EXHIBIT 1
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RIGHTS AGREEMENT
Dated as of September 30, 1997
By and Between
THE XXXX COMPANY
and
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
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TABLE OF CONTENTS
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Page
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1. Certain Definitions................................................ 1
2. Appointment of Rights Agent........................................ 6
3. Issue of Right Certificates........................................ 6
4. Form of Right Certificates......................................... 7
5. Countersignature and Registration.................................. 8
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates............ 8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights...... 9
8. Cancellation and Destruction of Right Certificates................. 11
9. Company Covenants Concerning Securities and Rights................. 11
10. Record Date........................................................ 13
11. Adjustment of Purchase Price, Number and Kind of Securities or
Number of Rights................................................... 13
12. Certificate of Adjusted Purchase Price or Number of Securities..... 24
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power.............................................................. 24
14. Fractional Rights and Fractional Securities........................ 27
15. Rights of Action................................................... 29
16. Agreement of Rights Holders........................................ 29
17. Right Certificate Holder Not Deemed a Stockholder.................. 30
18. Concerning the Rights Agent........................................ 30
19. Merger or Consolidation or Change of Name of Rights Agent.......... 31
20. Duties of Rights Agent............................................. 31
21. Change of Rights Agent............................................. 34
22. Issuance of New Right Certificates................................. 35
(i)
Page
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23. Redemption......................................................... 35
24. Exchange........................................................... 36
25. Notice of Certain Events........................................... 37
26. Notices............................................................ 38
27. Supplements and Amendments......................................... 39
28. Successors; Certain Covenants...................................... 40
29. Benefits of This Agreement......................................... 40
30. Governing Law...................................................... 40
31. Severability....................................................... 40
32. Descriptive Headings, Etc.......................................... 40
33. Determinations and Actions by the Board............................ 40
34. Counterparts....................................................... 41
Exhibit A............................................................... A-1
Exhibit B............................................................... B-1
Exhibit C............................................................... C-1
(ii)
RIGHTS AGREEMENT
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This RIGHTS AGREEMENT, dated as of September 30, 1997 (this "Agreement"), is
made and entered into by and between The Xxxx Company, a Delaware corporation
(the "Company"), and American Stock Transfer & Trust Company, a New York
corporation (the "Rights Agent").
RECITALS
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WHEREAS, on September 30, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one right (a "Right") for
each share of Common Stock, par value $.01 per share, of the Company (a "Common
Share") outstanding as of the Close of Business (as hereinafter defined) on
October 15, 1997 (the "Record Date"), each Right initially representing the
right to purchase one one-hundredth of a Preferred Share (as hereinafter
defined), on the terms and subject to the conditions herein set forth, and
further authorized and directed the issuance of one Right (subject to adjustment
as provided herein) with respect to each Common Share issued or delivered by the
Company (whether originally issued or delivered from the Company's treasury)
after the Record Date but prior to the earlier of the Distribution Date (as
hereinafter defined) and the Expiration Date (as hereinafter defined) or as
provided in Section 22.
NOW, THEREFORE, in consideration of the mutual agreements herein set forth,
the parties hereto hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the
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following terms have the meanings indicated:
(a) "Acquiring Person" means any Person (other than the Company or any Related
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Person) who or which, together with all Affiliates and Associates of such
Person, is the Beneficial Owner of 15% or more of the then-outstanding
Common Shares; provided, however, that a Person will not be deemed to have
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become an Acquiring Person solely as a result of a reduction in the number
of Common Shares outstanding unless and until such time as (i) such Person
or any Affiliate or Associate of such Person thereafter becomes the
Beneficial Owner of additional Common Shares representing 1% or more of the
then-outstanding Common Shares, other than as a result of a stock dividend,
stock split or similar transaction effected by the Company in which all
holders of Common Shares are treated equally, or (ii) any other Person who
is the Beneficial Owner of Common Shares representing 1% or more of the
then-outstanding Common Shares thereafter becomes an Affiliate or Associate
of such Person; provided further, however, that a Person (other than the
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Company or any Related Person) who or which, together with all Affiliates
and Associates of such Person, was, at the time of the public announcement
by the Company of the declaration by its Board of Directors on September
30, 1997, of the dividend distribution of the Rights, the Beneficial Owner
of 15% or more of the then-outstanding Common Shares shall not be deemed to
have become an Acquiring Person unless and until such time as (A) such
Person or any Affiliate or Associate of such Person thereafter becomes the
Beneficial Owner of additional Common Shares representing 1% or more of the
then-outstanding Common Shares other than as a result of a stock dividend,
stock split or similar transaction effected by the Company in which all
holders of Common Shares are treated equally or (B) any other Person who is
the Beneficial Owner of Common Shares representing 1% or more of the then-
outstanding Common Shares thereafter becomes an Affiliate or Associate of
such Person. Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that a Person who would otherwise be
an "Acquiring Person" as defined pursuant to the foregoing provisions of
this paragraph (a), has become such inadvertently, and such Person divests
as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person" as defined pursuant to
the foregoing provisions of this paragraph (a), then such Person shall not
be deemed to be an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" will have the respective meanings ascribed to
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such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement.
(c) A Person will be deemed the "Beneficial Owner" of, and to "Beneficially
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Own," any securities:
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(i) the beneficial ownership of which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of conversion rights,
exchange rights, warrants, options or other rights (in each case, other
than upon exercise or exchange of the Rights); provided, however, that a
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Person will not be deemed the Beneficial Owner of, or to Beneficially Own,
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange; or
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has or shares the right to vote or
dispose of, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); or
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(iii) of which any other Person is the Beneficial Owner, if such
Person or any of such Person's Affiliates or Associates has any agreement,
arrangement, or understanding (whether or not in writing) with such other
Person (or any of such other Person's Affiliates or Associates) with
respect to acquiring, holding, voting or disposing of any securities of the
Company;
provided, however, that a Person will not be deemed the Beneficial Owner of, or
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to Beneficially Own, any security (A) if such Person has the right to vote such
security pursuant to an agreement, arrangement or understanding (whether or not
in writing) which (1) arises solely from a revocable proxy given to such Person
in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and
(2) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report), or (B) if such beneficial ownership arises
solely as a result of such Person's status as a "clearing agency," as defined in
Section 3(a)(23) of the Exchange Act; provided further, however, that nothing in
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this paragraph (c) will cause a Person engaged in business as an underwriter of
securities to be the Beneficial Owner of, or to Beneficially Own, any securities
acquired through such Person's participation in good faith in an underwriting
syndicate until the expiration of 40 calendar days after the date of such
acquisition, or such later date as the Board of Directors of the Company may
determine in any specific case.
(d) "Business Day" means any day other than a Saturday, Sunday or a day on
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which banking institutions in the State of New York (or such other state in
which the principal office of the Rights Agent is located) are authorized
or obligated by law or executive order to close.
(e) "Close of Business" on any given date means 5:00 P.M., Eastern time, on
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such date; provided, however, that if such date is not a Business Day it
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means 5:00 P.M., Eastern time, on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company means the shares of
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Common Stock, par value $.01 per share, of the Company; provided, however,
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that, if the Company is the continuing or surviving corporation in a
transaction described in Section 13(a)(ii), "Common Shares" when used with
reference to the Company means shares of the capital stock or units of the
equity interests with the greatest aggregate voting power of the Company.
"Common Shares" when used with reference to any corporation or other legal
entity other than the Company, including an Issuer, means shares of the
capital stock or units of the equity interests with the greatest aggregate
voting power of such corporation or other legal entity.
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(g) "Company" means The Xxxx Company, a Delaware corporation.
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(h) "Distribution Date" means the earlier of: (i) the Close of Business on the
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tenth calendar day (or, unless the Distribution Date shall have previously
occurred, such later date as may be specified by the Board of Directors of
the Company) after the Share Acquisition Date, or (ii) the Close of
Business on the tenth Business Day (or, unless the Distribution Date shall
have previously occurred, such later date as may be specified by the Board
of Directors of the Company) after the date of the commencement of a tender
or exchange offer by any Person (other than the Company or any Related
Person), if upon the consummation thereof such Person would be the
Beneficial Owner of 15% or more of the then-outstanding Common Shares.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
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(j) "Expiration Date" means the earliest of (i) the Close of Business on the
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Final Expiration Date, (ii) the time at which the Rights are redeemed as
provided in Section 23, and (iii) the time at which all exercisable Rights
are exchanged as provided in Section 24.
(k) "Final Expiration Date" means the tenth anniversary of the Record Date.
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(l) "Flip-in Event" means any event described in clauses (A), (B) or (C) of
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Section 11(a)(ii).
(m) "Flip-over Event" means any event described in clauses (i), (ii) or (iii)
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of Section 13(a).
(n) "Issuer" has the meaning set forth in Section 13(b).
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(o) "Nasdaq" means The Nasdaq Stock Market.
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(p) "Person" means any individual, firm, corporation or other legal entity, and
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includes any successor (by merger or otherwise) of such entity.
(q) "Preferred Shares" means shares of Series A Junior Participating Preferred
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Stock, par value $.01 per share, of the Company having the rights and
preferences set forth in the form of Certificates of Designation of Series
A Junior Participating Preferred Stock attached as Exhibit A.
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(r) "Purchase Price" means initially $49.00 per one one-hundredth of a
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Preferred Share, subject to adjustment from time to time as provided in
this Agreement.
(s) "Record Date" has the meaning set forth in the Recitals to this Agreement.
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(t) "Redemption Price" means $.01 per Right, subject to adjustment by
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resolution of the Board of Directors of the Company to reflect any stock
split, stock dividend or similar transaction occurring after the Record
Date.
(u) "Related Person" means (i) any Subsidiary of the Company or (ii) any
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employee benefit or stock ownership plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or
pursuant to the terms of any such plan.
(v) "Right" has the meaning set forth in the Recitals to this Agreement.
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(w) "Right Certificates" means certificates evidencing the Rights, in
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substantially the form attached as Exhibit B.
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(x) "Rights Agent" means American Stock Transfer & Trust Company, a New York
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corporation, unless and until a successor Rights Agent has become such
pursuant to the terms of this Agreement, and thereafter, "Rights Agent"
means such successor Rights Agent.
(y) "Securities Act" means the Securities Act of 1933, as amended.
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(z) "Share Acquisition Date" means the first date of public announcement by the
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Company or an Acquiring Person (by press release, filing made with the
Securities and Exchange Commission or otherwise) that an Acquiring Person
has become such; provided, however, that no such public announcement by an
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Acquiring Person shall have been deemed to have been made for purposes of
this paragraph (y) unless and until a majority of the members of the Board
of Directors of the Company have actual notice thereof.
(aa) "Subsidiary" when used with reference to any Person means any corporation
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or other legal entity of which a majority of the voting power of the voting
equity securities or equity interests is owned, directly or indirectly, by
such Person; provided, however, that for purposes of Section 13(b),
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"Subsidiary" when used with reference to any Person means any corporation
or other legal entity of which at least 20% of the voting power of the
voting equity securities or equity interests is owned, directly or
indirectly, by such Person.
(bb) "Trading Day" means any day on which the principal national securities
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exchange on which the Common Shares are listed or admitted to trading is
open for the transaction of business or, if the Common Shares are not
listed or admitted to trading on any national securities exchange, a
Business Day.
(cc) "Triggering Event" means any Flip-in Event or Flip-over Event.
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2. Appointment of Rights Agent. The Company hereby appoints the
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Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3, will also be, prior to the Distribution Date, the
holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment and hereby
certifies that it complies with the requirements of the American Stock Exchange
governing transfer agents and registrars. The Company may from time to time act
as Co-Rights Agent or appoint such Co-Rights Agents as it may deem necessary or
desirable. Any actions which may be taken by the Rights Agent pursuant to the
terms of this Agreement may be taken by any such Co-Rights Agent. To the extent
that any Co-Rights Agent takes any action pursuant to this Agreement, such Co-
Rights Agent will be entitled to all of the rights and protections of, and
subject to all of the applicable duties and obligations imposed upon, the Rights
Agent pursuant to the terms of this Agreement.
