CLASS A SHARE RIGHTS AGREEMENT
RURAL CELLULAR CORPORATION
AND
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
RIGHTS AGENT
DATED AS OF APRIL 30, 1999
TABLE OF CONTENTS
Section 1. Certain Definitions................................................................1
Section 2. Appointment of Rights Agent........................................................4
Section 3. Issue of Class A Right Certificates................................................5
Section 4. Form of Class A Right Certificates.................................................6
Section 5. Countersignature and Registration..................................................7
Section 6. Transfer, Split-Up, Combination and Exchange of Class A Right Certificates;
Lost, Stolen, Destroyed or Mutilated Class A Right Certificates....................7
Section 7. Exercise of Class A Rights, Purchase Price, Expiration Date of Class A Rights......8
Section 8. Cancellation and Destruction of Class A Right Certificates.........................9
Section 9. Reservation and Availability of Series A Preferred Shares.........................10
Section 10. Series A Preferred Shares Record Date.............................................10
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Class A Rights....................................................................11
Section 12. Certificate of Adjusted Purchase Price or Number of Shares........................18
Section 13. Consolidation, Merger, Statutory Share Exchange or Sale or Transfer of Assets
or Earning Power..................................................................18
Section 14. Fractional Class A Rights and Fractional Shares...................................20
Section 15. Rights of Action..................................................................21
Section 16. Agreement of Class A Right Holders................................................22
Section 17. Class A Right Certificate Holder Not Deemed a Shareholder.........................22
Section 18. Concerning the Rights Agent.......................................................23
Section 19. Merger or Consolidation or Change of Name of Rights Agent.........................23
Section 20. Duties of Rights Agent............................................................24
Section 21. Change of Rights Agent............................................................26
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Section 22. Issuance of New Class A Right Certificates........................................26
Section 23. Redemption........................................................................27
Section 24. Exchange..........................................................................27
Section 25. Notice of Certain Events..........................................................29
Section 26. Notices...........................................................................30
Section 27. Supplements and Amendments........................................................30
Section 28. Successors........................................................................31
Section 29. Benefits of this Agreement........................................................31
Section 30. Severability......................................................................31
Section 31. Governing Law.....................................................................31
Section 32. Counterparts......................................................................31
Section 33. Descriptive Headings..............................................................31
Exhibit A -- Certificate of Designation, Preferences and Rights of Series A Junior
Participating Preferred Shares
Exhibit B -- Form of Class A Right Certificate
Exhibit C -- Summary of Rights to Purchase Series A Preferred Shares
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CLASS A SHARE RIGHTS AGREEMENT
Agreement, dated as of April 30, 1999, between Rural Cellular
Corporation, a Minnesota corporation (the "Company"), and Norwest Bank
Minnesota, National Association (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (individually a "Class A
Right" and collectively the "Class A Rights") for each Class A Share (as
defined in this Agreement) of the Company outstanding at the Close of
Business (as defined in this Agreement) on May 20, 1999 (the "Record Date"),
each Class A Right initially representing the right to purchase one
one-hundredth of a Series A Preferred Share (as defined in this Agreement),
upon the terms and subject to the conditions set forth in this Agreement, and
has further authorized the issuance of one Class A Right (as such number may
hereafter be adjusted pursuant to the provisions of Section 11) with respect
to each Class A Share that shall become outstanding (i) at any time between
the Record Date and the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date (as such terms are defined in this
Agreement) or (ii) upon the exercise or conversion, prior to the earlier of
the Redemption Date or the Final Expiration Date, of any option or other
security exercisable for or convertible into Class A Shares, which option or
other such security is outstanding on the Distribution Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is defined
in this Agreement) who or which, together with all Affiliates and Associates
(as such terms are defined in this Agreement) of such Person, shall be the
Beneficial Owner (as such term is defined in this Agreement) of the Threshold
Percentage (as such term is defined in this Agreement) or more of the Common
Shares of the Company then outstanding, but shall not include an Exempt
Person (as such term is defined in this Agreement). Notwithstanding the
foregoing, no Person shall become an "Acquiring Person" as the result of an
acquisition of Common Shares by the Company which, by reducing the number of
Common Shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to at least the Threshold Percentage of the
Common Shares of the Company then outstanding; PROVIDED, HOWEVER, that if a
Person shall, together with all Affiliates or Associates of such Person,
become the Beneficial Owner of at least the Threshold Percentage of the
Common Shares of the Company then outstanding by reason of share acquisitions
by the Company and if such Person or such Person's Affiliates or Associates
shall, after such share acquisitions by the Company, become the Beneficial
Owner of any additional Common Shares of the Company, and, immediately after
becoming the Beneficial Owner of such additional Common Shares, such Person
shall, together with all Affiliates and Associates of such Person, be the
Beneficial Owner of the Threshold
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Percentage or more of the Common Shares of the Company then outstanding, then
such Person (unless such Person shall be an Exempt Person) shall be deemed an
"Acquiring Person." An entity other than the Company or any Subsidiary of the
Company holding Common Shares for or pursuant to the terms of an employee
benefit plan of the Company or of any Subsidiary of the Company and in
addition being the Beneficial Owner of Common Shares that are not held for or
pursuant to the terms of any such plan shall be deemed to constitute an
Acquiring Person, notwithstanding anything herein stated, if, but only if,
it, together with its Affiliates and Associates, shall be the Beneficial
Owner of at least the Threshold Percentage, exclusive of those Common Shares
held by it for or pursuant to the terms of any such plan, of the Common
Shares then outstanding. 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, has become such inadvertently (including,
without limitation, because (A) such Person was unaware that it beneficially
owned a percentage of the Common Shares that would otherwise cause such
Person to be an "Acquiring Person" or (B) such Person was aware of the extent
of its beneficial ownership but had no actual knowledge of the consequences
of such beneficial ownership under this Agreement), and without any intention
of changing or influencing control of the Company, and such Person divests as
promptly as practical 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, then such Person shall not be deemed
to be an "Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own" or have "beneficial ownership" of, any
securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly, including without
limitation securities with respect to which such Person or any of such
Person's Affiliates or Associates has "beneficial ownership" pursuant to Rule
13d-3 of the General Rules and Regulations under the Exchange Act;
(ii) which such Person or any of such Person's Affiliates or
Associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or after the passage of time) pursuant
to any agreement, arrangement or understanding, whether or not in writing
(other than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of securities), or
upon the exercise of conversion rights, exchange rights, other rights (other
than the Class A Rights), warrants or options, or otherwise; PROVIDED,
HOWEVER, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, or to have beneficial ownership of, any securities pursuant
to subparagraph (i), (ii) or (iii) of this paragraph (c) solely because such
securities are 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 (B) the
right to vote or dispose of (including without limitation pursuant to any
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agreement, arrangement or understanding (whether or not in writing));
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, or to have beneficial ownership of, any securities
pursuant to subparagraph (i), (ii) or (iii) of this paragraph (c) solely
because of the right to vote such securities pursuant to an agreement,
arrangement or understanding if the agreement, arrangement or understanding
to vote such securities (1) arises solely from a revocable proxy or consent
given to such Person or any of such Person's Affiliates or Associates in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under the Exchange Act
and (2) is not also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report) as being beneficially
owned by such Person; or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such Person
(or any of such Person's Affiliates or Associates) has any agreement,
arrangement or understanding (other than customary agreements with and
between underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the final proviso to
subparagraph (ii) of this paragraph (c)) or disposing of any voting
securities of the Company.
Notwithstanding anything in these definitions of "Beneficial Owner,"
"beneficially own" or "beneficial ownership" to the contrary, the phrase
"then outstanding," when used with reference to a Person's beneficial
ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would
be deemed to beneficially own under this Agreement.
(d) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the State of New York or Minnesota are
authorized or obligated by law or executive order to close.
(e) "Class A Shares" shall mean the Class A Common Stock, par value
$.01 per share, of the Company.
(f) "Class B Shares" shall mean the Class B Common Stock, par value
$.01 per share, of the Company.
(g) "Close of Business" on any given date shall mean 5:00 P.M.,
Minneapolis, Minnesota time, on such date; PROVIDED, HOWEVER, that if such
date is not a Business Day, it shall mean 5:00 P.M., Minneapolis, Minnesota
time, on the next succeeding Business Day.
(h) "Common Shares," when used with reference to the Company, shall
mean, collectively, the Class A Shares and the Class B Shares of the Company.
"Common Shares," when used with reference to any Person other than the
Company, shall mean the capital stock (or equity interest) with the greatest
voting power of such other Person.
(i) "Distribution Date" shall have the meaning set forth in Section 3.
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(j) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of
the Company, (iii) any employee benefit plan of the Company or of any
Subsidiary of the Company, or (iv) any Person holding Common Shares for or
pursuant to the terms of any such plan described in clause (iii) of this
sentence.
(k) "Final Expiration Date" shall have the meaning set forth in Section 7.
(l) "Person" shall mean any individual, firm, corporation, partnership
or other entity, and shall include any successor (by merger or otherwise) of
any such entity.
(m) "Series A Preferred Shares" shall mean Series A Junior
Participating Preferred Shares, par value $.01 per share (as such par value
may be changed from time to time), of the Company having the rights and
preferences set forth in the Form of Certificate of Designation, Preferences
and Rights attached to this Agreement as Exhibit A hereto.
(n) "Redemption Date" shall have the meaning set forth in Section 7.
(o) "Section 11(a)(ii) Event" shall mean an event described in the
first sentence of Section 11(a)(ii).
(p) "Section 13 Event" shall mean any event described in clauses (w),
(x), (y) or (z) of Section 13(a).
(q) "Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(r) "Subsidiary" of any Person shall mean any corporation or other
entity of which a majority of the voting power of the voting equity
securities or other equity interests entitled to vote in the election of
directors (or Persons with comparable responsibilities if the entity has no
directors) is beneficially owned, directly or indirectly, by such Person, or
otherwise controlled by such Person.
(s) "Threshold Percentage" shall mean 15 percent.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Class
A Rights (who, in accordance with Section 3, shall prior to the Distribution
Date also be the holders of the Class A Shares) in accordance with the terms
and conditions of this Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable.
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Section 3. ISSUE OF CLASS A RIGHT CERTIFICATES.
