of the
Company or for common stock of the acquiring company or in the event of the
redemption of the Rights as set forth above.
Any of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Company prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity, to make changes which do not adversely
affect the interests of holders of Rights, or to shorten or lengthen any time
period under the Rights Agreement; provided, however, that no amendment to
lengthen a time period relating to when the Rights may be redeemed may be made
at such time as the Rights are not redeemable. Notwithstanding the foregoing,
(i) any amendment of any provision of the Rights Agreement at any time requires
the consent of Citigroup unless Citigroup (together with its subsidiaries) holds
shares representing less than 20% of the voting power of the outstanding shares
of Common Stock at the time of such amendment, and (ii) any amendment of the
definition of "Acquiring Person" requires the consent of Citigroup unless
Citigroup owns less than 5% of the voting power of the outstanding shares of
Common Stock at the time of such amendment.
A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as Exhibit 4.2 to the Company's S-1 Registration
Statement No. 333- 82388. A copy of the Rights Agreement is available free of
charge from the Rights Agent.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