3. Issue of Right Certificates. (a) Until the Distribution Date,
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(i) the Rights will be evidenced by the certificates representing Common Shares
registered in the names of the record holders thereof (which certificates
representing Common Shares will also be deemed to be Right Certificates), (ii)
the Rights will be transferable only in connection with the transfer of the
underlying Common Shares, and (iii) the surrender for transfer of any
certificates evidencing Common Shares in respect of which Rights have been
issued will also constitute the transfer of the Rights associated with the
Common Shares evidenced by such certificates. On or as promptly as practicable
after the Record Date, the Company will send by first class, postage prepaid
mail, to each record holder of Common Shares as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company
as of such date, a copy of a Summary of Rights to Purchase Preferred Stock in
substantially the form attached as Exhibit C.
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(b) Rights will be issued by the Company in respect of all Common Shares (other
than Common Shares issued upon the exercise or exchange of any Right)
issued or delivered by the Company (whether originally issued or delivered
from the Company's treasury) after the Record Date but prior to the earlier
of the Distribution Date and the Expiration Date. Certificates evidencing
such Common Shares will have stamped on, impressed on, printed on, written
on, or otherwise affixed to them the following legend or such similar
legend as the Company may deem appropriate and as is not inconsistent with
the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange or transaction reporting
system on which the Common Shares may from time to time be listed or
quoted, or to conform to usage:
This Certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Rights Agreement between The Xxxx Company and
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American Stock Transfer & Trust Company, dated as of September 30, 1997
(the "Rights Agreement"), the terms of which are hereby incorporated herein
by reference and a copy of which is on file at the principal executive
offices of The Xxxx Company. The Rights are not exercisable prior to the
occurrence of certain events specified in the Rights Agreement. Under
certain circumstances, as set forth in the Rights Agreement, such Rights
may be redeemed, may expire, may be amended, or may be evidenced by
separate certificates and no longer be evidenced by this Certificate. The
Xxxx 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 as set forth in the Rights Agreement, Rights beneficially
owned by an Acquiring Person or any Affiliate or Associate of an Acquiring
Person (as such terms are defined in the Rights Agreement) may become null
and void.
(c) As promptly as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send),
by first class, insured, postage prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Right
Certificate evidencing one Right for each Common Share so held, subject to
adjustment as provided herein. As of and after the Distribution Date, the
Rights will be evidenced solely by such Right Certificates.
(d) In the event that the Company purchases or otherwise acquires any Common
Shares after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares will be deemed canceled and retired so
that the Company will not be entitled to exercise any Rights associated
with the Common Shares so purchased or acquired.
4. Form of Right Certificates. The Right Certificates (and the
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form of election to purchase, the form of assignment and the form of election to
purchase without the payment of cash to be printed on the reverse thereof) will
be substantially in the form attached as Exhibit B with such changes and marks
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of identification or designation, and such legends, summaries or endorsements
printed thereon, as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or transaction reporting system on
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which the Rights may from time to time be listed or quoted, or to conform to
usage. Subject to the provisions of Section 22, the Right Certificates,
whenever issued, on their face will entitle the holders thereof to purchase such
number of one one-hundredths of a Preferred Share as are set forth therein at
the Purchase Price set forth therein, but the Purchase Price, the number and
kind of securities issuable upon exercise of each Right and the number of Rights
outstanding will be subject to adjustment as provided herein.
5. Countersignature and Registration. (a) The Right Certificates
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will be executed on behalf of the Company by its Chairman of the Board, any Vice
Chairman, its President or any Vice President, either manually or by facsimile
signature, and will have affixed thereto the Company's seal or a facsimile
thereof which will be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature. The Right Certificates will
be manually countersigned by the Rights Agent and will not be valid for any
purpose unless so countersigned. In case any officer of the Company who signed
any of the Right Certificates ceases to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any person who, at the actual date of the execution of such Right
Certificate, is a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Rights Agreement any such person
was not such officer.
(b) Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at the principal office of the Rights Agent designated for such
purpose and at such other offices as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange or any transaction reporting
system on which the Rights may from time to time be listed or quoted, books
for registration and transfer of the Right Certificates issued hereunder.
Such books will show the names and addresses of the respective holders of
the Right Certificates, the number of Rights evidenced on its face by each
of the Right Certificates and the date of each of the Right Certificates.
6. Transfer, Split Up, Combination and Exchange of Right
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Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a)
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Subject to the provisions of Sections 7(d) and 14, at any time after the Close
of Business on the Distribution Date and prior to the Expiration Date, any Right
Certificate or Right Certificates representing exercisable Rights may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
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one one-hundredths of a Preferred Share (or other securities, as the case may
be) as the Right Certificate or Right Certificates surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any such
Right Certificate or Rights Certificates must make such request in a writing
delivered to the Rights Agent and must surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the principal
office of the Rights Agent designated for such purpose. Thereupon or as
promptly as practicable thereafter, subject to the provisions of Sections 7(d)
and 14, the Company will prepare, execute and deliver to the Rights Agent, and
the Rights Agent will countersign and deliver, a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a
Right Certificate and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, if requested by the
Company, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights
Agent and cancellation of the Right Certificate if mutilated, the Company
will prepare, execute and deliver a new Right Certificate of like tenor to
the Rights Agent and the Rights Agent will countersign and deliver such new
Right Certificate to the registered holder in lieu of the Right Certificate
so lost, stolen, destroyed or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
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(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date and prior to the Expiration Date, upon
surrender of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed, to the Rights Agent at the office or offices
of the Rights Agent designated for such purpose, together with payment in cash,
in lawful money of the United States of America by certified check or bank draft
payable to the order of the Company, equal to the sum of (i) the exercise price
for the total number of securities as to which such surrendered Rights are
exercised and (ii) an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with the provisions
of Section 9(c).
(b) Upon receipt of a Right Certificate representing exercisable Rights with
the form of election to purchase duly executed, accompanied by payment as
described above, the Rights Agent will promptly (i) requisition from any
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transfer agent of the Preferred Shares (or make available, if the Rights
Agent is the transfer agent) certificates representing the number of one
one-hundredths of a Preferred Share to be purchased (and the Company hereby
irrevocably authorizes and directs its transfer agent to comply with all
such requests), or, if the Company elects to deposit Preferred Shares
issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a Preferred Share as are to be purchased
(and the Company hereby irrevocably authorizes and directs such depositary
agent to comply with all such requests), (ii) after receipt of such
certificates (or depositary receipts, as the case may be), cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, (iii) when appropriate, requisition from the Company or any
transfer agent therefor (or make available, if the Rights Agent is the
transfer agent) certificates representing the number of equivalent common
shares to be issued in lieu of the issuance of Common Shares in accordance
with the provisions of Section 11(a)(iii), (iv) when appropriate, after
receipt of such certificates, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder, (v) when
appropriate, requisition from the Company the amount of cash to be paid in
lieu of the issuance of fractional shares in accordance with the provisions
of Section 14 or in lieu of the issuance of Common Shares in accordance
with the provisions of Section 11(a)(iii), (vi) when appropriate, after
receipt, deliver such cash to or upon the order of the registered holder of
such Right Certificate, and (vii) when appropriate, deliver any due xxxx or
other instrument provided to the Rights Agent by the Company for delivery
to the registered holder of such Right Certificate as provided by Section
11(l).
(c) In case the registered holder of any Right Certificate exercises less than
all the Rights evidenced thereby, the Company will prepare, execute and
deliver a new Right Certificate evidencing Rights equivalent to the Rights
remaining unexercised and the Rights Agent will countersign and deliver
such new Right Certificate to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14.
(d) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company will be obligated to undertake any action with
respect to any purported transfer, split up, combination or exchange of any
Right Certificate pursuant to Section 6 or exercise of a Right Certificate
as set forth in this Section 7 unless the registered holder of such Right
Certificate has (i) completed and signed the certificate following the form
of assignment or the form of election to purchase, as applicable, set forth
on the reverse side of the Right Certificate surrendered for such transfer,
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split up, combination, exchange or exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company may
reasonably request.
8. Cancellation and Destruction of Right Certificates. All Right
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Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange will, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, will be canceled by it,
and no Right Certificates will be issued in lieu thereof except as expressly
permitted by the provisions of this Agreement. The Company will deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent will so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent will deliver
all canceled Right Certificates to the Company, or will, at the written request
of the Company, destroy such canceled Right Certificates, and in such case will
deliver a certificate of destruction thereof to the Company.
9. Company Covenants Concerning Securities and Rights. The
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Company covenants and agrees that:
(a) It will cause to be reserved and kept available out of its authorized and
unissued Preferred Shares or any Preferred Shares held in its treasury, a
number of Preferred Shares that will be sufficient to permit the exercise
in full of all outstanding Rights in accordance with Section 7.
(b) So long as the Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) issuable upon the
exercise of the Rights may be listed on a national securities exchange, or
quoted on Nasdaq, it will endeavor to cause, from and after such time as
the Rights become exercisable, all securities reserved for issuance upon
the exercise of Rights to be listed on such exchange, or quoted on Nasdaq,
upon official notice of issuance upon such exercise.
(c) It will take all such action as may be necessary to ensure that all
Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares and/or other securities) delivered upon exercise of Rights,
at the time of delivery of the certificates for such securities, will be
(subject to payment of the Purchase Price) duly authorized, validly issued,
fully paid and nonassessable securities.
(d) It will pay when due and payable any and all federal and state transfer
taxes and charges that may be payable in respect of the issuance or
delivery of the Right Certificates and of any certificates representing
securities issued upon the exercise of Rights; provided, however, that the
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11
Company will not be required to pay any transfer tax or charge which may be
payable in respect of any transfer or delivery of Right Certificates to a
person other than, or the issuance or delivery of certificates or
depositary receipts representing securities issued upon the exercise of
Rights in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to issue or
deliver any certificates or depositary receipts representing securities
issued upon the exercise of any Rights until any such tax or charge has
been paid (any such tax or charge being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to
the Company's reasonable satisfaction that no such tax is due.
(e) It will use its best efforts (i) to file on an appropriate form, as soon as
practicable following the later of the Share Acquisition Date and the
Distribution Date, a registration statement under the Securities Act with
respect to the securities issuable upon exercise of the Rights, (ii) to
cause such registration statement to become effective as soon as
practicable after such filing, and (iii) to cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the
Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue
sky" laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time
after the date set forth in clause (i) of the first sentence of this
Section 9(e), the exercisability of the Rights in order to prepare and file
such registration statement and to permit it to become effective. Upon any
such suspension, the Company will issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. In addition, if the Company determines that a registration
statement should be filed under the Securities Act or any state securities
laws following the Distribution Date, the Company may temporarily suspend
the exercisability of the Rights in each relevant jurisdiction until such
time as a registration statement has been declared effective and, upon any
such suspension, the Company will issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in
effect. Notwithstanding anything in this Agreement to the contrary, the
Rights will not be exercisable in any jurisdiction if the requisite
registration or qualification in such jurisdiction has not been effected or
the exercise of the Rights is not permitted under applicable law.
12
(f) Notwithstanding anything in this Agreement to the contrary, after the later
of the Share Acquisition Date and the Distribution Date it will not take
(or permit any Subsidiary to take) any action if at the time such action is
taken it is reasonably foreseeable that such action will eliminate or
otherwise diminish the benefits intended to be afforded by the Rights.
(g) In the event that the Company is obligated to issue other securities of the
Company and/or pay cash pursuant to Sections 11, 13, 14 or 24 it will make
all arrangements necessary so that such other securities and/or cash are
available for distribution by the Rights Agent, if and when appropriate.