(a) Until the earlier of (i) the Close of Business on the 15th day
after the Shares Acquisition Date or (ii) the Close of Business on the 15th
day (or such later date as may be determined by action of the Board of
Directors of the Company prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other
than an Exempt Person) of, or of the first public announcement of the
intention of any Person (other than an Exempt Person) to commence (which
intention shall not have been withdrawn within five business days (as defined
in Rule 14d-1 of the General Rules and Regulations under the Exchange Act)
after such public announcement), a tender offer or an exchange offer the
consummation of which would result in beneficial ownership by a Person (other
than an Exempt Person) of at least the Threshold Percentage of the then
outstanding Common Shares (including any such date that is after the date of
this Agreement and prior to the issuance of the Class A Rights, the earlier
of such dates being herein referred to as the "Distribution Date"), (x) the
Class A Rights will be evidenced (subject to the provisions of Section 3(b)
hereof) by the certificates for Class A Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be Class A Right
Certificates where the context so requires) and not by separate Class A Right
Certificates, and (y) the right to receive Class A Right Certificates will be
transferable only in connection with the transfer of Class A Shares. As soon
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, postage-prepaid mail, to each record holder of Class A Shares as
of the close of business on the Distribution Date, at the address of such
holder shown on the records of the Company, one or more Class A Right
Certificates, in substantially the form of Exhibit B hereto (the "Class A
Right Certificates"), evidencing one Class A Right for each Class A Share so
held, subject to adjustment pursuant to Section 11(i). In the event that an
adjustment in the number of Class A Rights per Class A Share has been made
pursuant to Section 11(i), at the time Class A Right Certificates are
distributed, the Company may, to the extent provided in Section 14(a), make
the necessary and appropriate adjustments (as set forth in Section 14(a)) so
that Class A Right Certificates are distributed representing only whole
numbers of Class A Rights and pay cash in lieu of fractional Class A Rights
pursuant to Section 14(a). As of and after the Distribution Date, the Class A
Rights will be evidenced solely by such Class A Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Series A
Preferred Shares, in substantially the form of Exhibit C hereto (the "Summary
of Class A Rights"), by first-class, postage-prepaid mail, to each record
holder of Class A Shares as of the Close of Business on the Record Date, at
the address of such holder shown on the records of the Company. With respect
to certificates for Class A Shares outstanding as of the Record Date, until
the Distribution Date, the Class A Rights will be evidenced by such
certificates registered in the names of the holders thereof, and the
registered holders of the Class A Shares shall also be the registered holders
of the associated Class A Rights. Until the Distribution Date (or the earlier
of the Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for Class A Shares outstanding on the Record
Date, with or without a copy of the Summary of Class A Rights attached
thereto, shall also constitute the transfer of the Class A Rights associated
with the Class A Shares represented thereby.
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(c) Certificates for Class A Shares which become outstanding after the
Record Date and (i) prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date, including in respect of all
Class A Shares issued upon conversion of Class B Shares into Class A Shares,
or (ii) upon the exercise or conversion, prior to the earlier of the
Redemption Date or the Final Expiration Date, of any option or other security
exercisable for or convertible into Class A Shares, which option or other
security is outstanding on the Distribution Date, shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the
holder hereof to certain Class A Rights as set forth in a
Class A Rights Agreement between Rural Cellular
Corporation and Norwest Bank Minnesota, National
Association, dated as of April 30, 1999 (the "Class A
Rights Agreement"), the terms of which (including
restrictions on the transfer of such Class A Rights) are
hereby incorporated herein by reference and a copy of
which is on file with the Secretary at the principal
executive offices of the Company. Under certain
circumstances, as set forth in the Class A Rights
Agreement, such Class A Rights will be evidenced by
separate certificates and will no longer be evidenced by
this certificate. The Company will mail to the holder of
this certificate a copy of the Class A Rights Agreement
without charge after receipt of a written request
therefor to its Secretary from such holder. Under certain
circumstances, as set forth in the Class A Rights
Agreement, Class A Rights that are or were acquired or
beneficially owned by an Acquiring Person or any
Associate or Affiliate thereof (as such terms are defined
in the Class A Rights Agreement) may become null and void.
With respect to certificates containing the foregoing legend, until the
earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date, the Class A Rights associated with the Class A Shares
represented by such certificates shall be evidenced by such certificates
alone, the registered holders of the Class A Shares shall also be the
registered holders of the associated Class A Rights and the surrender for
transfer of any such certificate shall also constitute the transfer of the
Class A Rights associated with the Class A Shares represented thereby. In the
event that the Company purchases or acquires any Class A Shares after the
Record Date but prior to the Distribution Date, any Class A Rights associated
with such Class A Shares shall be deemed canceled and retired so that the
Company shall not be entitled to exercise any Class A Rights associated with
the Class A Shares which are no longer outstanding.
Section 4. FORM OF CLASS A RIGHT CERTIFICATES. The Class A Right
Certificates (and the forms of election to purchase Series A Preferred Shares
and of assignment to be printed on the reverse thereof) shall be in
substantially the form of Exhibit B hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation
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(including, without limitation, any rule or regulation of any stock exchange
on which the Class A Rights may from time to time be listed) or to conform to
usage or to reflect adjustments to the Class A Rights made pursuant to this
Agreement. Subject to the provisions of Section 11 and Section 22, the
initial Class A Right Certificates, whenever distributed, shall entitle the
holders thereof to purchase such number of one one-hundredths of a Series A
Preferred Share as shall be set forth therein at the price per one
one-hundredth of a Series A Preferred Share set forth therein (the price per
one-hundredth of a Series A Preferred Share being herein called the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise
of each Class A Right and the Purchase Price shall be subject to adjustment
as provided in this Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Class A Right Certificates shall be executed on behalf of the
Company by any one of its Chief Executive Officer, its President, its Chief
Financial Officer or any of its Vice Presidents, either manually or by
facsimile signature. The Class A Right Certificates shall be countersigned,
either manually or by facsimile signature, by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Class A Right Certificates shall
cease to be such officer of the Company before countersignature by the Rights
Agent and issuance and delivery by the Company, such Class A 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 Class A Right Certificates had not ceased to be
such officer of the Company; and any Class A Right Certificate may be signed
on behalf of the Company by any person who, at the actual date of the signing
of such Class A Right Certificate, shall be a proper officer of the Company
to sign such Class A Right Certificate, although at the date of the execution
of this Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or the office or offices designated
as the appropriate place for surrender of Class A Right Certificates upon
exercise or transfer, books for registration and transfer of the Class A
Right Certificates. Such books shall show the names and addresses of the
respective holders of the Class A Right Certificates, the number of Class A
Rights evidenced on its face by each of the Class A Right Certificates and
the date of each of the Class A Right Certificates.
Section 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF CLASS A
RIGHT CERTIFICATES; LOST, STOLEN, DESTROYED OR MUTILATED CLASS A RIGHT
CERTIFICATES.
(a) Subject to the provisions of Section 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close
of Business on the earlier of the Redemption Date or the Final Expiration
Date, any Class A Right Certificate or Class A Right Certificates (other than
Class A Right Certificates representing Class A Rights that have become void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof) may be transferred, split up, combined or exchanged for
another Class A Right Certificate or Class A Right Certificates, entitling
the registered holder to purchase a like number of one one-hundredths of a
Series A Preferred Share as the Class A Right Certificate or Class A 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
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any Class A Right Certificate or Class A Right Certificates shall make such
request in writing delivered to the Rights Agent and shall surrender the
Class A Right Certificate or Class A Right Certificates to be transferred,
split up, combined or exchanged at the office or offices of the Rights Agent
designated for such purpose. Thereupon the Rights Agent shall, subject to
Section 14 hereof, countersign and deliver to the Person entitled thereto a
Class A Right Certificate or Class A Right Certificates, as the case may be,
as so requested. The Company may require payment by the registered holder 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 Class A
Right Certificates. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any
such surrendered Class A Right Certificate until the registered holder shall
have duly completed and executed the form of assignment on the reverse side
of such Class A Right Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
of such Class A Right Certificate or Affiliates or Associates thereof as the
Company shall reasonably request.
(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 Class A Right Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, at the
Company's request, 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 Class A Right Certificate if mutilated, the
Company will make and deliver a new Class A Right Certificate of like tenor
to the Rights Agent for countersignature and delivery to the registered owner
in lieu of the Class A Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. EXERCISE OF CLASS A RIGHTS, PURCHASE PRICE, EXPIRATION DATE
OF CLASS A RIGHTS.
(a) Subject to Section 11(a)(ii) hereof, the registered holder of any
Class A Right Certificate may exercise the Class A Rights evidenced thereby
(except as otherwise provided in this Agreement) in whole or in part at any
time after the Distribution Date upon surrender of the Class A Right
Certificate, with the form of election to purchase on the reverse side
thereof duly completed and executed, to the Rights Agent at the office or
offices of the Rights Agent designated for such purpose, together with
payment of the Purchase Price for each one one-hundredth of a Series A
Preferred Share as to which the Class A Rights are exercised, prior to the
earliest of (i) the Close of Business on May 20, 2009 (the "Final Expiration
Date"), (ii) the time at which the Class A Rights are redeemed as provided in
Section 23 (the "Redemption Date"), or (iii) the time at which such Class A
Rights are exchanged as provided in Section 24.
(b) The Purchase Price for each one one-hundredth of a Series A
Preferred Share purchasable pursuant to the exercise of a Class A Right shall
initially be $120.00, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in lawful money of
the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Class A Right Certificate representing
exercisable Class A Rights, with the form of election to purchase duly
completed and executed, accompanied by payment of the Purchase Price for the
shares to be purchased and an amount equal to any applicable transfer tax
required to be paid by the holder of such Class A Right Certificate in
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accordance with Section 9 in cash, or by certified check or bank cashier's
check or money order payable to the order of the Company, the Rights Agent
shall, subject to Section 20(k), thereupon promptly (i)(A) requisition from
any transfer agent of the Series A Preferred Shares (or make available, if
the Rights Agent is the transfer agent for such shares) certificates for the
number of Series A Preferred Shares to be purchased and the Company hereby
irrevocably authorizes its transfer agent to comply with all such requests,
or (B) if the Company shall have elected to deposit the total number of
Series A Preferred Shares issuable upon exercise of the Class A Rights under
this Agreement with a depositary agent, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths of a
Series A Preferred Share as are to be purchased (in which case certificates
for the Series A Preferred Shares represented by such receipts shall be
deposited by the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in
lieu of issuance of fractional interests in shares in accordance with Section
14, (iii) after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of
such Class A Right Certificate, registered in such name or names as may be
designated by such holder and (iv) when appropriate, after receipt, deliver
such cash for fractional interests in shares to or upon the order of the
registered holder of such Class A Right Certificate.
(d) In case the registered holder of any Class A Right Certificate
shall exercise less than all the Class A Rights evidenced thereby, a new
Class A Right Certificate evidencing Class A Rights equivalent to the Class A
Rights remaining unexercised shall be issued by the Rights Agent and
delivered to the registered holder of such Class A Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section
14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section unless such registered holder shall
have (i) duly completed and executed the form of election to purchase set
forth on the reverse side of the Class A Right Certificate surrendered for
such exercise and (ii) provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) of such Class A Right
Certificate or Affiliates or Associates thereof as the Company shall
reasonably request.
Section 8. CANCELLATION AND DESTRUCTION OF CLASS A RIGHT CERTIFICATES.
All Class A Right Certificates surrendered for the purpose of exercise,
transfer, split-up, combination or exchange shall, if surrendered to the
Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent,
shall be canceled by it, and no Class A Right Certificates shall be issued in
lieu thereof except as expressly permitted by any of the provisions of this
Agreement. The Company shall deliver to the Rights Agent for cancellation and
retirement, and the Rights Agent shall so cancel and retire, any other Class
A Right Certificate purchased or acquired by the Company otherwise than upon
the exercise thereof. The Rights Agent shall deliver all canceled Class A
Right Certificates to the Company.
