EXHIBIT 99.1
EXHIBIT A
RIGHTS AGREEMENT
dated as of
October 18, 2002
between
FOG CUTTER CAPITAL GROUP INC.
and
THE BANK OF NEW YORK
as Rights Agent
TABLE OF CONTENTS
Section 1. Certain Definitions............................................................... 1
Section 2. Appointment of Rights Agent....................................................... 3
Section 3. Issue of Right Certificates....................................................... 4
Section 4. Form of Right Certificate......................................................... 5
Section 5. Countersignature and Registration................................................. 5
Section 6. Transfer, Split-up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificate.................. ......... 6
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..................... 6
Section 8. Cancellation of Right Certificates................................................ 8
Section 9. Reservation and Availability of Common Shares..................................... 8
Section 10. Common Shares Record Date......................................................... 9
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights....... 9
Section 12. Certificate of Adjusted Purchase Price or Number of Shares........................ 14
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.............. 14
Section 14. Fractional Rights and Fractional Shares........................................... 16
Section 15. Rights of Action.................................................................. 17
Section 16. Agreement of Right Holders........................................................ 17
Section 17. Right Certificate Holder Not Deemed a Stockholder................................. 17
Section 18. Concerning the Rights Agent....................................................... 18
Section 19. Merger or Consolidation or Change of Name of Rights Agent......................... 18
Section 20. Duties of Rights Agent............................................................ 19
Section 21. Change of Rights Agent............................................................ 20
Section 22. Issuance of New Right Certificates................................................ 21
Section 23. Redemption and Termination........................................................ 21
Section 24. Exchange.......................................................................... 22
Section 25. Notice of Certain Events.......................................................... 22
Section 26. Notices........................................................................... 23
Section 27. Supplements and Amendments........................................................ 24
Section 28. Determination and Actions by the Board of Directors of the Corporation, Etc....... 24
Section 29. Successors........................................................................ 24
Section 30. Benefits of This Agreement........................................................ 24
Section 31. Severability...................................................................... 24
Section 32. Governing Law..................................................................... 24
Section 33. Counterparts...................................................................... 25
Section 34. Descriptive Headings.............................................................. 25
DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person...................................... Section 1(a)
Act................................................... Section 1(b)
Adjustment Shares..................................... Section 11(a)(ii)
Affiliate............................................. Section 1(c)
Agreement............................................. Preface
Beneficial Owner...................................... Section 1(d)
beneficially own...................................... Section 1(d)
Board of Directors.................................... Section 1(e)
Business Day.......................................... Section 1(f)
common share equivalent............................... Section 11(a)(iii)
Close of business..................................... Section 1
Common Shares......................................... Section 1(h)
Corporation........................................... Preface
Current per share market price........................ Section 11(d)
Current Value......................................... Section 11(a)(iii)
Distribution Date..................................... Section 1(i)
equivalent common shares.............................. Section 11(b)
Exchange Act.......................................... Section 1(j)
Exchange Ratio........................................ Section 24(a)
Final Expiration Date................................. Section 7(a)
Permitted Offer....................................... Section 1
Person................................................ Section 1(m)
Principal Party....................................... Section 13(b)
Proposing Person...................................... Section 1(n)
Purchase Price........................................ Section 4(a)
Record Date........................................... Preface
Redemption Date....................................... Section 7(a)
Redemption Price...................................... Section 23(a)
Right................................................. Preface
Right Certificate..................................... Section 3(a)
Rights Agent.......................................... Preface
Rights Agreement...................................... Section 3(c)
Section 11(a)(ii) Event............................... Section 1(p)
Section 13 Event...................................... Section 1(q)
Security.............................................. Section 11(d)
Shares Acquisition Date............................... Section 1(r)
Subsidiary............................................ Section 1(s)
Substitution Period................................... Section 11(a)(iii)
Summary of Rights..................................... Section 3(b)
then outstanding...................................... Section 1(d)
Trading Day........................................... Section 11(d)
Transfer.............................................. Section 1(t)
Triggering Event...................................... Section 1(u)
Voting securities..................................... Section 13(a)
ii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of October 18, 2002 (the "Agreement"), between
FOG CUTTER CAPITAL GROUP INC., a Maryland corporation (the "Corporation") and
THE BANK OF NEW YORK, a New York banking corporation (the "Rights Agent").