10. Record Date. Each Person in whose name any certificate
-----------
representing Preferred Shares (or Common Shares and/or other securities, as the
case may be) is issued upon the exercise of Rights will for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate will be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
-------- -------
date of such surrender and payment is a date upon which the transfer books of
the Company for the Preferred Shares (or Common Shares and/or other securities,
as the case may be) are closed, such Person will be deemed to have become the
record holder of such securities on, and such certificate will be dated, the
next succeeding Business Day on which the transfer books of the Company for the
Preferred Shares (or Common Shares and/or other securities, as the case may be)
are open. Prior to the exercise of the Rights evidenced thereby, the holder of
a Right Certificate will not be entitled to any rights of a holder of any
security for which the Rights are or may become exercisable, including without
limitation the right to vote, to receive dividends or other distributions, or to
exercise any preemptive rights, and will not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.
11. Adjustment of Purchase Price, Number and Kind of Securities or
--------------------------------------------------------------
Number of Rights. The Purchase Price, the number and kind of securities
----------------
issuable upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event that the Company at any time after the Record Date
(A) declares a dividend on the Preferred Shares payable in Preferred
Shares, (B) subdivides the outstanding Preferred Shares, (C) combines the
outstanding Preferred Shares into a smaller number of Preferred Shares, or
(D) issues any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
13
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the
Purchase Price in effect at the time of the record date for such dividend
or of the effective date of such subdivision, combination or
reclassification and/or the number and/or kind of shares of capital stock
issuable on such date upon exercise of a Right, will be proportionately
adjusted so that the holder of any Right exercised after such time is
entitled to receive upon payment of the Purchase Price then in effect the
aggregate number and kind of shares of capital stock which, if such Right
had been exercised immediately prior to such date and at a time when the
transfer books of the Company for the Preferred Shares were open, the
holder of such Right would have owned upon such exercise (and, in the case
of a reclassification, would have retained after giving effect to such
reclassification) and would have been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however,
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that in no event shall the consideration to be paid upon the exercise of
one Right be less than the aggregate par value of the shares of capital
stock issuable upon exercise of one Right. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) or Section 13, the adjustment provided for in this Section
11(a)(i) will be in addition to, and will be made prior to, any adjustment
required pursuant to Section 11(a)(ii) or Section 13.
(ii) Subject to the provisions of Section 24, if:
(A) any Person becomes an Acquiring Person; or
(B) any Acquiring Person or any Affiliate or Associate of any
Acquiring Person, directly or indirectly, (1) merges into the Company or
otherwise combines with the Company and the Company is the continuing or
surviving corporation of such merger or combination (other than in a
transaction subject to Section 13), (2) merges or otherwise combines with
any Subsidiary of the Company, (3) in one or more transactions (otherwise
than in connection with the exercise, exchange or conversion of securities
exercisable or exchangeable for or convertible into shares of any class of
capital stock of the Company or any of its Subsidiaries) transfers cash,
securities or any other property to the Company or any of its Subsidiaries
in exchange (in whole or in part) for shares of any class of capital stock
of the Company or any of its Subsidiaries or for securities exercisable or
exchangeable for or convertible into shares of any class of capital stock
of the Company or any of its Subsidiaries, or otherwise obtains from the
Company or any of its Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the Company or any of
14
its Subsidiaries or securities exercisable or exchangeable for or
convertible into shares of any class of capital stock of the Company or any
of its Subsidiaries (otherwise than as part of a pro rata distribution to
all holders of shares of any class of capital stock of the Company, or any
of its Subsidiaries), (4) sells, purchases, leases, exchanges, mortgages,
pledges, transfers or otherwise disposes (in one or more transactions) to,
from, with or of, as the case may be, the Company or any of its
Subsidiaries (otherwise than in a transaction subject to Section 13), any
property, including securities, on terms and conditions less favorable to
the Company than the Company would be able to obtain in an arm's-length
transaction with an unaffiliated third party, (5) receives any compensation
from the Company or any of its Subsidiaries other than compensation as a
director or a regular full-time employee, in either case at rates
consistent with the Company's (or its Subsidiaries') past practices, or (6)
receives the benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantage provided by
the Company or any of its Subsidiaries; or
(C) during such time as there is an Acquiring Person, there is any
reclassification of securities of the Company (including any reverse stock
split), or any recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries, or any other
transaction or series of transactions involving the Company or any of its
Subsidiaries (whether or not with or into or otherwise involving an
Acquiring Person), other than a transaction subject to Section 13, which
has the effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries, or of securities
exercisable or exchangeable for or convertible into equity securities of
the Company or any of its Subsidiaries, of which an Acquiring Person, or
any Affiliate or Associate of any Acquiring Person, is the Beneficial
Owner;
then, and in each such case, proper provision will be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and
the date of the occurrence of such Flip-in Event each holder of a Right,
except as provided below, will have a right to receive, upon exercise
thereof in accordance with the terms of this Agreement at an exercise price
per Right equal to the product of the then-current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to the date of the
occurrence of such Flip-in Event (or, if any other Flip-in Event shall have
previously occurred, the product of the then-current Purchase Price
multiplied by the number of one one-hundredths of a Preferred Share for
15
which a Right would have been exercisable immediately prior to the date of
the occurrence of such Flip-in Event if no other Flip-in Event had
previously occurred), in lieu of Preferred Shares, such number of Common
Shares as equals the result obtained by (x) multiplying the then-current
Purchase Price by the number of one one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to the date of the
occurrence of such Flip-in Event (or, if any other Flip-in Event shall have
previously occurred, multiplying the then-current Purchase Price by the
number of one one-hundredths of a Preferred Share for which a Right would
have been exercisable immediately prior to the date of the occurrence of
such Flip-in Event if no other Flip-in Event had previously occurred), and
dividing that product by (y) 50% of the current per share market price of
the Common Shares (determined pursuant to Section 11(d)) on the date of the
occurrence of such Flip-in Event. Notwithstanding anything in this
Agreement to the contrary, from and after the occurrence of a Flip-in
Event, any Rights that are Beneficially Owned by (A) any Acquiring Person
(or any Affiliate or Associate of any Acquiring Person), (B) a transferee
of any Acquiring Person (or any such Affiliate or Associate) who becomes a
transferee after the occurrence of a Flip-in Event, or (C) a transferee of
any Acquiring Person (or any such Affiliate or Associate) who became a
transferee prior to or concurrently with the occurrence of a Flip-in Event
pursuant to either (1) a transfer from an Acquiring Person to holders of
its equity securities or to any Person with whom it has any continuing
agreement, arrangement or understanding regarding the transferred Rights or
(2) a transfer which the Board of Directors of the Company has determined
is part of a plan, arrangement or understanding which has the purpose or
effect of avoiding the provisions of this Section 11(a)(ii), and subsequent
transferees of any of such Persons, will be void without any further action
and any holder of such Rights will thereafter have no rights whatsoever
with respect to such Rights under any provision of this Agreement. The
Company will use all reasonable efforts to ensure that the provisions of
this Section 11(a)(ii) are complied with, but will have no liability to any
holder of Right Certificates or any other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder. Upon the occurrence of a
Flip-in Event, no Right Certificate that represents Rights that are or have
become void pursuant to the provisions of this Section 11(a)(ii) will
thereafter be issued pursuant to Section 3 or Section 6, and any Right
Certificate delivered to the Rights Agent that represents Rights that are
or have become void pursuant to the provisions of this Section 11(a)(ii)
will be canceled. Upon the occurrence of a Flip-over Event, any Rights
16
that shall not have been previously exercised pursuant to this Section
11(a)(ii) shall thereafter be exercisable only pursuant to Section 13 and
not pursuant to this Section 11(a)(ii).
(iii) Upon the occurrence of a Flip-in Event, if there are not
sufficient Common Shares authorized but unissued or issued but not
outstanding to permit the issuance of all the Common Shares issuable in
accordance with Section 11(a)(ii) upon the exercise of a Right, the Board
of Directors of the Company will use its best efforts promptly to authorize
and, subject to the provisions of Section 9(e), make available for issuance
additional Common Shares or other equity securities of the Company having
equivalent voting rights and an equivalent value (as determined in good
faith by the Board of Directors of the Company) to the Common Shares (for
purposes of this Section 11(a)(iii), "equivalent common shares"). In the
event that equivalent common shares are so authorized, upon the exercise of
a Right in accordance with the provisions of Section 7, the registered
holder will be entitled to receive (A) Common Shares, to the extent any are
available, and (B) a number of equivalent common shares, which the Board of
Directors of the Company has determined in good faith to have a value
equivalent to the excess of (x) the aggregate current per share market
value on the date of the occurrence of the most recent Flip-in Event of all
the Common Shares issuable in accordance with Section 11(a)(ii) upon the
exercise of a Right (the "Exercise Value") over (y) the aggregate current
per share market value on the date of the occurrence of the most recent
Flip-in Event of any Common Shares available for issuance upon the exercise
of such Right; provided, however, that if at any time after 90 calendar
-------- -------
days after the latest of the Share Acquisition Date, the Distribution Date
and the date of the occurrence of the most recent Flip-in Event, there are
not sufficient Common Shares and/or equivalent common shares available for
issuance upon the exercise of a Right, then the Company will be obligated
to deliver, upon the surrender of such Right and without requiring payment
of the Purchase Price, Common Shares (to the extent available), equivalent
common shares (to the extent available) and then cash (to the extent
permitted by applicable law and any agreements or instruments to which the
Company is a party in effect immediately prior to the Share Acquisition
Date), which securities and cash have an aggregate value equal to the
excess of (1) the Exercise Value over (2) the product of the then-current
Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to the
date of the occurrence of the most recent Flip-in Event (or, if any other
Flip-in Event shall have previously occurred, the product of the then-
current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right would have been exercisable immediately
prior to the date of the occurrence of such Flip-in Event if no other Flip-
17
in Event had previously occurred). To the extent that any legal or
contractual restrictions prevent the Company from paying the full amount of
cash payable in accordance with the foregoing sentence, the Company will
pay to holders of the Rights as to which such payments are being made all
amounts which are not then restricted on a pro rata basis and will continue
to make payments on a pro rata basis as promptly as funds become available
until the full amount due to each such Rights holder has been paid.
(b) In the event that the Company fixes a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling
them (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Preferred Shares (or securities having
equivalent rights, privileges and preferences as the Preferred Shares (for
purposes of this Section 11(b), "equivalent preferred shares")) or
securities convertible into Preferred Shares or equivalent preferred shares
at a price per Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Preferred Shares
or equivalent preferred shares) less than the current per share market
price of the Preferred Shares (determined pursuant to Section 11(d)) on
such record date, the Purchase Price to be in effect after such record date
will be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which is the
number of Preferred Shares outstanding on such record date plus the number
of Preferred Shares which the aggregate offering price of the total number
of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per share
market price and the denominator of which is the number of Preferred Shares
outstanding on such record date plus the number of additional Preferred
Shares and/or equivalent preferred shares to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
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consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock issuable upon exercise
of one Right. In case such subscription price may be paid in a
consideration part or all of which is in a form other than cash, the value
of such consideration will be as determined in good faith by the Board of
Directors of the Company, whose determination will be described in a
statement filed with the Rights Agent. Preferred Shares owned by or held
for the account of the Company will not be deemed outstanding for the
purpose of any such computation. Such adjustment will be made successively
whenever such a record date is fixed, and in the event that such rights,
options or warrants are not so issued, the Purchase Price will be adjusted
to be the Purchase Price which would then be in effect if such record date
had not been fixed.