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Section 9. RESERVATION AND AVAILABILITY OF SERIES A PREFERRED SHARES.
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Series A Preferred
Shares, the number of Series A Preferred Shares that will be sufficient to
permit the exercise in full of all outstanding Class A Rights.
(b) The Company will prepare and file, as soon as practicable following
expiration of the Company's right of redemption pursuant to Section 23, a
registration statement under the Securities Act of 1933, as amended (the
"Act"), with respect to the Class A Rights and the Company's securities
purchasable upon exercise of the Class A Rights, on an appropriate form, and
use its best efforts to cause such registration statement to (i) become
effective as soon as practicable after such filing and (ii) remain effective
(with a prospectus at all times meeting the requirements of the Act) until
the earlier of (A) the date as of which the Class A Rights are no longer
exercisable for such securities or (B) the Final 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 Class A Rights. The Company may
temporarily suspend, for a period of time not to exceed 90 days after the
date the registration statement is filed, the exercisability of the Class A
Rights in order to permit the registration statement to become effective.
Upon any such suspension, the Company shall issue a public announcement
stating that the exercisability of the Class A Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is
no longer in effect. Notwithstanding any provision of this Agreement to the
contrary, the Class A Rights shall not be exercisable in any jurisdiction if
the requisite qualification in such jurisdiction shall not have been obtained
or the exercise thereof is not permitted under applicable law.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Series A Preferred Shares delivered
upon exercise of Class A Rights shall, at the time of delivery of the
certificates for such Series A Preferred Shares (subject to payment of the
Purchase Price and any applicable transfer taxes), be duly and validly
authorized and issued and fully paid and nonassessable shares.
(d) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may
be payable in respect of the issuance or delivery of the Class A Right
Certificates or of any Series A Preferred Shares upon the exercise of Class A
Rights. The Company shall not, however, be required to pay any transfer tax
that may be payable in respect of any transfer or delivery of Class A Right
Certificates to a person other than, or the issuance or delivery of
certificates or depositary receipts for the Series A Preferred Shares in a
name other than that of, the registered holder of the Class A Right
Certificate evidencing Class A Rights surrendered for exercise, or to issue
or to deliver any certificates or depositary receipts for Series A Preferred
Shares upon the exercise of any Class A Rights, until any such tax shall have
been paid (any such tax being payable by the holder of such Class A Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
Section 10. SERIES A PREFERRED SHARES RECORD DATE. Each person in whose
name any certificate for Series A Preferred Shares is issued upon the
exercise of Class A Rights shall for
10
all purposes be deemed to have become the holder of record of the Series A
Preferred Shares represented thereby on, and such certificate shall be dated,
the date upon which the Class A Right Certificate evidencing such Class A
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the date of
such surrender and payment is a date upon which the Series A Preferred Shares
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Series A Preferred
Shares transfer books of the Company are open. Prior to the exercise of the
Class A Rights evidenced thereby, the holder of a Class A Right Certificate
as such shall not be entitled to any rights of a holder of Series A Preferred
Shares for which the Class A Rights shall be exercisable, including without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF CLASS A RIGHTS. The Purchase Price, the number and kind of shares
covered by each Class A Right and the number of Class A Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Series A Preferred Shares
payable in Series A Preferred Shares, (B) subdivide the outstanding Series A
Preferred Shares, (C) combine the outstanding Series A Preferred Shares into
a smaller number of Series A Preferred Shares or (D) issue any shares of its
capital stock in a reclassification of the Series A Preferred Shares
(including any such reclassification in connection with a consolidation,
merger or statutory share exchange in which the Company is the continuing,
surviving or acquiring 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 the number and kind of shares of capital stock
issuable on such date pursuant to the exercise of the Class A Rights, shall
be proportionately adjusted so that the holder of any Class A Right exercised
after such time shall be entitled to receive, upon payment of the Purchase
Price then in effect (and any applicable transfer taxes), the aggregate
number and kind of shares of capital stock which, if such Class A Right had
been exercised immediately prior to such date and at a time when the Series A
Preferred Shares transfer books of the Company were open, such holder would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs
which would require an adjustment under both Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event any
Person shall become an Acquiring Person (other than pursuant to any Section
13 Event occurring after the Distribution Date or within 15 days prior
thereto), proper provision shall be made so that each holder of a Class A
Right, subject to Section 11(a)(iii), shall thereafter have a right to
receive, upon exercise thereof by payment of the amount equal to the product
of the number of one one-hundredths of a Series A Preferred Share which would
otherwise be issuable upon exercise of a
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Class A Right and the then current Purchase Price in accordance with the
terms of this Agreement, in lieu of Series A Preferred Shares, such number of
Class A Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one
one-hundredths of a Series A Preferred Share for which a Class A Right is
exercisable immediately prior to the occurrence of the Section 11(a)(ii)
Event and (y) dividing that product by 50% of the then current per share
market price of the Company's Class A Shares (determined pursuant to Section
11(d) hereof) on the date of such occurrence.
From and after the first occurrence of a Section 11(a)(ii) Event or a
Section 13 Event, any Class A Rights that are beneficially owned by any
Acquiring Person (or any Associate or Affiliate thereof) or were beneficially
owned by any Acquiring Person (or any Associate or Affiliate thereof) after
the Acquiring Person became an Acquiring Person shall become null and void
without any further action and no holder of such Class A Rights shall
thereafter have any rights to exercise such Class A Rights or any other
rights whatsoever with respect to such Class A Rights, whether under any
provision of this Agreement or otherwise. No Class A Right Certificate shall
be issued pursuant to Section 3 that represents Class A Rights that would be
void pursuant to the preceding sentence; no Class A Right Certificate shall
be issued at any time upon the transfer of any Class A Rights to or from an
Acquiring Person whose Class A Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate of such an Acquiring Person or any
nominee of such Acquiring Person, Associate or Affiliate; and any Class A
Right Certificate delivered to the Rights Agent for transfer to or from an
Acquiring Person or any Associate or Affiliate of such Acquiring Person whose
Class A Rights would be void pursuant to the preceding sentence shall be
canceled. The Company shall use all reasonable efforts to insure that the
provisions of this Section 11(a)(ii) are complied with, but shall have no
liability to any holder of a Class A Right Certificate or other Person as a
result of its failure in good faith to make any determinations with respect
to an Acquiring Person or its Affiliates or Associates.
(iii) (A) If, on the date of the occurrence of a Section
11(a)(ii) Event (the "Adjustment Date"), the Company does not have sufficient
authorized, unissued and unreserved Class A Shares available to permit the
exercise in full of all Class A Rights that are exercisable on the Adjustment
Date for the number of Class A Shares per Class A Right provided for in
Section 11(a)(ii), then, in lieu of issuing Class A Shares (in whole or in
part) upon the exercise of Class A Rights, the Company may issue, upon the
exercise of Class A Rights, other equity securities of the Company
(including, without limitation, shares, or units or fractions of shares, of
Class B Shares or preferred stock) which the Board of Directors of the
Company has determined to have substantially the same value, voting rights
and other rights as Class A Shares (such equity securities are herein called
"Class A share equivalents"). To the extent that such Class A share
equivalents (or fractions thereof) are substituted for Class A Shares upon
exercise of the Class A Rights following the occurrence of a Section
11(a)(ii) Event, they shall be substituted on a pro-rata basis with respect
to all Class A Rights (other than Class A Rights that are beneficially owned
by any Acquiring Person (or any Associate or Affiliate thereof) or were
beneficially owned by any Acquiring Person (or any Associate or Affiliate
thereof) after the Acquiring Person became an Acquiring Person that shall
have become void pursuant to Section 11(a)(ii) hereof).
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(B) If, at the time any adjustment is required pursuant to
this 11(a)(iii), the Class A Shares shall have no par value, then for the
purposes of this Section 11(a)(iii), the par value of the Class A Shares
shall be deemed to be $.0l per share.
(C) In the event that there shall not be sufficient
authorized but unissued and unreserved Class A Shares (or Class A share
equivalents the issuance of which is permitted under Section 11(a)(iii)(A))
to permit the exercise in full of the Class A Rights in accordance with this
subparagraph (iii), the Company shall use its best efforts to cause the
authorization of sufficient additional Class A Shares or Class A share
equivalents to permit such exercise and, if the Board of Directors of the
Company shall determine in good faith that it is likely that sufficient
additional Class A Shares or Class A share equivalents could be authorized to
permit such exercise, the Company may suspend the exercisability of the Class
A Rights for a period not to exceed 90 days in order to seek any
authorization of additional Class A Shares or Class A share equivalents. In
the event of any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Class A Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Series A Preferred Shares
entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Series A Preferred Shares (or
shares having the same rights, privileges and preferences as the Series A
Preferred Shares ("equivalent preferred shares")) or securities convertible
into Series A Preferred Shares or equivalent preferred shares at a price per
Series A Preferred Share or equivalent preferred share (or having a
conversion price per share, if a security convertible into Series A Preferred
Shares or equivalent preferred shares) less than the current per share market
price of the Series A Preferred Shares (as determined pursuant to Section
11(d) hereof) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the number of Series A Preferred Shares outstanding on such
record date, plus the number of Series A Preferred Shares which the aggregate
offering price of the total number of Series A 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 shall be the number of Series A Preferred Shares outstanding on such
record date, plus the number of additional Series A 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). In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors
of the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Class A Rights. Series A Preferred Shares owned by or held for
the account of the Company shall not be deemed outstanding for the purpose of
any such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights or warrants
are not so issued, the Purchase Price shall again be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
13
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Series A Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation or in a statutory
share exchange) of evidences of indebtedness or cash or non-cash assets
(other than a regular quarterly cash dividend or a dividend payable in Series
A Preferred Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the numerator
of which shall be the then current per share market price of the Series A
Preferred Shares (as determined pursuant to Section 11(d) hereof) on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Class A Rights) of the portion of the evidences
of indebtedness or cash or non-cash assets so to be distributed on, or of
such subscription rights or warrants applicable to, one Series A Preferred
Share, and the denominator of which shall be such then current per share
market price of the Series A Preferred Shares; PROVIDED, HOWEVER, that in no
event shall the consideration to be paid upon the exercise of one Class A
Right be less than the aggregate par value of the shares of capital stock of
the Company to be issued upon exercise of one Class A Right. Such adjustments
shall be made successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase Price shall again
be adjusted to be the Purchase Price that 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 any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) immediately prior to such date;
PROVIDED, HOWEVER, that in the event that the current per share market price
of the Security is determined during a period following the announcement by
the issuer of such Security of (A) a dividend or distribution on such
Security payable in such Security or securities convertible into such
Security (other than the Class A Rights) or (B) any subdivision, combination
or reclassification of such Security, 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 shall be
appropriately adjusted to reflect the current market price per share
equivalent of such Security. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Security is 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 Security is listed or admitted to trading
or, if the Security is 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 on the Nasdaq National Market or the Nasdaq SmallCap Market or such
other system then in use, or, if on any such day the Security is not so
quoted or reported, the
14
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of
Directors of the Company. Except as provided in Section 11(d)(ii) with
respect to Series A Preferred Shares, if on any such day the Security is not
publicly held or no professional market maker is making a market in the
Security, the fair value of such Security on such day as determined in good
faith by the Board of Directors of the Company (whose determination shall be
described in a statement filed with the Rights Agent and shall be binding on
the Rights Agent and the holders of the Class A Rights) shall be used in lieu
of the closing price for such day. The term "Trading Day" shall mean a day on
which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business or, if
the Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) If the Series A Preferred Shares are not publicly held or
traded in a manner described in Section 11(d)(i) hereof, then,
notwithstanding anything to the contrary provided in Section 11(d)(i) hereof,
the "current per share market price" of the Series A Preferred Shares shall
be conclusively deemed to be the current per share market price of the Class
A Shares as determined pursuant to Section 11(d)(i) (appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date of this Agreement) multiplied by one hundred. If neither the
Class A Shares nor the Series A Preferred Shares are publicly held or so
traded, the "current per share market price" of the Series A Preferred Shares
shall mean the fair value per share as determined in good faith by the Board
of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Class A Rights.