The Board of Directors of the Corporation has authorized and declared a
dividend of one right (a "Right") for each Common Share (as hereinafter defined)
of the Corporation outstanding at the close of business on October 28, 2002 (the
"Record Date"), each Right representing the right to purchase one one-tenth of a
Common Share, upon the terms and subject to the conditions herein set forth, and
has further authorized and directed the issuance of one Right with respect to
each Common Share that shall become outstanding between the Record Date and the
earliest of the Distribution Date, the Redemption Date or Final Expiration Date
(as such terms are hereinafter defined); provided, however, that Rights may be
issued with respect to Common Shares that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date and the Final
Expiration Date in accordance with the provisions of Section 22 of this
Agreement.
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 (i) any Person who or which, together
with all Affiliates of such Person, shall be the Beneficial Owner of 5% or more
of the then outstanding Common Shares (other than as a result of a Permitted
Offer (as hereinafter defined)) or was such a Beneficial Owner at any time after
the date hereof, whether or not such person continues to be the Beneficial Owner
of 5% or more of the then outstanding Common Shares and (ii) any Person who or
which, together with all Affiliates of such Person, was the Beneficial Owner of
5% or more of the then outstanding Common Shares at any time prior to the date
hereof, and thereafter such Beneficial Owner's ownership interest increases by
1% or more of the then outstanding Common Shares (other than as a result of a
Permitted Offer). Notwithstanding the foregoing, (A) the term "Acquiring Person"
shall not include (i) the Corporation, (ii) any Subsidiary of the Corporation,
(iii) any employee benefit plan (including options granted thereunder) of the
Corporation or of any Subsidiary of the Corporation, or (iv) any Person or
entity organized, appointed or established by the Corporation for or pursuant to
the terms of any such plan (including the Fog Cutter Long Term Vesting Trust),
and (B) no Person shall become an "Acquiring Person":
(i) as a result of the acquisition of Common Shares by the
Corporation which, by reducing the number of Common Shares outstanding,
increases the proportional number of shares beneficially owned by such Person
together with all Affiliates of such Person; provided that if (1) a Person would
be or become an Acquiring Person (but for the operation of this subclause (i))
as a result of the acquisition of Common Shares by the Corporation, and (2)
after such share acquisition by the Corporation, such Person, or an Affiliate of
such Person, becomes the Beneficial Owner of any additional Common Shares, then
such Person shall be deemed an Acquiring Person; or
(ii) if the Board of Directors determines in good faith that a
Person who would otherwise be an "Acquiring Person" has become such
inadvertently, and such Person (A) does not attempt to exercise any control over
the business affairs or management of the Corporation, including by means of a
proxy solicitation, and (B) is able to rescind a sufficient number of Common
Shares so that such Person not be an "Acquiring Person", then such Person shall
not be deemed an "Acquiring Person" for any purposes of this Agreement.
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(b) "Act" shall mean the Securities Act of 1933, as amended and as in
effect on the date of this Agreement.
(c) "Affiliate" shall have the meaning ascribed to such term in the
Internal Revenue Code of 1986, as amended from time to time.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates
beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates has (A)
the right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or otherwise, provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates until
such tendered securities are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or understanding; provided,
however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations promulgated
under the Exchange Act and (2) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate thereof) with which such Person (or any of such
Person's Affiliates) has any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling group members
with respect to a bona fide offering of securities) relating to the acquisition,
holding, voting (except to the extent contemplated by the proviso to Section
1(d)(ii)(B)) or disposing of any securities of the Corporation.