18
(c) In the event that the Company fixes a record date for the making of a
distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend), assets,
stock (other than a dividend payable in Preferred Shares) or subscription
rights, options or warrants (excluding those referred to in Section 11(b)),
the Purchase Price to be in effect after such record date will be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which is the current per
share market price of the Preferred Shares (as determined pursuant to
Section 11(d)) on such record date or, if earlier, the date on which
Preferred Shares begin to trade on an ex-dividend or when issued basis for
such distribution, less the fair market value (as determined in good faith
by the Board of Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent) of the portion of the
evidences of indebtedness, cash, assets or stock so to be distributed or of
such subscription rights, options or warrants applicable to one Preferred
Share, and the denominator of which is such current per share market price
of the Preferred Shares; provided, however, that in no event shall the
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consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock issuable upon exercise
of one Right. Such adjustments will be made successively whenever such a
record date is fixed; and in the event that such distribution is not so
made, the Purchase Price will again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of Common Shares on any date will be deemed to be the
average of the daily closing prices per share of such Common Shares for the
30 consecutive Trading Days immediately prior to such date; provided,
--------
however, that in the event that the current per share market price of the
-------
Common Shares is determined during a period following the announcement by
the issuer of such Common Shares of (A) a dividend or distribution on such
Common Shares payable in such Common Shares or securities convertible into
such Common Shares (other than the Rights) or (B) any subdivision,
combination or reclassification of such Common Shares, and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend
or distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price will be appropriately adjusted to take into account ex-dividend
trading or to reflect the current per share market price per Common Share
equivalent. The closing price for each day will be the last sale price,
regular way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
19
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Shares are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Common Shares are
listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted
price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use, or, if on any such date the Common Shares are not
quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the
Common Shares selected by the Board of Directors of the Company. If the
Common Shares are not publicly held or not so listed or traded, or are not
the subject of available bid and asked quotes, "current per share market
price" will mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination will be
described in a statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares will be determined in the same
manner as set forth above for Common Shares in Section 11(d)(i), other than
the last sentence thereof. If the current per share market price of the
Preferred Shares cannot be determined in the manner provided above, the
"current per share market price" of the Preferred Shares will be
conclusively deemed to be an amount equal to the current per share market
price of the Common Shares multiplied by one hundred (as such number may be
appropriately adjusted to reflect events such as stock splits, stock
dividends, recapitalizations or similar transactions relating to the Common
Shares occurring after the date of this Agreement). If neither the Common
Shares nor the Preferred Shares are publicly held or so listed or traded,
or the subject of available bid and asked quotes, "current per share market
price" of the Preferred Shares will mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent.
For all purposes of this Agreement, the current per share market price of
one one-hundredth of a Preferred Share will be equal to the current per
share market price of one Preferred Share divided by one hundred.
(e) Except as set forth below, no adjustment in the Purchase Price will be
required unless such adjustment would require an increase or decrease of at
20
least 1% in such price; provided, however, that any adjustments which by
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reason of this Section 11(e) are not required to be made will be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 will be made to the nearest cent or to
the nearest one one-millionth of a Preferred Share or one ten-thousandth of
a Common Share or other security, as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this
Section 11 will be made no later than the earlier of (i) three years from
the date of the transaction which requires such adjustment and (ii) the
Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a), the holder
of any Right thereafter exercised becomes entitled to receive any
securities of the Company other than Preferred Shares, thereafter the
number and/or kind of such other securities so receivable upon exercise of
any Right (and/or the Purchase Price in respect thereof) will be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Preferred Shares (and
the Purchase Price in respect thereof) contained in this Section 11, and
the provisions of Sections 7, 9, 10, 13 and 14 with respect to the
Preferred Shares (and the Purchase Price in respect thereof) will apply on
like terms to any such other securities (and the Purchase Price in respect
thereof).
(g) All Rights originally issued by the Company subsequent to any adjustment
made to the Purchase Price hereunder will evidence the right to purchase,
at the adjusted Purchase Price, the number of one one-hundredths of a
Preferred Share issuable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company has exercised its election as provided in Section 11(i),
upon each adjustment of the Purchase Price pursuant to Section 11(b) or
Section 11(c), each Right outstanding immediately prior to the making of
such adjustment will thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of one one-hundredths of a Preferred
Share (calculated to the nearest one one-millionth of a Preferred Share)
obtained by (i) multiplying (x) the number of one one-hundredths of a
Preferred Share issuable upon exercise of a Right immediately prior to such
adjustment of the Purchase Price by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii)
dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of the
Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of one one-hundredths of a Preferred Share
issuable upon the exercise of a Right. Each of the Rights outstanding
21
after such adjustment of the number of Rights will be exercisable for the
number of one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights will become that
number of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of
the Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company will make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. Such record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, will be at least 10 calendar days later than
the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company will, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date
Right Certificates evidencing, subject to the provisions of Section 14, the
additional Rights to which such holders are entitled as a result of such
adjustment, or, at the option of the Company, will cause to be distributed
to such holders of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof if required by the Company, new Right Certificates
evidencing all the Rights to which such holders are entitled after such
adjustment. Right Certificates so to be distributed will be issued,
executed, and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and will
be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
(j) Without respect to any adjustment or change in the Purchase Price and/or
the number and/or kind of securities issuable upon the exercise of the
Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number and kind of
securities which were expressed in the initial Right Certificate issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredth of the then par value, if any, of
the Preferred Shares or below the then par value, if any, of any other
securities of the Company issuable upon exercise of the Rights, the Company
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully
paid and nonassessable Preferred Shares or such other securities, as the
case may be, at such adjusted Purchase Price.
(l) In any case in which this Section 11 otherwise requires that an adjustment
in the Purchase Price be made effective as of a record date for a specified
22
event, the Company may elect to defer until the occurrence of such event
the issuance to the holder of any Right exercised after such record date
the number of Preferred Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of Preferred Shares
or other securities of the Company, if any, issuable upon such exercise on
the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company delivers to such holder a due xxxx or
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other appropriate instrument evidencing such holder's right to receive such
additional Preferred Shares or other securities upon the occurrence of the
event requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, the Company
will be entitled to make such reductions in the Purchase Price, in addition
to those adjustments expressly required by this Section 11, as and to the
extent that in its good faith judgment the Board of Directors of the
Company determines to be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly for cash of
Preferred Shares at less than the current per share market price therefor,
(iii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred Shares, (iv)
stock dividends, or (v) issuance of rights, options or warrants referred
to in this Section 11, hereafter made by the Company to holders of its
Preferred Shares is not taxable to such stockholders.
(n) Notwithstanding anything in this Agreement to the contrary, in the event
that the Company at any time after the Record Date prior to the
Distribution Date (i) pays a dividend on the outstanding Common Shares
payable in Common Shares, (ii) subdivides the outstanding Common Shares,
(iii) combines the outstanding Common Shares into a smaller number of
shares, or (iv) issues any shares of its capital stock in a
reclassification of the outstanding Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the number of Rights
associated with each Common Share then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, will be proportionately
adjusted so that the number of Rights thereafter associated with each
Common Share following any such event equals the result obtained by
multiplying the number of Rights associated with each Common Share
immediately prior to such event by a fraction the numerator of which is the
total number of Common Shares outstanding immediately prior to the
occurrence of the event and the denominator of which is the total number of
Common Shares outstanding immediately following the occurrence of such
event. The adjustments provided for in this Section 11(n) will be made
successively whenever such a dividend is paid or such a subdivision,
combination or reclassification is effected.
23
12. Certificate of Adjusted Purchase Price or Number of Securities.
--------------------------------------------------------------
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company will promptly (a) prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Preferred Shares and the
Common Shares a copy of such certificate, and (c) if such adjustment is made
after the Distribution Date, mail a brief summary of such adjustment to each
holder of a Right Certificate in accordance with Section 26.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning
--------------------------------------------------------------
Power. (a) In the event that:
-----
(i) at any time after a Person has become an Acquiring Person, the
Company consolidates with, or merges with or into, any other Person and the
Company is not the continuing or surviving corporation of such
consolidation or merger; or
(ii) at any time after a Person has become an Acquiring Person, any
Person consolidates with the Company, or merges with or into the Company,
and the Company is the continuing or surviving corporation of such merger
or consolidation and, in connection with such merger or consolidation, all
or part of the Common Shares is changed into or exchanged for stock or
other securities of any other Person or cash or any other property; or
(iii) at any time after a Person has become an Acquiring Person,
the Company, directly or indirectly, sells or otherwise transfers (or one
or more of its Subsidiaries sells or otherwise transfers), in one or more
transactions, assets or earning power (including without limitation
securities creating any obligation on the part of the Company and/or any of
its Subsidiaries) representing in the aggregate more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any Person or Persons other than the Company or one or more of its wholly
owned Subsidiaries;
then, and in each such case, proper provision will be made so that from and
after the latest of the Share Acquisition Date, the Distribution Date and the
date of the occurrence of such Flip-over Event (A) each holder of a Right
thereafter has the right to receive, upon the exercise thereof in accordance
with the terms of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of one one-
hundredths of a Preferred Share for which a Right was exercisable immediately
prior to the Share Acquisition Date, such number of duly authorized, validly
issued, fully paid, nonassessable and freely tradeable Common Shares of the
Issuer, free and clear of any liens, encumbrances and other adverse claims and
not subject to any rights of call or first refusal, as equals the result
obtained by (x) multiplying the then-current Purchase Price by the number of one
24
one-hundredths of a Preferred Share for which a Right is exercisable immediately
prior to the Share Acquisition Date and dividing that product by (y) 50% of the
current per share market price of the Common Shares of the Issuer (determined
pursuant to Section 11(d)), on the date of the occurrence of such Flip-over
Event; (B) the Issuer will thereafter be liable for, and will assume, by virtue
of the occurrence of such Flip-over Event, all the obligations and duties of the
Company pursuant to this Agreement; (C) the term "Company" will thereafter be
deemed to refer to the Issuer; and (D) the Issuer will take such steps
(including without limitation the reservation of a sufficient number of its
Common Shares to permit the exercise of all outstanding Rights) in connection
with such consummation as may be necessary to assure that the provisions hereof
are thereafter applicable, as nearly as reasonably may be possible, in relation
to its Common Shares thereafter deliverable upon the exercise of the Rights.
(b) For purposes of this Section 13, "Issuer" means (i) in the case of any
Flip-over Event described in Sections 13(a)(i) or (ii) above, the Person
that is the continuing, surviving, resulting or acquiring Person (including
the Company as the continuing or surviving corporation of a transaction
described in Section 13(a)(ii) above), and (ii) in the case of any Flip-
over Event described in Section 13(a)(iii) above, the Person that is the
party receiving the greatest portion of the assets or earning power
(including without limitation securities creating any obligation on the
part of the Company and/or any of its Subsidiaries) transferred pursuant to
such transaction or transactions; provided, however, that, in any such
-------- -------
case, (A) if (1) no class of equity security of such Person is, at the time
of such merger, consolidation or transaction and has been continuously over
the preceding 12-month period, registered pursuant to Section 12 of the
Exchange Act, and (2) such Person is a Subsidiary, directly or indirectly,
of another Person, a class of equity security of which is and has been so
registered, the term "Issuer" means such other Person; and (B) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person, a
class of equity security of two or more of which are and have been so
registered, the term "Issuer" means whichever of such Persons is the issuer
of the equity security having the greatest aggregate market value.
Notwithstanding the foregoing, if the Issuer in any of the Flip-over Events
listed above is not a corporation or other legal entity having outstanding
equity securities, then, and in each such case, (x) if the Issuer is
directly or indirectly wholly owned by a corporation or other legal entity
having outstanding equity securities, then all references to Common Shares
of the Issuer will be deemed to be references to the Common Shares of the
corporation or other legal entity having outstanding equity securities
which ultimately controls the Issuer, and (y) if there is no such
corporation or other legal entity having outstanding equity securities, (I)
proper provision will be made so that the Issuer creates or otherwise makes
available for purposes of the exercise of the Rights in accordance with the
25
terms of this Agreement, a kind or kinds of security or securities having a
fair market value at least equal to the economic value of the Common Shares
which each holder of a Right would have been entitled to receive if the
Issuer had been a corporation or other legal entity having outstanding
equity securities; and (II) all other provisions of this Agreement will
apply to the issuer of such securities as if such securities were Common
Shares.