(e) Except as provided in the third sentence of this Section 11(e), no
adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
PROVIDED, HOWEVER, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one one-millionth of a Series A
Preferred Share or one ten-thousandth of any other share or security, as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11, but for the first sentence of this
Section 11(e), shall be made no later than the earlier of (i) three years
from the date of the transaction that requires such adjustment or (ii) the
Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Class A Right thereafter exercised shall
become entitled to receive any shares of capital stock other than Series A
Preferred Shares, thereafter the number of such other shares so receivable
upon exercise of any Class A Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Series A Preferred Shares contained in Section
11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10, 13 and
14 with respect to the Series A Preferred Shares shall apply on like terms to
any such other shares.
(g) All Class A Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price under this Agreement shall evidence
the right to
15
purchase, at the adjusted Purchase Price, the number of one one-hundredths of
a Series A Preferred Share (or other securities) purchasable from time to
time under this Agreement upon exercise of the Class A Rights, all subject to
further adjustment as provided in this Agreement.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Section 11(b) and (c), each Class A Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence
the right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Series A Preferred Share (calculated to the nearest one
one-millionth of a Series A Preferred Share) obtained by (i) multiplying (x)
the number of one one-hundredths of a share covered by a Class A Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after
such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Class A Rights, in substitution for
any adjustment in the number of one one-hundredths of a Series A Preferred
Share purchasable upon the exercise of a Class A Right. Each of the Class A
Rights outstanding after such adjustment of the number of Class A Rights
shall be exercisable for the number of one one-hundredths of a Series A
Preferred Share for which a Class A Right was exercisable immediately prior
to such adjustment. Each Class A Right held of record prior to such
adjustment of the number of Class A Rights shall become that number of Class
A Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Class A Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Class A Right Certificates have
been issued on or after the Distribution Date, shall be at least 10 days
later than the date of the public announcement. If Class A Right Certificates
have been issued on or after the Distribution Date, upon each adjustment of
the number of Class A Rights pursuant to this Section 11(i) the Company
shall, as promptly as practicable, cause to be distributed to holders of
record of Class A Right Certificates on such record date Class A Right
Certificates evidencing, subject to Section 14 hereof, the additional Class A
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the Class A
Right Certificates held by such holders prior to the date of adjustment, and
upon surrender thereof, if required by the Company, new Class A Right
Certificates evidencing all the Class A Rights to which such holders shall be
entitled after such adjustment. Class A Right Certificates so to be
distributed shall be issued, executed and countersigned in the manner
provided for in this Agreement, shall bear the adjusted Purchase Price, and
shall be registered in the names of the holders of record of Class A Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a Series A Preferred Share issuable upon
the exercise of the Class A
16
Rights, the Class A Right Certificates theretofore issued may continue to
express the Purchase Price and the number of one one-hundredths of a Series A
Preferred Share which were expressed at the time of the issuance of such
Class A Right Certificates under this Agreement.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Class A Right exercised after such
record date of the Series A Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the Series A Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; PROVIDED, HOWEVER, that the Company
shall deliver to such holder a due ▇▇▇▇ or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(1) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that the Board of Directors of the Company shall determine to
be advisable in order that any (i) consolidation or subdivision of the Series
A Preferred Shares, (ii) issuance wholly for cash of any of the Series A
Preferred Shares at less than the current per share market price, (iii)
issuance wholly for cash of Series A Preferred Shares or securities which by
their terms are convertible into or exchangeable for Series A Preferred
Shares, (iv) dividends on Series A Preferred Shares payable in Series A
Preferred Shares or (v) issuance of rights, options or warrants referred to
in Section 11(b) hereof, hereafter made by the Company to holders of its
Series A Preferred Shares shall not be taxable to such shareholders.
(m) Anything in this Agreement or the Class A Rights to the contrary
notwithstanding, in the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare
or pay any dividend on the Class A Shares payable in Class A Shares or (ii)
effect a subdivision, combination or consolidation of the Class A Shares (by
reclassification or otherwise) into a greater or lesser number of Class A
Shares, then in any such case (x) the number of one one-hundredths of a
Series A Preferred Share purchasable after such event upon proper exercise of
each Class A Right shall be determined by multiplying the number of one
one-hundredths of a Series A Preferred Share so purchasable immediately prior
to such event by a fraction, the numerator of which is the number of Class A
Shares outstanding immediately before such event and the denominator of which
is the number of Class A Shares outstanding immediately after such event and
(y) each Class A Share outstanding immediately after such event shall have
issued with respect to it that number of Class A Rights which each Class A
Share outstanding immediately prior to such event had issued with respect to
it. The adjustments provided for in this Section 11(m) shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected. If an event occurs
which would require an adjustment under Section 11(a)(ii) and this Section
11(m), the adjustments provided for in this Section 11(m) shall be in
addition and prior to any adjustment required pursuant to Section 11(a)(ii).
17
(n) If any adjustment in the Purchase Price pursuant to paragraph (b)
or (c) of this Section 11 would not be permitted by law, under the Company's
Articles of Incorporation or under the Certificate of Designation,
Preferences and Rights establishing the Series A Preferred Shares, no such
issuance of securities or distribution of evidences of indebtedness or other
assets or subscription rights or warrants, as the case may be, that would
require such an adjustment but for the limitations established by law, the
Company's Articles of Incorporation or such Certificate of Designation,
Preferences and Rights shall be made by the Company.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 and 13, the
Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Class A Shares or the Series A Preferred Shares a copy of such certificate
and (c) if such adjustment is made after the Distribution Date, mail a brief
summary thereof to each holder of record of a Class A Right Certificate in
accordance with Section 26. The Rights Agent shall be fully protected in
relying on such certificate and on any adjustment therein contained.
Section 13. CONSOLIDATION, MERGER, STATUTORY SHARE EXCHANGE OR SALE
OR TRANSFER OF ASSETS OR EARNING POWER.
(a) In the event, after the Distribution Date or within 15 days prior
thereto, directly or indirectly,
(w) the Company shall consolidate with, or merge with and into,
any other Person, and the Company shall not be the continuing or surviving
corporation of such consolidation or merger,
(x) any Person shall consolidate with the Company, or merge with
and into the Company and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding Common Shares of the
Company held by existing shareholders of the Company shall be changed into or
exchanged for stock or other securities of any other Person (or the Company)
or money or any other property (except as a result of the exercise of
statutory dissenters' rights),
(y) the Company shall effect a statutory share exchange with
outstanding Common Shares of the Company being exchanged for stock or other
securities of any other Person, money or other property, or
(z) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one transaction or
a series of related transactions, assets or earning power aggregating 50% or
more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company or
one or more of its wholly owned Subsidiaries),
then, and in each such case, proper provision shall be made so that (i) each
holder of a Class A Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the
18
exercise thereof by payment of the amount equal to the product of the number
of one one-hundredths of a Series A Preferred Share which would otherwise be
issuable upon exercise of a Class A Right and the then current Purchase Price
in accordance with the terms of this Agreement and in lieu of Series A
Preferred Shares, such number of validly authorized and issued, fully paid,
nonassessable and freely tradeable Common Shares of the Principal Party (as
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or adverse claims, as shall be equal to the result obtained by (x)
multiplying the then current Purchase Price by the number of one
one-hundredths of a Series A Preferred Share for which a Class A Right is,
immediately prior to the occurrence of the Section 13 Event, exercisable and
(y) dividing that product by 50% of the then current per share market price
of the Common Shares of such Principal Party (determined pursuant to Section
11(d) hereof) on the date of consummation of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue
of such merger, consolidation, statutory share exchange, sale or transfer,
all the obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares to permit the exercise of all outstanding Class A Rights) in
connection with the consummation of any such transaction as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Class A Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clauses (w), (x)
or (y) of the first sentence of Section 13(a), the Person (including, without
limitation, the Company as successor thereto or as the surviving corporation)
that is the issuer of any securities into which Common Shares of the Company
are converted in such merger, consolidation or exchange, or if no securities
are so issued, the Person that is the other party to such merger,
consolidation or exchange; and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
PROVIDED, HOWEVER, that in any such case, (1) if the Common Shares of such
Person are not at such time or have not been continuously over the preceding
12-month period registered under Section 12 of the Exchange Act, and such
Person is a direct or indirect Subsidiary of another Person the Common Shares
of which are and have been so registered, "Principal Party" shall refer to
such other Person, and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, the Common Shares of two or more of
which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the Common Shares having the
greatest aggregate market value.
(c) The Company shall not consummate any Section 13 Event unless the
Principal Party shall have a sufficient number of authorized, unreserved
Common Shares which have not been issued or are held in treasury to permit
the exercise in full of the Class A Rights in accordance with this Section 13
and unless prior thereto the Company and such Principal Party
19
shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that, as soon as practicable after the date
of any Section 13 Event, the Principal Party will:
(i) prepare and file a registration statement under the Act,
with respect to the Class A Rights and the securities purchasable upon
exercise of the Class A 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 Act) until the earlier of (1)
the date as of which the Class A Rights are no longer exercisable for such
securities or (2) the Final Expiration Date;
(ii) 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 Class A Rights; and
(iii) deliver to holders of the Class A Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10
under the Exchange Act.
(d) The Company shall not enter into any transaction of the kind
referred to in this Section 13 if at the time of such transaction there are
any rights, warrants, instruments or securities outstanding or any agreements
or arrangements which, as a result of the consummation of such transaction,
would eliminate or substantially diminish the benefits intended to be
afforded by the Class A Rights.
The provisions of this Section 13 shall similarly apply to successive
mergers, consolidations, statutory share exchanges or sales or other
transfers.