Notwithstanding anything in this definition of Beneficial Ownership
to the contrary, the phrase "then outstanding", when used with reference to a
Person's Beneficial Ownership of securities of the Corporation, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(e) "Board of Directors" shall mean the Board of Directors of the
Corporation from time to time.
(f) "Business Day" shall mean any day other than a Saturday, Sunday,
federal holiday or day on which commercial banks are authorized or required to
close in New York City.
(g) "Close of business" on any given date shall mean 5:00 p.m., New York
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 p.m., New York time, on the next succeeding Business Day.
(h) "Common Shares" when used with reference to the Corporation shall mean
the shares of Common Stock, par value $0.0001, of the Corporation or, in the
event of a subdivision, combination or consolidation with respect to such shares
of Common Stock, the shares of Common Stock resulting from such subdivision,
combination or consolidation. "Common Shares" when used with reference to any
Person other than the Corporation shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person or, if such other
Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.
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(i) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(j) "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
(k) "Final Expiration Date" shall have the meaning set forth in Section 7
hereof.
(l) "Permitted Offer" shall mean (i) a tender or exchange offer which is
for all outstanding Common Shares at a price and on terms determined, prior to
the purchase of shares under such tender or exchange offer, by the Board of
Directors to be adequate (taking into account all factors that such directors
deem relevant) and otherwise in the best interests of the Corporation and its
stockholders (other than the Person or any Affiliate thereof on whose basis the
offer is being made) taking into account all factors that such directors may
deem relevant or (ii) the offer and sale of Common Shares, preferred stock,
subordinated debt or other debt securities, securities convertible into equity
of the Corporation or a Subsidiary, warrants, options or derivative securities
by the Corporation or one of its Subsidiaries or Affiliates at a price and on
terms determined by the Board of Directors to be reasonable in their business
judgment (taking into account all factors that such directors deem relevant,
including the impact on the Corporation's net operating loss carry forwards) and
otherwise in the best interests of the Corporation and its stockholders taking
into account all factors that such directors may deem relevant, including the
impact on the Corporation's net operating loss carry forwards.
(m) "Person" shall mean any individual, firm, partnership, corporation,
trust, association, joint venture or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(n) "Proposing Person" means any Person proposing or attempting to effect
a business combination, tender offer, exchange offer or similar transaction with
the Corporation or its stockholders, including, without limitation, a merger,
tender offer or exchange offer, sale of substantially all of the Corporation's
assets, or liquidation of the Corporation's assets.
(o) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(p) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
(q) "Section 13 Event" shall mean any event described in clause (x), (y)
or (z) of Section 13(a) hereof.
(r) "Shares Acquisition Date" shall mean the first date that an Acquiring
Person has become such; provided, that, if such Person is determined not to have
become an Acquiring Person pursuant to Section 1(a)(ii) hereof, then no Shares
Acquisition Date shall be deemed to have occurred.
(s) "Subsidiary" of any Person shall mean any corporation or other Person
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
(t) "Transfer" shall mean any sale, assignment, transfer or other
disposition.
(u) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Corporation hereby appoints
the Rights Agent to act as agent for the Corporation in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. The Corporation may from time to time appoint such co-Rights Agents
as it may deem necessary or desirable upon ten (10) days prior written notice to
the Rights Agent. The Rights Agent shall have no duty to supervise, and shall in
no event be liable for, the acts or omissions of any such co-Rights Agent.