(c) The Company will not consummate any Flip-over Event if, (i) at the time of
or immediately after such Flip-over Event, there are or would be any
rights, warrants, instruments or securities outstanding or any agreements
or arrangements in effect which would eliminate or substantially diminish
the benefits intended to be afforded by the Rights, (ii) prior to,
simultaneously with or immediately after such Flip-over Event, the
stockholders of the Person who constitutes, or would constitute, the Issuer
for purposes of Section 13(a) shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates, or
(iii) the form or nature of the organization of the Issuer would preclude
or limit the exercisability of the Rights. In addition, the Company will
not consummate any Flip-over Event unless the Issuer has a sufficient
number of authorized Common Shares (or other securities as contemplated in
Section 13(b) above) which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section
13 and unless prior to such consummation the Company and the Issuer have
executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in subsections (a) and (b) of this
Section 13 and further providing that as promptly as practicable after the
consummation of any Flip-over Event, the Issuer will:
(A) prepare and file a registration statement under the Securities
Act with respect to the Rights and the securities issuable upon exercise of
the Rights on an appropriate form, and use its best efforts to cause such
registration statement to (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 Securities Act) until the Expiration Date;
(B) take all such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights; and
(C) deliver to holders of the Rights historical financial
statements for the Issuer and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
26
(d) The provisions of this Section 13 will similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Flip-over Event occurs at any time after the occurrence of a Flip-in Event,
except for Rights that have become void pursuant to Section 11(a)(ii),
Rights that shall not have been previously exercised will cease to be
exercisable in the manner provided in Section 11(a)(ii) and will thereafter
be exercisable in the manner provided in Section 13(a).
14. Fractional Rights and Fractional Securities. (a) The Company
-------------------------------------------
will not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company will pay as promptly as practicable to the registered
holders of the Right Certificates with regard to which such fractional Rights
otherwise would be issuable, an amount in cash equal to the same fraction of the
current market value of one Right. For the purposes of this Section 14(a), the
current market value of one Right is the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights
otherwise would have been issuable. The closing price for any day is the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use, or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Rights selected by the
Board of Directors of the Company. If the Rights are not publicly held or are
not so listed or traded, or are not the subject of available bid and asked
quotes, the current market value of one Right will mean the fair value thereof
as determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent.
(b) The Company will not be required to issue fractions of Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of
a Preferred Share) upon exercise of the Rights or to distribute
certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one one-
27
hundredth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts pursuant to an appropriate agreement
between the Company and a depositary selected by it, provided that such
agreement provides that the holders of such depositary receipts have all
the rights, privileges and preferences to which they are entitled as
beneficial owners of the Preferred Shares represented by such depositary
receipts. In lieu of fractional Preferred Shares that are not integral
multiples of one one-hundredth of a Preferred Share, the Company may pay to
any Person to whom or which such fractional Preferred Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For purposes of this Section
14(b), the current market value of one Preferred Share is the closing price
of the Preferred Shares (as determined in the same manner as set forth for
Common Shares in the second sentence of Section 11(d)(i)) for the Trading
Day immediately prior to the date of such exercise; provided, however, that
-------- -------
if the closing price of the Preferred Shares cannot be so determined, the
closing price of the Preferred Shares for such Trading Day will be
conclusively deemed to be an amount equal to the closing price of the
Common Shares (determined pursuant to the second sentence of Section
11(d)(i)) for such Trading Day multiplied by one hundred (as such number
may be appropriately adjusted to reflect events such as stock splits, stock
dividends, recapitalizations or similar transactions relating to the Common
Shares occurring after the date of this Agreement); provided further,
-------- -------
however, that if neither the Common Shares nor the Preferred Shares are
-------
publicly held or listed or admitted to trading on any national securities
exchange, or the subject of available bid and asked quotes, the current
market value of one Preferred Share will mean the fair value thereof as
determined in good faith by the Board of Directors of the Company, whose
determination will be described in a statement filed with the Rights Agent.
(c) Following the occurrence of a Triggering Event, the Company will not be
required to issue fractions of Common Shares or other securities issuable
upon exercise or exchange of the Rights or to distribute certificates which
evidence any such fractional securities. In lieu of issuing any such
fractional securities, the Company may pay to any Person to whom or which
such fractional securities would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of one such
security. For purposes of this Section 14(c), the current market value of
one Common Share or other security issuable upon the exercise or exchange
of Rights is the closing price thereof (as determined in the same manner as
set forth for Common Shares in the second sentence of Section 11(d)(i)) for
the Trading Day immediately prior to the date of such exercise or exchange;
provided, however, that if neither the Common Shares nor any such other
-------- -------
securities are publicly held or listed or admitted to trading on any
national securities exchange, or the subject of available bid and asked
28
quotes, the current market value of one Common Share or such other security
will mean the fair value thereof as determined in good faith by the Board
of Directors of the Company, whose determination will mean the fair value
thereof as be described in a statement filed with the Rights Agent.
15. Rights of Action. All rights of action in respect of this
----------------
Agreement, excepting the rights of action given to the Rights Agent under
Section 18, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the holder of any Common Shares), may in his own behalf
and for his own benefit enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his right to exercise the Rights evidenced by such Right Certificate in the
manner provided in such Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to this Agreement.
16. Agreement of Rights Holders. Every holder of a Right by
---------------------------
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights are transferable only in
connection with the transfer of the Common Shares;
(b) After the Distribution Date, the Right Certificates are transferable only
on the registry books of the Rights Agent if surrendered at the principal
office of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer;
(c) The Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Right Certificate or the associated Common
Share certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent will be affected by any notice to the contrary;
29
(d) Such holder expressly waives any right to receive any fractional Rights and
any fractional securities upon exercise or exchange of a Right, except as
otherwise provided in Section 14.
(e) Notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent will have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, that the
-------- -------
Company will use its best efforts to have any such order, decree or ruling
lifted or otherwise overturned as soon as possible.
17. Right Certificate Holder Not Deemed a Stockholder. No
-------------------------------------------------
holder, as such, of any Right Certificate will be entitled to vote, receive
dividends, or be deemed for any purpose the holder of Preferred Shares or any
other securities of the Company which may at any time be issuable upon the
exercise of the Rights represented thereby, nor will anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of Directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions of
this Agreement or exchanged pursuant to the provisions of Section 24.
18. Concerning the Rights Agent. (a) The Company will pay to the
---------------------------
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company will also indemnify the Rights Agent for, and hold it
harmless against, any loss, liability, suit, action, proceeding or expense,
incurred without negligence, bad faith, or willful misconduct on the part of the
Rights Agent, for anything done or omitted to be done by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability arising
therefrom, directly or indirectly.
30
(b) The Rights Agent will be protected and will incur no liability for or in
respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Right Certificate
or certificate evidencing Preferred Shares or Common Shares or other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be
genuine and to be signed, executed, and, where necessary, verified or
acknowledged, by the proper Person or Persons.
19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent is a party, or any corporation succeeding to the corporate trust
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21. If at the time such successor
Rights Agent succeeds to the agency created by this Agreement any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor Rights Agent and
deliver such Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Right Certificates will have the full force provided in the Right
Certificates and in this Agreement.
(b) If at any time the name of the Rights Agent changes and at such time any of
the Right Certificates have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name and
deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates have not been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates will have the
full force provided in the Right Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, will be bound:
31
(a) The Rights Agent may consult with legal counsel (who may be legal counsel
for the Company), and the opinion of such counsel will be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the Rights
Agent deems it necessary or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the
Board, the President, any Vice President, the Secretary or the Treasurer of
the Company and delivered to the Rights Agent, and such certificate will be
full authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance upon
such certificate.
(c) The Rights Agent will be liable hereunder only for its own negligence, bad
faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify
the same, but all such statements and recitals are and will be deemed to
have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the
due execution and delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor will it be responsible for any breach by the Company of any
covenant contained in this Agreement or in any Right Certificate; nor will
it be responsible for any adjustment required under the provisions of
Sections 11 or 13 (including any adjustment which results in Rights
becoming void) or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require
any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such
adjustment); nor will it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
shares of stock or other securities to be issued pursuant to this Agreement
or any Right Certificate or as to whether any shares of stock or other
32
securities will, when issued, be duly authorized, validly issued, fully
paid and nonassessable.
(f) The Company will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other
acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from any one of the
Chairman of the Board, the President, any Vice President, the Secretary or
the Treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it will not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer, or employee of the
Rights Agent may buy, sell, or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein will preclude
the Rights Agent from acting in any other capacity for the Company or for
any other Person.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be
answerable or accountable for any act, default, neglect or misconduct of
any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof. The Rights
Agent will not be under any duty or responsibility to ensure compliance
with any applicable federal or state securities laws in connection with the
issuance, transfer or exchange of Right Certificates.
(j) If, with respect to any Right Certificate surrendered to the Rights Agent
for exercise, transfer, split up, combination or exchange, either (i) the
certificate attached to the form of assignment or form of election to
purchase, as the case may be, has either not been completed or indicates an
affirmative response to clause 1 or 2 thereof, or (ii) any other actual or
suspected irregularity exists, the Rights Agent will not take any further
action with respect to such requested exercise, transfer, split up,
33
combination or exchange without first consulting with the Company, and will
thereafter take further action with respect thereto only in accordance with
the Company's written instructions.
21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 calendar days' notice in writing mailed to the Company and to each
transfer agent of the Preferred Shares or the Common Shares by registered or
certified mail, and to the holders of the Right Certificates by first class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 calendar days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Preferred Shares and the Common Shares by registered or certified mail, and to
the holders of the Right Certificates by first class mail. If the Rights Agent
resigns or is removed or otherwise becomes incapable of acting, the Company will
appoint a successor to the Rights Agent. If the Company fails to make such
appointment within a period of 30 calendar days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who will, with such notice, submit his Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate
may apply to any court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by the Company or
by such a court, will be a corporation or other legal entity organized and doing
business under the laws of the United States or of the State of New York (or of
any other state of the United States so long as such corporation is authorized
to do business as a banking institution in the State of New York), in good
standing, having a principal office in the State of New York, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million. After appointment, the successor Rights Agent
will be vested with the same powers, rights, duties, and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent will deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act, or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company will file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Preferred Shares or the Common Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein, will
not affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
34
22. Issuance of New Right Certificates. Notwithstanding any of the
----------------------------------
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price per share and the number or kind of securities issuable upon
exercise of the Rights made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale by the Company of Common
Shares following the Distribution Date and prior to the Expiration Date, the
Company (a) will, with respect to Common Shares so issued or sold pursuant to
the exercise, exchange or conversion of securities (other than Rights) issued
prior to the Distribution Date which are exercisable or exchangeable for, or
convertible into Common Shares, and (b) may, in any other case, if deemed
necessary, appropriate or desirable by the Board of Directors of the Company,
issue Right Certificates representing an equivalent number of Rights as would
have been issued in respect of such Common Shares if they had been issued or
sold prior to the Distribution Date, as appropriately adjusted as provided
herein as if they had been so issued or sold; provided, however, that
-------- -------
(i) no such Right Certificate will be issued if, and to the extent that, in its
good faith judgment the Board of Directors of the Company determines that the
issuance of such Right Certificate could have a material adverse tax consequence
to the Company or to the Person to whom or which such Right Certificate
otherwise would be issued and (ii) no such Right Certificate will be issued if,
and to the extent that, appropriate adjustment otherwise has been made in lieu
of the issuance thereof.
23. Redemption. (a) Prior to the Expiration Date, the Board of Directors of
----------
the Company may, at its option, redeem all but not less than all of the then-
outstanding Rights at the Redemption Price at any time prior to the Close of
Business on the later of (i) the Share Acquisition Date and (ii) the
Distribution Date. Any such redemption will be effective immediately upon the
action of the Board of Directors of the Company ordering the same, unless such
action of the Board of Directors of the Company expressly provides that such
redemption will be effective at a subsequent time or upon the occurrence or
nonoccurrence of one or more specified events (in which case such redemption
will be effective in accordance with the provisions of such action of the Board
of Directors of the Company).