Section 14. FRACTIONAL CLASS A RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Class A
Rights or to distribute Class A Right Certificates which evidence fractional
Class A Rights. In lieu of such fractional Class A Rights, there may be paid
to the registered holders of the Class A Right Certificates with regard to
which such fractional Class A Rights would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole Class
A Right. For the purposes of this Section 14(a), the current market value of
a whole Class A Right shall be the closing price of the Class A Rights for
the Trading Day immediately prior to the date on which such fractional Class
A Rights would have been otherwise issuable. The closing price for any day
shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Class A 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
Class A Rights are listed or admitted to trading or, if the Class A 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
20
reported on the Nasdaq National Market or the Nasdaq SmallCap Market or such
other system then in use or, if on any such date the Class A Rights are not
so quoted or reported, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Class A
Rights selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Class A Rights, the fair value
of the Class A Rights on such date as determined in good faith by the Board
of Directors of the Company shall be used in lieu of the closing price for
such day.
(b) The Company shall not be required to issue fractions of Series A
Preferred Shares (other than fractions that are integral multiples of one
one-hundredth of a Series A Preferred Share, or, if a Class A Right shall
then be exercisable for a fraction other than one one-hundredth of a Series A
Preferred Share, integral multiples of that fraction) upon exercise of the
Class A Rights or to distribute certificates which evidence fractions of
Series A Preferred Shares (other than fractions that are integral multiples
of one one-hundredth of a Series A Preferred Share or, if a Class A Right
shall then be exercisable for a fraction other than one one-hundredth of a
Series A Preferred Share, integral multiples of that fraction). Fractions of
Series A Preferred Shares in integral multiples of one one-hundredth of a
Series A Preferred Share or, if a Class A Right shall then be exercisable for
a fraction other than one one-hundredth of a Series A Preferred Share,
integral multiples of that fraction 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
shall provide that the holders of such depositary receipts shall have all the
rights, privileges and preferences to which they are entitled as beneficial
owners of the Series A Preferred Shares represented by such depositary
receipts. In lieu of fractional Series A Preferred Shares that are not
integral multiples of one one-hundredth of a Series A Preferred Share, or, if
a Class A Right shall then be exercisable for a fraction other than one
one-hundredth of a Series A Preferred Share, integral multiples of that
fraction, the Company may pay to the registered holders of Class A Right
Certificates at the time such Class A Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of
one Series A Preferred Share. For purposes of this Section 14(b), the current
market value of a Series A Preferred Share shall be the closing price of a
Series A Preferred Share (as determined pursuant to Section 11(d)(ii)) for
the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Class A Right by the acceptance of the Class A
Rights expressly waives such holder's right to receive any fractional Class A
Rights or any fractional shares (except as provided above) upon exercise of a
Class A Right.
Section 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 Class A
Right Certificates (and, prior to the Distribution Date, the registered
holders of the Class A Shares); and any registered holder of any Class A
Right Certificate (or, prior to the Distribution Date, of any Class A Share),
without the consent of the Rights Agent or of the holder of any other Class A
Right Certificate (or, prior to the Distribution Date, of any other Class A
Share), may, in such holder's own behalf and for such holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, such holder's
right to exercise the
21
Class A Rights evidenced by such Class A Right Certificate (or, prior to the
Distribution Date, the associated Class A Share certificate) in the manner
provided in such Class A Right Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Class A
Rights, it is specifically acknowledged that the holders of Class A 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, and
injunctive relief against actual or threatened violations of the obligations
of any Person subject to, this Agreement.
Section 16. AGREEMENT OF CLASS A RIGHT HOLDERS. Every holder of a Class
A Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Class A Right that:
(a) prior to the Distribution Date, the Class A Rights will be
transferable only in connection with the transfer of the Class A Shares;
(b) after the Distribution Date, the Class A Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purposes, 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 Class A Right Certificate (or, prior to the Distribution Date,
the associated Class A Share certificate) is registered as the absolute owner
thereof and of the Class A Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Class A Right Certificate or the
associated Class A 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 shall be affected by any notice to the contrary;
(d) the Company may issue Class A Rights after the Record Date as
provided in this Agreement; and
(e) notwithstanding anything in this Agreement or the Class A Rights to
the contrary, the Company, the Rights Agent and the Board of Directors of the
Company shall not have any liability to any holder of a Class A Right or
other Person as a result of the inability of the Company or the Rights Agent
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.
Section 17. CLASS A RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
No holder, as such, of any Class A Right Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the Series
A Preferred Shares or any other securities of the Company which may at any
time be issuable on the exercise of the Class A Rights represented thereby,
nor shall anything contained in this Agreement or in any Class A Right
Certificate be construed to confer upon the holder of any Class A Right
Certificate, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter
22
submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 25), or to
receive dividends or subscription rights, or otherwise, until the Class A
Right or Class A Rights evidenced by such Class A Right Certificate shall
have been exercised in accordance with the provisions of this Agreement.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Agreement and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
under this Agreement. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability or expense
(including the costs and expenses of defending against any claim of
liability), incurred without negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any
Class A Right Certificate or certificate for the Series A Preferred Shares or
Class A Shares or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of its counsel as set forth in Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on
the part of any of the parties to this Agreement; PROVIDED, HOWEVER, that
such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 21 hereof. If at the time such
successor Rights Agent shall succeed to the agency created by this Agreement
any of the Class A 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 Class A Right Certificates so
countersigned; and in case at that time any of the Class A Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Class A 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 Class A Right Certificates shall have the full force provided in the
Class A Right Certificates and in this Agreement.
23
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Class A Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Class A Right Certificates
so countersigned; and in case at that time any of the Class A Right
Certificates shall not have been countersigned, the Rights Agent may
countersign such Class A Right Certificates either in its prior name or in
its changed name; and in all such cases such Class A Right Certificates shall
have the full force provided in the Class A Right Certificates and in this
Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Class A Right
Certificates (or, prior to the Distribution Date, the Class A Share
certificates), by their acceptance of the Class A Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of the "current per share market price") be proved or
established by the Company prior to taking or suffering any action under this
Agreement, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chief Executive
Officer, the President, the Chief Financial Officer, any Vice President or
the Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement
in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Class A
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution by the Rights Agent) or in respect of the
validity or execution of any Class A Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Class A Right Certificate; nor shall it be responsible for any change in the
exercisability of the Class A Rights (including the Class A Rights becoming
void pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of
the Class A Rights (including the manner, method or amount thereof) provided
for in Section 3, 11,
24
13, 23 or 24, or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Class A Rights evidenced by Class A Right Certificates after actual notice
that such change or adjustment is required); nor shall it by any act under
this Agreement be deemed to make any representation or warranty as to the
authorization or reservation of any Series A Preferred Shares or Class A
Shares to be issued pursuant to this Agreement or any Class A Right
Certificate or as to whether any Series A Preferred Shares or Class A Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this
Agreement from any one of the Chief Executive Officer, the President, the
Chief Financial Officer, any Vice President or the Secretary of the Company,
and to apply to such officers for advice or instructions in connection with
its duties, and it shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer
or for delay in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Class A Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company or its Subsidiaries may be interested, or
contract with or lend money to the Company or its Subsidiaries or otherwise
act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing in this Agreement shall preclude the Rights Agent from
acting in any other capacity for the Company or its Subsidiaries or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty under this Agreement either
itself or by or through its attorneys or agents, and the Rights Agent shall
not be answerable or accountable for any act, default, neglect or misconduct
of any such attorneys or agents or for any loss to the Company resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties under this Agreement or in the exercise
of its Class A Rights or powers if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(k) If, with respect to any Class A Right Certificate surrendered to
the Rights Agent for exercise or transfer, the form of assignment or form of
election to purchase, as the case may be, has either not been duly completed
and executed or indicates an affirmative response to enumerated clause 1
and/or 2 on the reverse side of the applicable Class A Right Certificate, the
25
Rights Agent shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days' notice in writing mailed to the Company and to each
transfer agent of the Class A Shares and Series A Preferred Shares by
registered or certified mail, and, if such notice is mailed after the
Distribution Date, to the holders of the Class A Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Class A Shares and Series A Preferred Shares by registered or certified mail,
and, if such notice is mailed after the Distribution Date, to the holders of
the Class A Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice
of such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Rights Agent or by the holder
of a Class A Right Certificate (who shall, with such notice, submit such
holder's Class A Right Certificate for inspection by the Company), then the
registered holder of any Class A 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,
shall be (a) a corporation organized and doing business under the laws of the
United States or of the State of Minnesota or 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 Minnesota or New York), in good
standing, having an office in the State of Minnesota or 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 or (b) an affiliate of a
corporation described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Rights Agent
without further act or deed; but the predecessor Rights Agent shall deliver
and transfer to the successor Rights Agent any property at the time held by
it under this Agreement and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent of the
Class A Shares and Series A Preferred Shares, and, if such notice is filed
after the Distribution Date, mail a notice thereof in writing to the
registered holders of the Class A Right Certificates. Failure to give any
notice provided for in this Section, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case
may be.
Section 22. ISSUANCE OF NEW CLASS A RIGHT CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Class A Rights to the
contrary, the Company may, at its option, issue new Class A Right
Certificates evidencing Class A Rights in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Purchase Price
and the number or kind or class of shares or other securities or property
purchasable under the Class
26
A Right Certificates made in accordance with the provisions of this
Agreement. In addition, following the Distribution Date and prior to the
redemption or expiration of the Class A Rights, the Company shall issue Class
A Right Certificates representing the appropriate number of Class A Rights in
connection with (i) the conversion of Class B Right Certificates into Class A
Right Certificates pursuant to the last sentence of Section 6(a) of the Class
B Share Rights Agreement dated April 30, 1999, between the Company and
Norwest Bank Minnesota, National Association, as Rights Agent (the "Class B
Share Rights Agreement") or (ii) the conversion of all Class B Right
Certificates into Class A Right Certificates pursuant to Section 7(f) of the
Class B Share Rights Agreement.
Section 23. REDEMPTION.
(a) Subject to the provisions of Section 27, the Board of Directors of
the Company may, at its option, at any time prior to the earlier of (x) the
Close of Business on the Shares Acquisition Date or (y) the Close of Business
on the Final Expiration Date, redeem all but not less than all of the then
outstanding Class A Rights at a redemption price of $.001 per Class A Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date of this Agreement (such redemption price
being hereinafter referred to as the "Redemption Price"). The Redemption
Price shall be payable in cash by the Company. The redemption of the Class A
Rights by the Board of Directors of the Company may be made effective at such
time and on such basis and with such conditions as the Board of Directors of
the Company in its sole discretion may establish. Except for the obligation
to pay the Redemption Price, the Board of Directors and the Company shall not
have any liability to any Person as a result of the redemption of Class A
Rights pursuant to the terms of this Section 23.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Class A Rights pursuant to paragraph
(a) of this Section 23, and without any further action and without any
notice, the right to exercise the Class A Rights will terminate and the only
right thereafter of the holders of Class A Rights shall be to receive the
Redemption Price for each Class A Right so held. Promptly after the action of
the Board of Directors of the Company ordering the redemption of the Class A
Rights, the Company shall give notice of such redemption to the Rights Agent
and the holders of the then outstanding Class A Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Class A Shares; PROVIDED, HOWEVER, that
the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Any notice which is mailed in the manner
provided in this paragraph shall be deemed given whether or not the holder
receives the notice. The notice of redemption will state the method by which
the payment of the Redemption Price will be made. Neither the Company nor any
of its Affiliates or Associates may redeem, acquire or purchase for value any
Class A Rights at any time in any manner except as specifically set forth in
this Section or in Section 24 or in connection with the purchase of Class A
Shares prior to the Distribution Date.