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Section 3. ISSUE OF RIGHT CERTIFICATES. (a)(a) Unless otherwise determined
by the Corporation's Board of Directors until the earlier of (i) the Shares
Acquisition Date or (ii) the close of business on the tenth day (or such later
date as may be determined by action of the Corporation's Board of Directors)
after the date of the commencement by any Person (other than the Corporation,
any Subsidiary of the Corporation, any employee benefit plan of the Corporation
or of any Subsidiary of the Corporation or any Person or entity organized,
appointed or established by the Corporation for or pursuant to the terms of such
plan) of a tender or exchange offer the consummation of which would result in
any Person becoming an Acquiring Person (including, in the case of both (i) and
(ii), any such date which is after the date of this Agreement and prior to the
issuance of the Rights, the earlier of such dates being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Rights Certificates will be transferable only in connection
with the transfer of the underlying Common Shares (including a transfer to the
Corporation); PROVIDED, HOWEVER, that if a tender offer is terminated prior to
the occurrence of a Distribution Date, then no Distribution Date shall occur as
a result of such tender offer. The Corporation shall give the Rights Agent
prompt written notice of the Distribution Date. Unless new Common Shares are
immediately delivered in lieu of Rights Certificates as provided herein, as soon
as practicable after the Distribution Date and receipt of written notice of the
Distribution Date from the Corporation, the Corporation will prepare and
execute, the Rights Agent will countersign and the Corporation will send or
cause to be sent by first-class, postage-prepaid mail, to each record holder of
Common Shares as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Corporation, a Right
Certificate, substantially in the form of EXHIBIT A hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held. Unless
otherwise determined by the Corporation's Board of Directors, as of and after
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) As promptly as practicable following the Record Date, the Corporation
will send a copy of a Summary of Rights to Purchase Common Shares in the form of
EXHIBIT B hereto (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of Common Shares as of the close of business on the
Record Date, at the address of such holder shown on the records of the
Corporation and the Corporation will attempt to contact any Beneficial Owners of
5% or more of the Common Shares. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto. Unless otherwise
determined by the Corporation's Board of Directors, until the Distribution Date
(or the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on the
Record Date shall also constitute the transfer of the Rights associated with
such Common Shares.
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, and the Redemption Date or the Final Expiration Date shall be
deemed also to be certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in a Rights Agreement between Fog
Cutter Capital Group Inc. and The Bank of New York, dated as of
October 18, 2002 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of Fog Cutter Capital Group
Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. Fog Cutter
Capital Group Inc. will mail to the holder of this certificate a
copy of the Rights Agreement without charge after receipt of a
written request therefor. Under certain circumstances set forth in
the Rights Agreement, Rights issued to, or held by, any Person who
is, was or becomes an Acquiring Person or an Affiliate thereof (as
defined in the Rights Agreement) and certain related persons,
whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
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With respect to such certificates containing the foregoing legend, until
the Distribution Date, unless otherwise determined by the Corporation's Board of
Directors, the Rights associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby. In the event that
the Corporation purchases or acquires any Common Shares after the Record Date
but prior to the Distribution Date, any Rights associated with such Common
Shares shall be deemed canceled and retired so that the Corporation shall not be
entitled to exercise any Rights associated with the Common Shares which are no
longer outstanding.
Section 4. FORM OF RIGHT CERTIFICATE. (a) (a) The Right Certificates (and
the forms of election to purchase and of assignment to be printed on the reverse
thereof) shall be substantially in the form set forth in EXHIBIT A hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Corporation may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed, or to conform to usage. The Rights
Certificates shall be in a machine printable format. Subject to the provisions
of Section 11 and Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of tenths of a Common Share as shall be
set forth therein at the price per Common Share set forth therein (the "Purchase
Price"), but the amount and type of securities purchasable upon the exercise of
each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights which are null and void pursuant to Section 7(e)
of this Agreement and any Right Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Right Certificate and the
Rights represented hereby are null and void.
On becoming aware of any certificates that should be so legended, the
Corporation shall instruct the Rights Agent in writing of the Rights which
should be so legended and shall supply the Rights Agent with such legended Right
Certificates.
The provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any such Right Certificate.