(b) Immediately upon the effectiveness of the redemption of the Rights as
provided in Section 23(a), and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights will be to receive the Redemption
Price, without interest thereon. Promptly after the effectiveness of the
redemption of the Rights as provided in Section 23(a), the Company will
publicly announce such redemption and, within 10 calendar days thereafter,
will give notice of such redemption to the holders of the then-outstanding
Rights by mailing such notice to all such holders at their last addresses
as they appear upon the registry books of the Company; provided, however,
-------- -------
35
that the failure to give, or any defect in, any such notice will not affect
the validity of the redemption of the Rights. Any notice which is mailed
in the manner herein provided will be deemed given, whether or not the
holder receives the notice. The notice of redemption mailed to the holders
of Rights will state the method by which the payment of the Redemption
Price will be made. The Company may, at its option, pay the Redemption
Price in cash, Common Shares (based upon the current per share market price
of the Common Shares (determined pursuant to Section 11(d)) at the time of
redemption), or any other form of consideration deemed appropriate by the
Board of Directors of the Company (based upon the fair market value of such
other consideration, determined by the Board of Directors of the Company in
good faith) or any combination thereof. The Company may, at its option,
combine the payment of the Redemption Price with any other payment being
made concurrently to holders of Common Shares and, to the extent that any
such other payment is discretionary, may reduce the amount thereof on
account of the concurrent payment of the Redemption Price. If legal or
contractual restrictions prevent the Company from paying the Redemption
Price (in the form of consideration deemed appropriate by the Board of
Directors) at the time of redemption, the Company will pay the Redemption
Price, without interest, promptly after such time as the Company ceases to
be so prevented from paying the Redemption Price.
(c) At any time following the Share Acquisition Date, the Board of Directors of
the Company may relinquish the right to redeem the Rights under this
Section 23 by duly adopting a resolution to that effect. Immediately upon
adoption of such resolution, the rights of the Board of Directors of the
Company to redeem the Rights will terminate without further action and
without any notice. Promptly after adoption of such a resolution, the
Company will publicly announce such action; provided, however, that the
-------- -------
failure to give, or any defect in, any such notice will not affect the
validity of the action of the Board of Directors of the Company.
24. Exchange. (a) The Board of Directors of the Company may, at its option,
--------
at any time after the later of the Share Acquisition Date and the Distribution
Date, exchange all or part of the then-outstanding and exercisable Rights (which
will not include Rights that have become void pursuant to the provisions of
Section 11(a)(ii)) for Common Shares at an exchange ratio of one Common Share
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the Record Date (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Any such exchange will be
effective immediately upon the action of the Board of Directors of the Company
ordering the same, unless such action of the Board of Directors of the Company
expressly provides that such exchange will be effective at a subsequent time or
upon the occurrence or nonoccurrence of one or more specified events (in which
36
case such redemption will be effective in accordance with the provisions of such
action of the Board of Directors of the Company). Notwithstanding the foregoing,
the Board of Directors of the Company will not be empowered to effect such
exchange at any time after any Person (other than the Company or any Related
Person), who or which, together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of 50% or more of the then-outstanding
Common Shares.
(b) Immediately upon the effectiveness of the exchange of any Rights as
provided in Section 24(a), and without any further action and without any
notice, the right to exercise such Rights will terminate and the only right
with respect to such Rights thereafter of the holder of such Rights will be
to receive that number of Common Shares equal to the number of such Rights
held by such holder multiplied by the Exchange Ratio. Promptly after the
effectiveness of the exchange of any Rights as provided in Section 24(a),
the Company will publicly announce such exchange and, within 10 calendar
days thereafter, will give notice of such exchange to all of the holders of
such Rights at their last addresses as they appear upon the registry books
of the Rights Agent; provided, however, that the failure to give, or any
-------- -------
defect in, such notice will not affect the validity of such exchange. Any
notice which is mailed in the manner herein provided will be deemed given,
whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange will be
effected pro rata based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 11(a)(ii)) held by
each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its option,
may substitute for any Common Share exchangeable for a Right (i) equivalent
common shares (as such term is used in Section 11(a)(iii)), (ii) cash,
(iii) debt securities of the Company, (iv) other assets, or (v) any
combination of the foregoing, in any event having an aggregate value, as
determined in good faith by the Board of Directors of the Company (whose
determination will be described in a statement filed with the Rights
Agent), equal to the current market value of one Common Share (determined
pursuant to Section 11(d)) on the Trading Day immediately preceding the
date of the effectiveness of the exchange pursuant to this Section 24.
25. Notice of Certain Events. (a) If, after the Distribution Date, the
------------------------
Company proposes (i) to pay any dividend payable in stock of any class to the
holders of Preferred Shares or to make any other distribution to the holders of
Preferred Shares (other than a regular periodic cash dividend), (ii) to offer to
the holders of Preferred Shares rights, options or warrants to subscribe for or
to purchase any additional Preferred Shares or shares of stock of any class or
37
any other securities, rights, or options, (iii) to effect any reclassification
of its Preferred Shares (other than a reclassification involving only the
subdivision of outstanding Preferred Shares), (iv) to effect any consolidation
or merger into or with, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of assets or earning power (including without limitation
securities creating any obligation on the part of the Company and/or any of its
Subsidiaries) representing more than 50% of the assets and earning power of the
Company and its Subsidiaries, taken as a whole, to any other Person or Persons
other than the Company or one or more of its wholly owned Subsidiaries, (v) to
effect the liquidation, dissolution or winding up of the Company, or (vi) to
declare or pay any dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or reclassification of the Common Shares then,
in each such case, the Company will give to each holder of a Right Certificate,
to the extent feasible and in accordance with Section 26, a notice of such
proposed action, which specifies the record date for the purposes of such stock
dividend, distribution or offering of rights, options or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice will be so given, in
the case of any action covered by clause (i) or (ii) above, at least 10 calendar
days prior to the record date for determining holders of the Preferred Shares
for purposes of such action, and, in the case of any such other action, at least
10 calendar days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever is the earlier.
(b) In case any Triggering Event occurs, then, in any such case, the Company
will as soon as practicable thereafter give to the Rights Agent and each
holder of a Right Certificate, in accordance with Section 26, a notice of
the occurrence of such event, which specifies the event and the
consequences of the event to holders of Rights.
26. Notices. (a) Notices or demands authorized by this Agreement to be
-------
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company will be sufficiently given or made if sent by first class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
The Xxxx Company
000 Xxxxxxxx Xxxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
38
(b) Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent will be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
(c) Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate (or, if
prior the Distribution Date, to the holder of any certificate evidencing
Common Shares) will be sufficiently given or made if sent by first class
mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.
27. Supplements and Amendments. Prior to the time at which the Rights cease
--------------------------
to be redeemable pursuant to Section 23, and subject to the last sentence of
this Section 27, the Company may in its sole and absolute discretion, and the
Rights Agent will if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of Rights
or Common Shares. From and after the time at which the Rights cease to be
redeemable pursuant to Section 23, and subject to the last sentence of this
Section 27, the Company may, and the Rights Agent will if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights or Common Shares in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to supplement or amend the provisions hereunder
in any manner which the Company may deem desirable; provided that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights as such (other than an Acquiring Person or an Affiliate or Associate of
an Acquiring Person), and no such supplement or amendment shall cause the Rights
again to become redeemable or cause this Agreement again to become
supplementable or amendable otherwise than in accordance with the provisions of
this sentence. Without limiting the generality or effect of the foregoing, this
Agreement may be supplemented or amended to provide for such voting powers for
the Rights and such procedures for the exercise thereof, if any, as the Board of
Directors of the Company may determine to be appropriate. Upon the delivery of a
certificate from an officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this Section 27, the
Rights Agent will execute such supplement or amendment; provided, however, that
-------- -------
39
the failure or refusal of the Rights Agent to execute such supplement or
amendment will not affect the validity of any supplement or amendment adopted by
the Board of Directors of the Company, any of which will be effective in
accordance with the terms thereof. Notwithstanding anything in this Agreement
to the contrary, no supplement or amendment may be made which decreases the
stated Redemption Price to an amount less than $0.01 per Right.
28. Successors; Certain Covenants. All the covenants and provisions of this
-----------------------------
Agreement by or for the benefit of the Company or the Rights Agent will be
binding on and inure to the benefit of their respective successors and assigns
hereunder.
29. Benefits of This Agreement. Nothing in this Agreement will be construed
--------------------------
to give to any Person other than the Company, the Rights Agent, and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement. This Agreement will be for the sole and exclusive benefit of the
Company, the Rights Agent, and the registered holders of the Right Certificates
(or prior to the Distribution Date, the Common Shares).
30. Governing Law. This Agreement, each Right and each Right Certificate
-------------
issued hereunder will be deemed to be a contract made under the internal
substantive laws of the State of Delaware and for all purposes will be governed
by and construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.
31. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect and will in no way be affected, impaired or invalidated; provided,
--------
however, that nothing contained in this Section 31 will affect the ability of
-------
the Company under the provisions of Section 27 to supplement or amend this
Agreement to replace such invalid, void or unenforceable term, provision,
covenant or restriction with a legal, valid and enforceable term, provision,
covenant or restriction.
32. Descriptive Headings, Etc. Descriptive headings of the several Sections
-------------------------
of this Agreement are inserted for convenience only and will not control or
affect the meaning or construction of any of the provisions hereof. Unless
otherwise expressly provided, references herein to Articles, Sections and
Exhibits are to Articles, Sections and Exhibits of or to this Agreement.
33. Determinations and Actions by the Board. For all purposes of this
---------------------------------------
Agreement, any calculation of the number of Common Shares outstanding at any
particular time, including for purposes of determining the particular percentage
of such outstanding Common Shares of which any Person is the Beneficial Owner,
40
will be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act. The Board of Directors of
the Company will have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
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 any determination as to whether particular Rights
shall have become void). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, any omission with
respect to any of the foregoing) which are done or made by the Board of
Directors of the Company in good faith will (x) be final, conclusive and binding
on the Company, the Rights Agent, the holders of the Rights and all other
parties and (y) not subject the Board of Directors of the Company to any
liability to any Person, including without limitation the Rights Agent and the
holders of the Rights.
34. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts will for all purposes be deemed to be
an original, and all such counterparts will together constitute but one and the
same instrument.
41
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.
[SEAL]
Attest: THE XXXX COMPANY
By /s/ A. Xxxxxxx Xxx By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------ ------------------------
A. Xxxxxxx Xxx Xxxxxxx X. Xxxxxxxxx
Secretary President and Chief Executive Officer
[SEAL]
Attest: AMERICAN STOCK TRANSFER & TRUST COMPANY
By /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxx
---------------- ---------------------
Xxxxx Xxxxxx Xxxxxxx X. Xxxxxx
Assistant Secretary Vice President
EXHIBIT A
---------
FORM
of
CERTIFICATE OF DESIGNATION
of
SERIES A JUNIOR PARTICIPATING
PREFERRED STOCK
of
THE XXXX COMPANY
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
The Xxxx Company, a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "Company"),
DOES HEREBY CERTIFY:
That, pursuant to authority vested in the Board of Directors of the Company by
its Certificate of Incorporation, and pursuant to the provisions of Section 151
of the General Corporation Law, the Board of Directors of the Company has
adopted the following resolution providing for the issuance of a series of
Preferred Stock:
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Company (hereinafter called the "Board of
Directors" or the "Board") by the Certificate of Incorporation of the Company, a
series of Preferred Stock, par value $.01 per share (the "Preferred Stock"), of
the Company be, and it hereby is, created, and that the designation and amount
thereof and the powers, designations, preferences and relative, participating,
optional and other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
I. Designation and Amount
----------------------
The shares of such series will be designated as Series A Junior Participating
Preferred Stock (the "Series A Preferred") and the number of shares constituting
the Series A Preferred is 250,000. Such number of shares may be increased or
decreased by resolution of the Board; provided, however, that no decrease will
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reduce the number of shares of Series A Preferred to a number less than the
number of shares then outstanding plus the number of shares reserved for
A-1
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series A Preferred.