Section 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any
time after the date the Class A Rights first become exercisable for Class A
Shares pursuant to Section 11(a)(ii),
27
exchange all or part of the then outstanding and exercisable Class A Rights
(which shall not include Class A Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Class A Shares, at an exchange
ratio of one Class A Share per Class A Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction affecting the
Class A Shares that occurs after the Record Date (such exchange ratio, as the
same may be adjusted from time to time, being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors of
the Company shall not be empowered to effect such exchange at any time after
any Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Class A Rights pursuant to paragraph (a)
of this Section 24 and without any further action and without any notice, the
right to exercise such Class A Rights shall terminate and the only right
thereafter of a holder of such Class A Rights shall be to receive that number
of Class A Shares equal to the number of such Class A Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; PROVIDED, HOWEVER, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange. The Company shall promptly mail a notice of any such exchange to
all of the holders of such Class A Rights at their last addresses as they
appear upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. The notice of exchange will state the method
by which the exchange of the Class A Shares for Class A Rights will be
effected and, in the event of any partial exchange, the number of Class A
Rights which will be exchanged. Any partial exchange shall be effected pro
rata based on the number of Class A Rights (other than Class A Rights which
have become void pursuant to the provisions of Section 11(a)(ii) hereof) held
by each holder of Class A Rights.
(c) In the event that there shall not be sufficient Class A Shares
authorized, unissued and unreserved to permit the exchange of Class A Rights
as contemplated in accordance with this Section 24, the Company, at its
option, may substitute Series A Preferred Shares (or equivalent preferred
shares, as such term is defined in Section 11(b), or Class A share
equivalents, as such term is defined in Section 11(a)(iii)(A) hereof), for
Class A Shares exchangeable for Class A Rights, at the initial rate of one
one-hundredth of a Series A Preferred Share (or equivalent preferred share)
or one Class A share equivalent for each Class A Share, as appropriately
adjusted to reflect stock splits, stock dividends or similar transactions
affecting the Class A Shares that occur after the date of this Agreement.
(d) In the event that there shall not be sufficient Class A Shares,
Series A Preferred Shares, equivalent preferred shares or Class A share
equivalents, authorized, unissued and unreserved to permit the exchange of
Class A Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize
additional Class A Shares or Series A Preferred Shares, equivalent preferred
shares or Class A share equivalents for issuance upon exchange of the Class A
Rights.
28
(e) The Company shall not be required to issue fractions of Class A
Shares or to distribute certificates which evidence fractional Class A
Shares. In lieu of such fractional Class A Shares, the Company may pay to the
registered holders of the Class A Right Certificates with regard to which
such fractional Class A Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole Class A
Share. For the purposes of this paragraph (e), the current market value of a
whole Class A Share shall be the closing price of a Class A Share (as
determined pursuant to the second sentence of 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this
Section. The Board of Directors and the Company shall not have any liability
to any Person as a result of the exchange of Class A Rights pursuant to the
terms of this Section.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company shall propose, at any time after the
Distribution Date, (i) to pay any dividend payable in stock of any class to
the holders of its Series A Preferred Shares or to make any other
distribution to the holders of its Series A Preferred Shares (other than a
regular quarterly cash dividend), or (ii) to offer to the holders of its
Series A Preferred Shares rights or warrants to subscribe for or to purchase
any additional Series A Preferred Shares or shares of stock of any class or
any other securities, rights or options, or (iii) to effect any
reclassification of its Series A Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Series A
Preferred Shares), or (iv) to effect any consolidation or merger into or with
any other Person, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one
transaction or a series of related transactions, of 50% or more of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to
any other Person or Persons (other than the Company and/or any of its wholly
owned Subsidiaries), or (v) to effect any statutory share exchange with
outstanding Class A Shares of the Company being exchanged for stock or other
securities of any other corporation or money or other property, or (vi) to
effect the liquidation, dissolution or winding-up of the Company, or (vii) to
declare or pay any dividend on the Class A Shares payable in Class A Shares
or to effect a subdivision, combination or consolidation of the Class A
Shares (by reclassification or otherwise), then, in each such case, the
Company shall give to each holder of a Class A Right Certificate, to the
extent feasible and in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, exchange, sale, transfer,
liquidation, dissolution, or winding-up is to take place and the date of
participation therein by the holders of the Class A Shares and/or Series A
Preferred Shares, if any such date is to be fixed, and such notice shall be
so given in the case of any action covered by clause (i) or (ii) above at
least 10 days prior to the record date for determining holders of the Series
A Preferred Shares for purposes of such action, and in the case of any such
other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Class A Shares and/or Series A Preferred Shares, whichever shall be the
earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to each holder
of a Class A Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which
29
shall specify the event and the consequences of the event to holders of Class
A Rights under Section 11(a)(ii).
Section 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Class A Right
Certificate to or on the Company shall be sufficiently given or made if sent
by first-class mail, postage-prepaid, addressed (until another address is
filed in writing with the Rights Agent) as follows:
Rural Cellular Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any
Class A Right Certificate to or on the Rights Agent shall 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:
Norwest Bank Minnesota, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Stock Transfer Manager
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Class A Right Certificate
shall be sufficiently given or made if sent by first-class mail,
postage-prepaid, addressed to such holder at the address of such holder as
shown on the registry books maintained by the Rights Agent.
Section 27. SUPPLEMENTS AND AMENDMENTS. The Company may and the Rights
Agent shall, if so directed by the Company, from time to time supplement or
amend this Agreement without the approval of any holders of Class A Shares or
Class A Right Certificates in order (i) to extend the Final Expiration Date,
(ii) to cure any ambiguity, or to correct or supplement any provision
contained in this Agreement which may be defective or inconsistent with any
other provisions in this Agreement, (iii) prior to the Distribution Date, to
otherwise change or supplement any provision in this Agreement in any manner
which the Company may deem necessary or desirable, or (iv) following the
Distribution Date, to otherwise change or supplement any provision in this
Agreement in any manner which the Company may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Class A
Right Certificates (other than Class A Right Certificates evidencing Class A
Rights that shall have become null and void pursuant to Section 11(a)(ii)).
Without limiting the foregoing, the Company may at any time prior to such
time as any Person becomes an Acquiring Person amend this Agreement to lower
the Threshold Percentage set forth in Sections 1(s) and 3(a) hereof to not
less than the greater of (i) the sum of .001% and the largest percentage of
the outstanding Class A Shares then known by the Company to be beneficially
owned by any Person (other than an Exempt Person) or (ii) 10%.
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Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. BENEFITS OF THIS AGREEMENT.
(a) Nothing in this Agreement shall be construed to give to any Person
other than the Company, the Rights Agent and the registered holders of the
Class A Right Certificates (and, prior to the Distribution Date, the
registered holders of Class A Shares) any legal or equitable right, remedy or
claim under this Agreement. This Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders
of the Class A Right Certificates (and, prior to the Distribution Date, the
registered holders of Class A Shares).
(b) The Board of Directors of the Company shall have the exclusive
power and total and complete authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors
or the Company or necessary or advisable in the administration of this
Agreement, including without limitation the right and power to interpret this
Agreement and to make conclusively all determinations deemed necessary or
advisable for the administration of this Agreement. All such acts,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) that are done
or made by the Board of Directors in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent and the holders of
the Class A Rights and all other parties and (y) not subject the Board of
Directors to any liability to the holders of the Class A Rights or any other
party.
Section 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 31. GOVERNING LAW. This Agreement and each Class A Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Minnesota and for all purposes shall be governed by and
construed in accordance with the laws of the State of Minnesota applicable to
contracts to be made and performed entirely within such state.
Section 32. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions of
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
RURAL CELLULAR CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Chief Executive Officer
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By: ▇▇▇▇ ▇▇▇▇▇
------------------------
Its: Account Manager
-------------------
32
EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES A
JUNIOR PARTICIPATING PREFERRED SHARES OF
RURAL CELLULAR CORPORATION
I, ▇▇▇ ▇. ▇▇▇▇▇▇▇, the Secretary of Rural Cellular Corporation, a
corporation organized and existing under the Business Corporation Act of the
State of Minnesota, in accordance with the provisions of Section 302A.401
thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by
the Restated Articles of Incorporation of the corporation, as amended (the
"Articles of Incorporation"), the Board of Directors on April 30, 1999,
adopted the following resolution creating a series of Preferred Shares, par
value $.01 per share, designated as Series A Junior Participating Preferred
Shares:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the corporation in accordance with the provisions of
its Restated Articles of Incorporation, as amended, a series of Preferred
Stock of this corporation be, and it hereby is, created from the undesignated
shares of the corporation, and that the designation and amount thereof and
the relative rights and preferences of the shares of such series, are as
follows:
1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A Junior Participating Preferred Shares" (the "Series A
Preferred Shares"), the par value of the shares constituting such series
shall be $.01 per share and the number of shares constituting such series
shall be two hundred thousand (200,000). The number of shares constituting
such series may, unless prohibited by the Articles of Incorporation or by
applicable law of the State of Minnesota, be increased or decreased by
resolution of the Board of Directors; PROVIDED, that no decrease shall reduce
the number of Series A Preferred Shares to a number less than the number of
shares then outstanding plus the number of shares issuable upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the corporation convertible into Series A
Preferred Shares.
2. DIVIDENDS AND DISTRIBUTIONS.
(i) The holders of Series A Preferred Shares, in preference to
the holders of Class A Common Stock, par value $.01 per share, of the Company
(the "Class A Shares") and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, quarterly dividends payable in cash on the
last day of March, June, September, and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"), commencing
on the first Quarterly Dividend Payment Date after the first issuance of a
Series A Preferred Share, or fraction thereof, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b)
subject to the provision for adjustment hereinafter set forth, one hundred
(100) times the aggregate per share amount of all cash dividends, and one
hundred (100) times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend payable in
Class A Shares or a subdivision of the outstanding Class A Shares (by
reclassification or otherwise), declared on the Class A Shares since the
A-1
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any Series
A Preferred Share, or fraction thereof. In the event the corporation shall at
any time after May 20, 1999, declare or pay any dividend on Class A Shares
payable in Class A Shares, or effect a subdivision or combination or
consolidation of the outstanding Class A Shares (by reclassification or
otherwise) into a greater or lesser number of Class A Shares, then in each
such case the amount to which holders of Series A Preferred Shares were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of Class A Shares outstanding immediately
after such event and the denominator of which is the number of Class A Shares
that were outstanding immediately prior to such event.