II. Dividends and Distributions
---------------------------
(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock ranking prior to the Series A Preferred with respect to
dividends, the holders of shares of Series A Preferred, in preference to
the holders of Common Stock, par value $.01 per share (the "Common Stock"),
of the Company, and of any other junior stock, will be entitled to receive,
when, as and if declared by the Board out of funds legally available for
the purpose, dividends payable in cash (except as otherwise provided below)
on such dates as are from time to time established for the payment of
dividends on the Common Stock (each such date being referred to herein as a
"Dividend Payment Date"), commencing on the first Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A
Preferred (the "First Dividend Payment Date"), in an amount per share
(rounded to the nearest cent) equal to the greater of (i) $1.00 or (ii)
subject to the provision for adjustment hereinafter set forth, one hundred
times the aggregate per share amount of all cash dividends, and one hundred
times the aggregate per share amount (payable in kind) of all non-cash
dividends, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock since the immediately preceding
Dividend Payment Date or, with respect to the First Dividend Payment Date,
since the first issuance of any share or fraction of a share of Series A
Preferred. In the event that the Company at any time (i) declares a
dividend on the outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivides the outstanding shares of Common Stock, (iii)
combines the outstanding shares of Common Stock into a smaller number of
shares, or (iv) issues any shares of its capital stock in a
reclassification of the outstanding shares of Common Stock (including any
such reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), then, in each such
case and regardless of whether any shares of Series A Preferred are then
issued or outstanding, the amount to which holders of shares of Series A
Preferred would otherwise be entitled immediately prior to such event under
clause (ii) of the preceding sentence will be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
(b) The Company will declare a dividend on the Series A Preferred as provided
in the immediately preceding paragraph immediately after it declares a
dividend on the Common Stock (other than a dividend payable in shares of
Common Stock). Each such dividend on the Series A Preferred will be
A-2
payable immediately prior to the time at which the related dividend on the
Common Stock is payable.
(c) Dividends will accrue on outstanding shares of Series A Preferred from the
Dividend Payment Date next preceding the date of issue of such shares,
unless (i) the date of issue of such shares is prior to the record date for
the First Dividend Payment Date, in which case dividends on such shares
will accrue from the date of the first issuance of a share of Series A
Preferred or (ii) the date of issue is a Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series
A Preferred entitled to receive a dividend and before such Dividend Payment
Date, in either of which events such dividends will accrue from such
Dividend Payment Date. Accrued but unpaid dividends will cumulate from the
applicable Dividend Payment Date but will not bear interest. Dividends
paid on the shares of Series A Preferred in an amount less than the total
amount of such dividends at the time accrued and payable on such shares
will be allocated pro rata on a share-by-share basis among all such shares
at the time outstanding. The Board may fix a record date for the
determination of holders of shares of Series A Preferred entitled to
receive payment of a dividend or distribution declared thereon, which
record date will be not more than 60 calendar days prior to the date fixed
for the payment thereof.
III. Voting Rights
-------------
The holders of shares of Series A Preferred will have the following voting
rights:
(a) Subject to the provision for adjustment hereinafter set forth, each share
of Series A Preferred will entitle the holder thereof to one hundred votes
on all matters submitted to a vote of the stockholders of the Company. In
the event the Company at any time (i) declares a dividend on the
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivides the outstanding shares of Common Stock, (iii) combines the
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues any shares of its capital stock in a reclassification of the
outstanding shares of Common Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, in each such case and
regardless of whether any shares of Series A Preferred are then issued or
outstanding, the number of votes per share to which holders of shares of
Series A Preferred would otherwise be entitled immediately prior to such
event will be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such
event.
A-3
(b) Except as otherwise provided herein, in any other Preferred Stock
Designation creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred and the holders of
shares of Common Stock and any other capital stock of the Company having
general voting rights will vote together as one class on all matters
submitted to a vote of stockholders of the Company.
(c) Except as set forth in the Certificate of Incorporation or herein, or as
otherwise provided by law, holders of shares of Series A Preferred will
have no voting rights.
IV. Certain Restrictions
--------------------
(a) Whenever dividends or other dividends or distributions payable on the
Series A Preferred are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series A Preferred outstanding have been paid in full, the Company will
not:
(i) Declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the shares of Series A
Preferred;
(ii) Declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution, or winding up) with the shares of Series A
Preferred, except dividends paid ratably on the shares of Series A
Preferred and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) Redeem, purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the shares of Series A
Preferred; provided, however, that the Company may at any time redeem,
-------- -------
purchase or otherwise acquire shares of any such junior stock in exchange
for shares of any stock of the Company ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the shares of
Series A Preferred; or
(iv) Redeem, purchase or otherwise acquire for consideration any
shares of Series A Preferred, or any shares of stock ranking on a parity
with the shares of Series A Preferred, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board) to all
holders of such shares upon such terms as the Board, after consideration of
the respective annual dividend rates and other relative rights and
A-4
preferences of the respective series and classes, may determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(b) The Company will not permit any majority-owned subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (a) of this Article IV,
purchase or otherwise acquire such shares at such time and in such manner.
V. Reacquired Shares
-----------------
Any shares of Series A Preferred purchased or otherwise acquired by the
Company in any manner whatsoever will be retired and canceled promptly after the
acquisition thereof. All such shares will upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock subject to the conditions and restrictions on
issuance set forth herein, in the Certificate of Incorporation of the Company,
or in any other Preferred Stock Designation creating a series of Preferred Stock
or any similar stock or as otherwise required by law.
VI. Liquidation, Dissolution or Winding Up
--------------------------------------
Upon any liquidation, dissolution or winding up of the Company, no
distribution will be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution, or winding up) to the
shares of Series A Preferred unless, prior thereto, the holders of shares of
Series A Preferred have received $100 per share, plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment; provided, however, that the holders of shares of Series A
-------- -------
Preferred will be entitled to receive an aggregate amount per share, subject to
the provision for adjustment hereinafter set forth, equal to one hundred times
the aggregate amount to be distributed per share to holders of shares of Common
Stock or (b) to the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution, or winding up) with the shares of
Series A Preferred, except distributions made ratably on the shares of Series A
Preferred and all such parity stock in proportion to the total amounts to which
the holders of all such shares are entitled upon such liquidation, dissolution,
or winding up. In the event the Company at any time (i) declares a dividend on
the outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivides the outstanding shares of Common Stock, (iii) combines the
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues any shares of its capital stock in a reclassification of the outstanding
shares of Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), then, in each such case and regardless of whether any shares of
Series A Preferred are then issued or outstanding, the aggregate amount to which
each holder of shares of Series A Preferred would otherwise be entitled
A-5
immediately prior to such event under the proviso in clause (a) of the preceding
sentence will be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
VII. Consolidation, Merger, Etc.
---------------------------
In the event that the Company enters into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then, in each such case, each share of Series A Preferred will at the
same time be similarly exchanged for or changed into an amount per share,
subject to the provision for adjustment hereinafter set forth, equal to one
hundred times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Company at any
time (a) declares a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (b) subdivides the outstanding shares of Common
Stock, (c) combines the outstanding shares of Common Stock in a smaller number
of shares, or (d) issues any shares of its capital stock in a reclassification
of the outstanding shares of Common Stock (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing or surviving corporation), then, in each such case and regardless of
whether any shares of Series A Preferred are then issued or outstanding, the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred will be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
VIII. Redemption
----------
The shares of Series A Preferred are not redeemable.
IX. Rank
----
The Series A Preferred rank, with respect to the payment of dividends and the
distribution of assets, junior to all other series of the Company's Preferred
Stock.
X. Amendment
---------
Notwithstanding anything contained in the Certificate of Incorporation of the
Company to the contrary and in addition to any other vote required by applicable
law, the Certificate of Incorporation of the Company may not be amended in any
A-6
manner that would materially alter or change the powers, preferences or special
rights of the Series A Preferred so as to affect them adversely without the
affirmative vote of the holders of at least 80% of the outstanding shares of
Series A Preferred, voting together as a single series.
A-7
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of
the Company by its President and Chief Executive Officer and attested by its
[Assistant] Secretary this ____ day of ________________.
/s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------------------
Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Attest:
------------------------
Name:
Title:
A-8
EXHIBIT B
---------
FORM OF RIGHT CERTIFICATE
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER OCTOBER 15, 2007 (SUBJECT TO POSSIBLE EXTENSION AT
THE OPTION OF THE COMPANY) OR EARLIER IF REDEEMED, EXCHANGED OR AMENDED.
THE RIGHTS ARE SUBJECT TO REDEMPTION, EXCHANGE AND AMENDMENT AT THE OPTION
OF THE COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE
OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT)
OR A TRANSFEREE THEREOF MAY BECOME NULL AND VOID.
Right Certificate
THE XXXX COMPANY
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 September 30, 1997 (the "Rights Agreement"), between The
Xxxx Company, a Delaware corporation (the "Company"), and American Stock
Transfer & Trust Company, a New York corporation (the "Rights Agent"), to
purchase from the Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 P.M. (Eastern time) on the
Expiration Date (as such term is defined in the Rights Agreement) at the
principal office or offices of the Rights Agent designated for such purpose, one
one-hundredth of a fully paid nonassessable share of Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Preferred
Shares"), of the Company, at a purchase price of $49.00 per one one-hundredth of
a Preferred Share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase and related
Certificate duly executed. If this Right Certificate is exercised in part, the
holder will be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
The number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise
thereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of the date of the Rights Agreement, based on the
Preferred Shares as constituted at such date.
B-1
As provided in the Rights Agreement, the Purchase Price and/or the number
and/or kind of securities issuable upon the exercise of the Rights evidenced by
this Right Certificate are subject to adjustment upon the occurrence of certain
events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of the Right Certificates, which limitations of
rights include the temporary suspension of the exercisability of the Rights
under the circumstances specified in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and can
be obtained from the Company without charge upon written request therefor.
Terms used herein with initial capital letters and not defined herein are used
herein with the meanings ascribed thereto in the Rights Agreement.
Pursuant to the Rights Agreement, from and after the occurrence of a Flip-in
Event, any Rights that are Beneficially Owned by (i) any Acquiring Person (or
any Affiliate or Associate of any Acquiring Person), (ii) a transferee of any
Acquiring Person (or any such Affiliate or Associate) who becomes a transferee
after the occurrence of a Flip-in Event, or (iii) a transferee of any Acquiring
Person (or any such Affiliate or Associate) who became a transferee prior to or
concurrently with the Flip-in Event pursuant to either (a) a transfer from an
Acquiring Person to holders of its equity securities or to any Person with whom
it has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (b) a transfer which the Board of Directors of the Company
has determined is part of a plan, arrangement or understanding which has the
purpose or effect of avoiding certain provisions of the Rights Agreement, and
subsequent transferees of any of such Persons, will be void without any further
action and any holder of such Rights will thereafter have no rights whatsoever
with respect to such Rights under any provision of the Rights Agreement. From
and after the occurrence of a Flip-in Event, no Right Certificate will be issued
that represents Rights that are or have become void pursuant to the provisions
of the Rights Agreement, and any Right Certificate delivered to the Rights Agent
that represents Rights that are or have become void pursuant to the provisions
of the Rights Agreement will be canceled.
This Right Certificate, with or without other Right Certificates, may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the holder to purchase a like number of one one-
hundredths of a Preferred Share (or other securities, as the case may be) as the
Right Certificate or Right Certificates surrendered entitled such holder (or
B-2
former holder in the case of a transfer) to purchase, upon presentation and
surrender hereof at the principal office of the Rights Agent designated for such
purpose, with the Form of Assignment (if appropriate) and the related
Certificate duly executed.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.01 per Right or may be exchanged in whole or in part. The Rights
Agreement may be supplemented and amended by the Company, as provided therein.
The Company is not required to issue fractions of Preferred Shares (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the option of the Company, be evidenced by depositary
receipts) or other securities issuable upon the exercise of any Right or Rights
evidenced hereby. In lieu of issuing such fractional Preferred Shares or other
securities, the Company may make a cash payment, as provided in the Rights
Agreement.
No holder of this Right Certificate, as such, will be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable upon the exercise of the Right or Rights represented hereby, nor will
anything contained herein or in the Rights Agreement be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate have been exercised in accordance with the
provisions of the Rights Agreement.
This Right Certificate will not be valid or obligatory for any purpose until
it has been countersigned by the Rights Agent.
B-3
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal. Dated as of ____________, 1997.
[SEAL]
ATTEST: THE XXXX COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx
___________ -------------------------------------
Assistant Secretary Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
----------------------------------
Authorized Signature
B-4
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate)
FOR VALUE RECEIVED, _______________ hereby sells, assigns and transfers
unto __________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
--------------------------
-------------------------------------------
Signature
Signature Guaranteed:
B-5
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not being
sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did
[ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:
-------------------
------------------------------------------
Signature
B-6
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate)
To The Xxxx Company:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Right Certificate to purchase the one one-hundredths of a
Preferred Share or other securities issuable upon the exercise of such Rights
and requests that certificates for such securities be issued in the name of and
delivered to:
Please insert social security
or other identifying number:
-------------------------------------------------
------------------------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------------------------
If such number of Rights is not all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
will be registered in the name of and delivered to:
Please insert social security
or other identifying number:
-------------------------------------------------
------------------------------------------------------------------------------
(Please print name and address)
------------------------------------------------------------------------------
Dated:
-----------------
------------------------------------------
Signature
Signature Guaranteed:
B-7
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are not being
exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ] did
[ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was, or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated:
------------------
--------------------------------------
Signature
NOTICE
SIGNATURES ON THE FOREGOING FORM OF ASSIGNMENT AND FORM OF ELECTION TO
PURCHASE AND IN THE RELATED CERTIFICATES MUST CORRESPOND TO THE NAME AS WRITTEN
UPON THE FACE OF THIS RIGHT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED MEDALLION SIGNATURE PROGRAM) PURSUANT TO RULE 17AD-15 UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
B-8
EXHIBIT C
---------
SUMMARY OF RIGHTS TO PURCHASE PREFERRED STOCK
The Board of Directors (the "Board") of The Xxxx Company (the "Company") has
declared a dividend distribution of one right (a "Right") for each outstanding
share of Common Stock, par value $.01 per share (the "Common Shares"), of the
Company. The distribution is payable on October 15, 1997 (the "Record Date") to
the stockholders of record as of the close of business on the Record Date. Each
Right entitles the registered holder thereof to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $.01 per share (the "Preferred Shares"), of the Company at a price (the
"Purchase Price") of $49.00 per one one-hundredth of a Preferred Share, subject
to adjustment. The description and terms of the Rights are set forth in a
Rights Agreement, dated as of September 30, 1997 (the "Rights Agreement"),
between the Company and American Stock Transfer & Trust Company, as Rights Agent
(the "Rights Agent").
Under the Rights Agreement, the Rights will be evidenced by the certificates
evidencing Common Shares until the earlier (the "Distribution Date") of: (i)
the close of business on the tenth calendar day (or such later date as may be
specified by the Board) following the first date (the "Share Acquisition Date")
of public announcement that a person (other than the Company, a subsidiary or
employee benefit or stock ownership plan of the Company or any of its affiliates
or associates), together with its affiliates and associates, has acquired
beneficial ownership of 15% or more of the outstanding Common Shares (any such
person being hereinafter called an "Acquiring Person") or (ii) the close of
business on the tenth business day (or such later date as may be specified by
the Board) following the commencement of a tender offer or exchange offer by a
person (other than the Company, a subsidiary or employee benefit or stock
ownership plan of the Company or any of its affiliates or associates), the
consummation of which would result in beneficial ownership by such person 15% or
more of the outstanding Common Shares.
The Rights Agreement provides that, until the Distribution Date, the Rights
may be transferred with and only with the Common Shares. Until the Distribution
Date (or earlier redemption or expiration of the Rights), any certificate
evidencing Common Shares of the Company issued upon transfer or new issuance of
the Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates evidencing Common
Shares will also constitute the transfer of the Rights associated with such
certificates. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of Common Shares as of the close of business on the
Distribution Date and such separate Rights Certificates alone will evidence the
Rights. No Right is exercisable at any time prior to the Distribution Date.
C-1
The Rights will expire on the tenth anniversary of the Record Date (the "Final
Expiration Date") unless earlier redeemed, exchanged or amended by the Company
as described below. Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including the right to vote
or to receive dividends.
The Purchase Price payable, and the number of the Preferred Shares or other
securities issuable, upon exercise of the Rights will be subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Preferred Shares, (ii)
upon the grant to holders of Preferred Shares of certain rights or warrants to
subscribe for or purchase the Preferred Shares at a price, or securities
convertible into the Preferred Shares with a conversion price, less than the
then-current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness,
cash (excluding regular periodic cash dividends), assets, stock (excluding
dividends payable in the Preferred Shares) or subscription rights or warrants
(other than those referred to above). The number of outstanding Rights and the
number of one one-hundredths of the Preferred Shares issuable upon exercise of
each Right will be subject to adjustment in the event of a stock dividend on the
Common Shares payable in Common Shares or a subdivision, combination or
reclassification of Common Shares occurring, in any such case, prior to the
Distribution Date.
The Preferred Shares issuable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled, in connection with the
declaration of a dividend on the Common Shares, to a preferential dividend
payment equal to the greater of (i) $1.00 per share and (ii) an amount equal to
100 times the related dividend declared per Common Share. Subject to customary
anti-dilution provisions, in the event of liquidation, the holders of Preferred
Shares will be entitled to a preferential liquidation payment equal to the
greater of (a) $100 per share and (b) an amount equal to 100 times the
liquidation payment made per Common Share. Because of the nature of the
Preferred Shares' dividend, voting and liquidation rights, the value of the one
one-hundredth interest in a Preferred Share purchasable upon exercise of a Right
should approximate the value of one Common Share.
Rights will be exercisable to purchase Preferred Shares only after the
Distribution Date occurs and prior to the occurrence of a Flip-in Event as
described below. A Distribution Date resulting from the commencement of a
tender offer or exchange offer described in clause (ii) of the second paragraph
of this summary could precede the occurrence of a Flip-in Event and thus result
in the Rights being exercisable to purchase Preferred Shares. A Distribution
Date resulting from any occurrence described in clause (i) of the second
C-2
paragraph of this summary would necessarily follow the occurrence of a Flip-in
Event and thus result in the Rights being exercisable to purchase Common Shares
or other securities as described below.
Under the Rights Agreement, in the event ( a "Flip-in Event") that (i) any
person, together with its affiliates and associates, becomes the beneficial
owner of 15% or more of the outstanding Common Shares, (ii) any Acquiring Person
or any affiliate or associate thereof merges into or combines with the Company
and the Company is the surviving corporation, (iii) any Acquiring Person or any
affiliate or associate thereof effects certain other transactions with the
Company, or (iv) during such time as there is an Acquiring Person the Company
effects certain transactions, in each case as described in the Rights Agreement,
then, in each such case, proper provision will be made so that from and after
the latest of the Share Acquisition Date, the Distribution Date and the date of
the occurrence of such Flip-in Event each holder of a Right, other than Rights
that are or were owned beneficially by an Acquiring Person (which, from and
after the date of a Flip-in Event, will be void), will have the right to
receive, upon exercise thereof at the then-current exercise price of the Right,
that number of Common Shares (or, under certain circumstances, an economically
equivalent security or securities of the Company) that at the time of such Flip-
in Event have a market value of two times the exercise price of the Right.
In the event (a "Flip-over Event") that, at any time after a person has become
an Acquiring Person, (i) the Company merges with or into any person and the
Company is not the surviving corporation, (ii) any person merges with or into
the Company and the Company is the surviving corporation, but all or part of the
Common Shares are changed or exchanged for stock or other securities of any
other person or cash or any other property, or (iii) 50% or more of the
Company's assets or earning power, including securities creating obligations of
the Company, are sold, in each case as described in the Rights Agreement, then,
in each such case, proper provision will be made so that from and after the
latest of the Share Acquisition Date, the Distribution Date and the date of the
occurrence of such Flip-over Event each holder of a Right, other than Rights
which have become void, will have the right to receive, upon the exercise
thereof at the then-current exercise price of the Right, that number of shares
of common stock (or, under certain circumstances, an economically equivalent
security or securities) of such other person that at the time of such Flip-over
Event have a market value of two times the exercise price of the Right.
From and after the later of the Share Acquisition Date and the Distribution
Date, Rights (other than any Rights that have become void) will be exercisable
as described above, upon payment of the aggregate exercise price in cash. In
addition, at any time after the later of the Share Acquisition Date and the
Distribution Date and prior to the acquisition by any person or group of
C-3
affiliated or associated persons of 50% or more of the outstanding Common
Shares, the Company may exchange the Rights (other than any rights that have
become void), in whole or in part, at an exchange ratio of one Common Share per
Right (subject to adjustment).
For all purposes of the Rights Agreement, any person that, at the time of
public announcement by the Company on September 30, 1997 of the declaration of
the dividend distribution of the Rights, has beneficial ownership of 15% or more
of the then-outstanding Common Shares, or that becomes the beneficial owner of
15% or more of the then-outstanding Common Shares solely as a result of a
reduction in the number of Common Shares outstanding, will not be deemed to have
become an Acquiring Person unless and until such time as (i) such person, or any
affiliate or associate of such person, thereafter becomes the beneficial owner
of additional Common Shares representing 1% or more of the then-outstanding
Common Shares or (ii) any other person that is the beneficial owner of Common
Shares representing 1% or more of the then-outstanding Common Shares thereafter
becomes an affiliate or associate of such person.
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment in the Purchase Price of at
least 1%. The Company will not be required to issue fractional Preferred Shares
(other than fractions that are integral multiples of one one-hundredth of a
Preferred Share, which may, at the option of the Company, be evidenced by
depositary receipts) or fractional Common Shares or other securities issuable
upon the exercise of Rights. In lieu of issuing such securities, the Company
may make a cash payment, as provided in the Rights Agreement.
The Company may, at its option, redeem the Rights in whole, but not in part,
at a price of $.01 per Right, subject to adjustment (the "Redemption Price"), at
any time prior to the close of business on the later of (i) the Share
Acquisition Date and (ii) the Distribution Date. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The Rights Agreement may be amended by the Company without the approval of any
holders of Rights Certificates, including amendments that increase or decrease
the Purchase Price, that add other events requiring adjustment to the Purchase
Price payable and the number of the Preferred Shares or other securities
issuable upon the exercise of the Rights or that modify procedures relating to
the redemption of the Rights, except that no amendment may be made that
decreases the stated Redemption Price to an amount less than $.01 per Right.
The Board will have the exclusive power and authority to administer the Rights
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company therein, or as may be necessary or advisable in the
C-4
administration of the Rights Agreement, including without limitation the right
and power to interpret the provisions of the Rights Agreement and to make all
determinations deemed necessary or advisable for the administration of the
Rights Agreement (including any determination to redeem or not redeem the Rights
or to amend or not amend the Rights Agreement). All such actions, calculations,
interpretations and determinations (including any omission with respect to any
of the foregoing) which are done or made by the Board in good faith will be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and will not subject the Board to any liability
to any person, including without limitation the Rights Agent and the holders of
the Rights.
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an exhibit to a Registration Statement on Form 8-A. A copy of the
Rights Agreement is available free of charge from the Company.
This summary description of the Rights is as of the Record Date, does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is incorporated herein by this reference.
C-5