(ii) The corporation shall declare a dividend or distribution on
the Series A Preferred Shares as provided in subparagraph (i) of this
paragraph 2 simultaneously with its declaration of a dividend or distribution
on the Class A Shares (other than a dividend payable in Class A Shares or a
subdivision of the outstanding Class A Shares); PROVIDED that, in the event
no dividend or distribution shall have been declared on the Class A Shares
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on
the Series A Preferred Shares shall nevertheless be payable, out of funds
legally available for such purpose, on such subsequent Quarterly Dividend
Payment Date.
(iii) Dividends shall begin to accrue and be cumulative on
outstanding Series A Preferred Shares from their date of issue. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the Series A
Preferred Shares in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares outstanding at that time. The
Board of Directors may fix a record date for the determination of holders of
Series A Preferred Shares entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than sixty
(60) days prior to the date fixed for the payment thereof.
3. VOTING RIGHTS. The holders of Series A Preferred Shares shall have
the following voting rights:
(i) Subject to the provision for adjustment hereinafter set
forth, each Series A Preferred Share shall entitle the holder thereof to one
hundred (100) votes on all matters submitted to a vote of the shareholders of
the corporation. In the event the corporation shall at any time after May 20,
1999, declare or pay any dividend on Class A Shares payable in Class A
Shares, or effect a subdivision or combination or consolidation of the
outstanding Class A Shares (by reclassification or otherwise) into a greater
or lesser number of Class A Shares, then in each such case the number of
votes per share to which holders of Series A Preferred Shares were entitled
immediately prior to such event shall be adjusted by multiplying such number
by a fraction, the numerator of which is the number of Class A Shares
outstanding immediately after such event and the denominator of which is the
number of Class A Shares that were outstanding immediately prior to such
event.
A-2
(ii) Except as otherwise provided herein, in any other
Certificate of Designation, Preferences and Rights creating a series of
Preferred Stock or by law, the holders of Series A Preferred Shares and the
holders of Class A Shares and any other capital shares of the corporation
having general voting rights shall vote together as one class on all matters
submitted to a vote of the shareholders of the corporation.
(iii) Except as otherwise provided herein or by law, the holders
of Series A Preferred Shares shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Class A Shares and any other capital stock of the corporation
having general voting rights as set forth herein) for taking any corporate
action.
4. CERTAIN RESTRICTIONS.
(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Shares as provided in
paragraph 2 hereof are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on Series A
Preferred Shares outstanding shall have been paid in full, the corporation
shall not:
(a) 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 Series A Preferred
Shares;
(b) 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 Series A
Preferred Shares, except dividends paid ratably on the Series A Preferred
Shares 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;
(c) redeem or 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 Series A Preferred
Shares, PROVIDED that the corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of
stock of the corporation ranking junior (both as to dividends and upon
liquidation, dissolution or winding-up) to the Series A Preferred Shares; or
(d) redeem or purchase or otherwise acquire for
consideration any Series A Preferred Shares, or any shares of stock ranking
on a parity with the Series A Preferred Shares, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(ii) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any shares of
stock of the corporation unless the
A-3
corporation could, under subparagraph (i) of this paragraph 4, purchase or
otherwise acquire such shares at such time and in such manner.
5. REACQUIRED SHARES. Any Series A Preferred Shares purchased or
otherwise acquired by the corporation in any manner whatsoever shall
constitute authorized but unissued shares and may be reissued as part of a
new series of shares by resolution or resolutions of the Board of Directors,
subject to the conditions and restrictions on issuance set forth herein, in
the Articles of Incorporation, or in any other Certificate of Designation,
Preferences and Rights creating a series of capital stock or as otherwise
required by law.
6. LIQUIDATION, DISSOLUTION OR WINDING-UP. Upon any liquidation,
dissolution or winding-up of the corporation, no distributions shall 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 Series A Preferred
Shares unless, prior thereto, the holders of Series A Preferred Shares shall
have received the greater of (i) $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, or (ii) an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to one
hundred (100) times the aggregate amount to be distributed per share to
holders of Class A Shares, 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 Series A Preferred Shares, except distributions made
ratably on the Series A Preferred Shares and all other such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding-up. In the event the
corporation shall at any time after May 20, 1999, declare or pay any dividend
on the Class A Shares payable in Class A Shares, or effect a subdivision or
combination or consolidation of the outstanding Class A Shares (by
reclassification or otherwise) into a greater or lesser number of Class A
Shares, then in each such case the aggregate amount to which holders of
Series A Preferred Shares were entitled immediately prior to such event under
clause (a)(ii) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of Class A
Shares outstanding immediately after such event and the denominator of which
is the number of Class A Shares that were outstanding immediately prior to
such event.
7. CONSOLIDATION, MERGER, EXCHANGE, ETC. In case the corporation
shall enter into any consolidation, merger, combination, statutory share
exchange or other transaction in which the Class A Shares are exchanged for
or changed into other stock or securities, money and/or any other property,
then in any such case the Series A Preferred Shares shall at the same time be
similarly exchanged or changed into an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to one hundred (100)
times the aggregate amount of stock, securities, money and/or any other
property (payable in kind), as the case may be, into which or for which each
Class A Share is changed or exchanged. In the event the corporation shall at
any time after May 20, 1999, declare or pay any dividend on Class A Shares
payable in Class A Shares, or effect a subdivision or combination or
consolidation of the outstanding Class A Shares (by reclassification or
otherwise) into a greater or lesser number of Class A Shares, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of Series A Preferred Shares shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number
of Class A Shares outstanding immediately after such event
A-4
and the denominator of which is the number of Class A Shares that were
outstanding immediately prior to such event.
8. NO REDEMPTION. The Series A Preferred Shares shall not be
redeemable.
9. RANK. The Series A Preferred Shares shall rank junior in terms of
dividend and liquidation, dissolution and winding-up rights to the
corporation's 11 3/8% Exchangeable Preferred Stock and all other series of
the corporation's Preferred Stock hereafter issued that specifically provide
that they shall rank senior to the Series A Preferred Shares.
10. FRACTIONAL SHARES. Series A Preferred Shares may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Series A Preferred Shares.
IN WITNESS WHEREOF, I have executed this Certificate of Designation,
Preferences and Rights this __ day of ___________, 1999.
________________________________________
▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
A-5
EXHIBIT B
[FORM OF CLASS A RIGHT CERTIFICATE]
Certificate No. R-_______ _______ Class A Rights
NOT EXERCISABLE AFTER MAY 20, 2009 OR SUCH EARLIER DATE AS THE BOARD OF
DIRECTORS ORDERS REDEMPTION OR EXCHANGE OF THE CLASS A RIGHTS. THE CLASS A
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.001 PER
CLASS A RIGHT (SUBJECT TO ADJUSTMENT) AND TO EXCHANGE ON THE TERMS SET FORTH
IN THE CLASS A RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE
CLASS A RIGHTS AGREEMENT, CLASS A RIGHTS THAT ARE OR WERE ACQUIRED OR
BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE CLASS A RIGHTS AGREEMENT)
MAY BECOME NULL AND VOID.
Class A Right Certificate
RURAL CELLULAR CORPORATION
This certifies that, ___________, or registered assigns, is the
registered owner of the number of Class A Rights set forth above, each of
which entitles the owner thereof, subject to the terms, provisions and
conditions of the Class A Share Rights Agreement dated as of April 30, 1999
(the "Class A Rights Agreement") between Rural Cellular Corporation, a
Minnesota corporation (the "Company"), and Norwest Bank Minnesota, National
Association (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Class A Rights
Agreement) and prior to 5:00 P.M. (Minneapolis, Minnesota time) on May 20,
2009 at the office or offices of the Rights Agent designated for such
purpose, or of its successor as Rights Agent, one one-hundredth of a fully
paid, nonassessable Series A Junior Participating Preferred Share, par value
$.01 per share (the "Series A Preferred Shares"), of the Company, at a
purchase price of $120.00 per one one-hundredth of a Series A Preferred Share
(the "Purchase Price"), upon presentation and surrender of this Class A Right
Certificate with the Form of Election to Purchase duly completed and
executed. The number of Class A Rights evidenced by this Class A Right
Certificate (and the number of one one-hundredths of a Series A Preferred
Share which may be purchased upon exercise thereof) set forth above, and the
Purchase Price set forth above, are, except for adjustments required pursuant
to the Class A Rights Agreement, the number and Purchase Price as of April
30, 1999, based on the Series A Preferred Shares as constituted at such date.
As provided in the Class A Rights Agreement, the Purchase Price and the
number of one one-hundredths of a Series A Preferred Share which may be
purchased upon the exercise of the
B-1
Class A Rights evidenced by this Class A Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Class A Right Certificate is subject to all of the terms,
provisions and conditions of the Class A Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by reference and
made a part hereof and which contains a full description of the Class A
Rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Class A Right
Certificates (which limitations of rights include the voiding of the Class A
Rights under certain circumstances specified in the Class A Rights
Agreement). Copies of the Class A Rights Agreement are on file with the
Secretary at the principal executive office of the Company and will be mailed
without charge by the Company or the Rights Agent to the holder of this
certificate promptly following receipt by the Company or the Rights Agent of
a written request therefor.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Class A Rights Agreement), any Class A Rights evidenced by
this Class A Right Certificate that are beneficially owned by an Acquiring
Person or an Associate or Affiliate of such Acquiring Person (as such terms
are defined in the Class A Rights Agreement) or were beneficially owned by
any Acquiring Person or an Associate or Affiliate of such Acquiring Person
after the Acquiring Person becomes an Acquiring Person shall be null and void
from and after the occurrence of such Section 11(a)(ii) Event, and any holder
of such Class A Rights shall thereafter have no right to exercise such Class
A Rights under any provision of the Class A Rights Agreement.
This Class A Right Certificate, with or without other Class A Right
Certificates, upon surrender at the office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Class A Right
Certificate or Class A Right Certificates of like tenor and date evidencing
Class A Rights entitling the holder to purchase a like aggregate number of
one one-hundredths of a Series A Preferred Share as the Class A Rights
evidenced by the Class A Right Certificate or Class A Right Certificates
surrendered then entitled such holder to purchase. If this Class A Right
Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Class A Right Certificate or Class A
Right Certificates for the number of Class A Rights not exercised.
Subject to the provisions of the Class A Rights Agreement, the Class A
Rights evidenced by this Class A Right Certificate (i) may, but are not
required to, be redeemed by the Company at a redemption price of $.001 per
Class A Right, subject to adjustment as provided in the Class A Rights
Agreement, payable in cash and (ii) may, but are not required to, be
exchanged by the Company in whole or in part for Class A Shares or other
shares of capital stock of the Company. The Board of Directors of the Company
and the Company shall not have any liability to any person as a result of the
redemption or exchange of the Class A Rights pursuant to the provisions of
the Class A Rights Agreement.
No fractional Series A Preferred Shares will be issued upon the exercise
of any Class A Right or Class A Rights evidenced hereby (other than
fractional shares which are integral multiples of one one-hundredth of a
Series A Preferred Share or, if a Class A Right shall then be exercisable for
a fraction other than one one-hundredth of a Series A Preferred Share,
integral
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multiples of that fraction, which may, at the election of the Company, be
evidenced by depositary receipts), if in lieu thereof a cash payment is made,
as provided in the Class A Rights Agreement.
No holder of this Class A Right Certificate, as such, shall be entitled
to vote or receive dividends or be deemed for any purpose the holder of the
Series A Preferred Shares or of any other securities of the Company which may
at any time be issuable on the exercise hereof, nor shall anything contained
in the Class A Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company or
any right to vote for the election of directors or upon any matter submitted
to shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Class A Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Class A
Right or Class A Rights evidenced by this Class A Right Certificate shall
have been exercised as provided in the Class A Rights Agreement.
This Class A Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the manual or facsimile signature of the proper officer of the
Company.
Dated: ______________________________
RURAL CELLULAR CORPORATION
By: _________________________________
Its: ________________________________
Countersigned:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By: _________________________________
Authorized Manual or
Facsimile Signature
B-3
[Form of Reverse Side of Class A Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Class A Right
Certificate.)
FOR VALUE RECEIVED _________________ hereby sells, assigns and transfers unto
_____________________________________________________________________________
(Please print name and address of transferee)
this Class A Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
______________________ Attorney, to transfer the within Class A Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: ______________________________
_____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States or by an eligible guarantor institution
(bank, stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program), pursuant to
Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as
amended.
B-4
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Class A Rights evidenced by this Class A Right Certificate
[ ] are
or
[ ] are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Class A Rights Agreement);
and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Class A Rights evidenced by this Class A Right Certificate from
any Person who, at any time that such Person beneficially owned such Class A
Rights, is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
_____________________________________
Signature
NOTICE
The signature on the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Class A Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
B-5
FORM OF ELECTION TO EXERCISE
(To be executed if holder desires to exercise
Class A Rights represented by the Class A Right
Certificate.)
TO: RURAL CELLULAR CORPORATION
The undersigned hereby irrevocably elects to exercise ___________
Class A Rights represented by this Class A Right Certificate to purchase the
Series A Preferred Shares issuable upon the exercise of such Class A Rights
(or such other securities of the Company or of any other person which may be
issuable upon exercise of the Class A Rights) and requests that certificates
for such shares be issued in the name of:
Please insert social security
or other identifying number _________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Please print name and address)
If such number of Class A Rights shall not be all the Class A Rights
evidenced by this Class A Right Certificate, a new Class A Right Certificate
for the balance remaining of such Class A Rights shall be registered in the
name of and delivered to:
Please insert social security
or other identifying number _________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Please print name and address)
Dated: ______________________________
_____________________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States or by an eligible guarantor institution
(bank, stockbroker, savings and loan association or credit union with
membership in an approved signature guarantee medallion program), pursuant to
Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as
amended.
B-6
CERTIFICATE
The undersigned hereby certifies (after due inquiry and to the best of
its knowledge) by checking the appropriate boxes that:
(1) the Class A Rights evidenced by this Class A Right Certificate
[ ] are
or
[ ] are not
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Class A Rights Agreement);
and
(2) the undersigned
[ ] did
or
[ ] did not
acquire the Class A Rights evidenced by this Class A Right Certificate from
any Person who, at any time that such Person beneficially owned such Class A
Rights, is or was an Acquiring Person or an Affiliate or Associate of an
Acquiring Person.
_____________________________________
Signature
NOTICE
The signature on the foregoing Election to Exercise and Certificate must
correspond to the name as written upon the face of this Class A Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
B-7
EXHIBIT C
SUMMARY OF RIGHTS TO PURCHASE
SERIES A PREFERRED SHARES
OF
RURAL CELLULAR CORPORATION
On April 30, 1999, the Board of Directors of Rural Cellular Corporation
(the "Company"), declared a dividend of one preferred share purchase right (a
"Class A Right") for each outstanding share of Class A Common Stock, par
value $.01 per share (the "Class A Shares"), of the Company. The dividend is
payable on May 20, 1999 (the "Record Date") to shareholders of record on that
date. A similar Class B Rights Agreement has been adopted for holders of the
Company's Class B Common Stock, par value $.01 per share (the "Class B
Shares").
Each Class A Right entitles the registered holder to purchase from the
Company one one-hundredth of a Series A Junior Participating Preferred Share,
par value $.01 per share (the "Series A Preferred Shares"), of the Company at
a price of $120.00 per one one-hundredth of a Series A Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Class A Rights are set forth in a Class A Share Rights Agreement (the "Class
A Rights Agreement"), dated as of April 30, 1999, between the Company and
Norwest Bank Minnesota, National Association, as Rights Agent (the "Rights
Agent").
Initially, the Class A Rights will attach to all certificates
representing Class A Shares then outstanding and no separate Class A Right
Certificates will be distributed. The Class A Rights will separate from the
Class A Shares and a Distribution Date for the Class A Rights will occur,
subject to certain exceptions, upon the earlier of:
(i) the close of business on the fifteenth day following a
public announcement that a person or group of affiliated or associated
persons has become an "Acquiring Person" (i.e., has become, subject to
certain exceptions, the beneficial owner of 15% or more of the outstanding
Class A Shares and Class B Shares, taken as a whole (collectively, the
"Common Shares"); or
(ii) the close of business on the fifteenth day following the
commencement or public announcement of a tender offer or exchange offer the
consummation of which would result in a person or group of affiliated or
associated persons becoming, subject to certain exceptions, the beneficial owner
of 15% or more of the outstanding Common Shares.
Until the Distribution Date,
(i) the Class A Rights will be evidenced by the Class A Share
certificates and will be transferred with and only with the Class A Shares,
C-1
(ii) new Class A Share certificates issued after the Record Date
upon transfer or new issuance of the Class A Shares will contain a notation
incorporating the Class A Rights Agreement by reference, and
(iii) the surrender for transfer of any Class A Share certificate,
even without such notation or a copy of this Summary of Class A Rights
attached thereto, will also constitute the transfer of the Class A Rights
associated with the Class A Shares represented by such certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Class A Rights ("Class A Right Certificates")
will be mailed to holders of record of the Class A Shares as of the close of
business on the Distribution Date and such separate Class A Right
Certificates alone will evidence the Class A Rights.
The Class A Rights are not exercisable until the Distribution Date. The
Class A Rights will expire on May 20, 2009, unless extended or earlier
redeemed or exchanged by the Company as described below.
The Purchase Price payable, and the number of Series A Preferred Shares
or other securities or property issuable, upon exercise of the Class A Rights
are subject to adjustment from time to time to prevent dilution:
(i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Series A Preferred Shares,
(ii) upon the grant to holders of the Series A Preferred Shares
of certain rights, options or warrants to subscribe for or purchase Series A
Preferred Shares or convertible securities at less than the then current
market price of the Series A Preferred Shares, or
(iii) upon the distribution to holders of the Series A Preferred
Shares of evidences of indebtedness or assets (excluding regular periodic
cash dividends or dividends payable in Series A Preferred Shares) or of
subscription rights or warrants (other than those described in clause (ii)
hereof).
The number of Series A Preferred Shares issuable upon the exercise of a
Class A Right is also subject to adjustment in the event of a dividend on
Class A Shares payable in Class A Shares, or a subdivision, combination or
consolidation of the Class A Shares.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Series A Preferred Shares will be issued
(other than fractional shares which are integral multiples of one
one-hundredth (subject to adjustment) of a Series A Preferred Share, which
may, at the election of the Company, be evidenced by depositary receipts) if
in lieu thereof a payment in cash is made based on the closing price
(pro-rated for the fraction) of the Series A Preferred Shares on the last
trading date prior to the date of exercise.
C-2
In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, proper provision shall be made so that
each holder of a Class A Right, other than Class A Rights that are or were
beneficially owned by the Acquiring Person (which will thereafter be void),
will thereafter have the right to receive upon exercise thereof at the then
current exercise price of the Class A Right that number of Class A Shares
having a market value of two times the exercise price of the Class A Right,
subject to certain possible adjustments. For example, if the exercise price
were $120, each holder of a Class A Right would be entitled to purchase $240
in market value of Class A Shares for $120.
In the event that, after the Distribution Date or within 15 days prior
thereto, the Company is acquired in certain mergers or other business
combination transactions or 50% or more of the assets or earning power of the
Company and its subsidiaries (taken as a whole) are sold after the
Distribution Date or within 15 days prior thereto in one transaction or a
series of related transactions, each holder of a Class A Right (other than
Class A Rights which have become void under the terms of the Class A Rights
Agreement) will thereafter have the right to receive, upon exercise thereof
at the then current exercise price of the Class A Right, that number of
common shares of the acquiring company (or, in certain cases, one of its
affiliates) having a market value of two times the exercise price of the
Class A Right. Thus, if the exercise price were $120, each holder of a Class
A Right would be entitled to purchase $240 in market value of common shares
of the acquiring company for $120.
In certain events specified in the Class A Rights Agreement, the Company
is permitted to temporarily suspend the exercisability of the Class A Rights.
At any time after a person or group of affiliated or associated persons
becomes an Acquiring Person (subject to certain exceptions) and prior to the
acquisition by a person or group of affiliated or associated persons of 50%
or more of the outstanding Common Shares, the Board of Directors of the
Company may exchange all or part of the Class A Rights (other than Class A
Rights which have become void under the terms of the Class A Rights
Agreement) at an exchange ratio of one Class A Share (or equivalent security)
per Class A Right, subject to adjustment.
At any time prior to the close of business on the date of a public
announcement that a person or group of affiliated or associated persons has
become an Acquiring Person, the Board of Directors of the Company may redeem
the Class A Rights in whole, but not in part, at a price of $.001 per Class A
Right, subject to adjustment (the "Redemption Price"), payable in cash. The
redemption of the Class A Rights may be made effective at such time, on such
basis and with such conditions as the Board of Directors in its sole
discretion may establish. The Board of Directors and the Company shall not
have any liability to any person as a result of the redemption or exchange of
the Class A Rights pursuant to the provisions of the Class A Rights Agreement.
The terms of the Class A Rights may be amended by the Board of Directors
of the Company, subject to certain limitations after the Distribution Date,
without the consent of the holders of the Class A Rights, including an
amendment prior to the date a person or group of affiliated or associated
persons becomes an Acquiring Person, to lower the 15% threshold for
C-3
exercisability of the Class A Rights to not less than the greater of (i) the
sum of .001% and the largest percentage of the outstanding Common Shares then
known by the Company to be beneficially owned by any person or group of
affiliated or associated persons (subject to certain exceptions) or (ii) 10%.
Until a Class A Right is exercised, the holder thereof, as such, will
have no rights as a shareholder of the Company, including, without
limitation, the right to vote or to receive dividends.
A copy of the Class A Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration Statement
on Form 8-A dated May 19, 1999.
A copy of the Class A Rights Agreement is available free of charge from
the Company by contacting the Secretary at Rural Cellular Corporation, P. O.
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. This summary description of the
Class A Rights does not purport to be complete and is qualified in its
entirety by reference to the Class A Rights Agreement, which is hereby
incorporated herein by reference.
C-4