Section 5. COUNTERSIGNATURE AND REGISTRATION. The Right Certificates shall
be executed on behalf of the Corporation by its Chairman of the Board, its Chief
Executive Officer, its President, any of its Vice Presidents, or its Treasurer,
either manually or by facsimile signature, shall have affixed thereto the
Corporation's seal or a facsimile thereof (if any), and shall be attested by the
Secretary or an Assistant Secretary of the Corporation, either manually or by
facsimile signature. The Right Certificates shall be countersigned by the Rights
Agent and shall not be valid for any purpose unless so countersigned. In case
any officer of the Corporation who shall have signed any of the Right
Certificates shall cease to be such officer of the Corporation before
countersignature by the Rights Agent and issuance and delivery by the
Corporation, such Right Certificates may nevertheless be countersigned by the
Rights Agent and issued and delivered by the Corporation with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Corporation; and any Right Certificate may be signed on
behalf of the Corporation by any person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Corporation to sign
such Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its office
5
designated as the appropriate place for surrender of such Right Certificate or
transfer, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on its face by
each of the Right Certificates and the certificate number and the date of each
of the Right Certificates.
Section 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATE. Subject to
the provisions of Section 4(b), Section 7(e) and Section 14 hereof and the
provisions of Section 7(a) relating to automatic exercise and the delivery of
new Common Shares in lieu of Rights Certificates, 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 Right
Certificate or Right Certificates may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of Common Shares (or, following a
Section 13 Event, other securities, as the case may be) as the Right Certificate
or Right Certificates surrendered then entitled such holder (or former holder in
the case of a transfer) to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split up,
combined or exchanged at the office of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Corporation shall be obligated to take
any action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
thereof as the Corporation shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 4(b), Section 7(e) and Section 14 hereof and the
provisions of Section 7(a) relating to automatic exercise and the delivery of
new Common Shares in lieu of Rights Certificates, countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Corporation may require payment by the holders of
Rights of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
Upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Corporation's request,
reimbursement to the Corporation and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate, if mutilated, the Corporation will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) (a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price for the total
number of Common Shares (or other securities, as the case may be) as to which
such surrendered Rights are exercised, at or prior to the earliest of (x) the
close of business on October 28, 2012 (the "Final Expiration Date"), or (y) the
time at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date"); provided, however, in the event that a Person has become an
Acquiring Person on the Shares Acquisition Date, (1) the Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(e)
and Section 11(a)(ii) hereof) shall be deemed to be automatically exercised on
the Shares Acquisitions Date, (2) each Holder will be entitled to receive Common
Shares of the Corporation at an exchange ratio of one Common Share (or a lesser
ratio as determined by the Board of Directors, if the Corporation does not have
sufficient authorized and unreserved Common Shares) per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"), in lieu of paying the Purchase Price and receiving
the Common Shares otherwise provided herein, and (3) no Rights Certificates will
be distributed in respect thereof. Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Corporation, any Subsidiary of the Corporation, any
employee benefit plan
6
of the Corporation or any such Subsidiary, any entity holding Common Shares for
or pursuant to the terms of any such plan or any trustee, administrator or
fiduciary of such a plan), together with all Affiliates of such Person, becomes
the Beneficial Owner of 50% or more of the Common Shares then outstanding.
Immediately upon the action of the Board of Directors of the Corporation
ordering the exchange of any Rights pursuant to the proviso to the first
sentence of this Section 7 and without any further action and without any
notice, the right to exercise such rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of Common
Shares equal to the number of such rights held by such holder multiplied by the
Exchange Ratio. The Corporation 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 Corporation promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e)) held by each holder of Rights. The Corporation, in
its sole discretion, may elect to deposit the Common Shares issuable upon
exercise of the Rights hereunder into a depositary, and requisition from the
depositary agent depositary receipts representing such number of Common Shares
as are to be delivered (in which case certificates for the Common Shares
represented by such receipts shall be deposited by the transfer agent with the
depositary agent).
(b) THE PURCHASE PRICE (THE "PURCHASE PRICE") PER WHOLE COMMON SHARE AT
WHICH A HOLDER OF RIGHTS MAY PURCHASE COMMON SHARES OR (SUBJECT TO SECTION 14
HEREOF) FRACTIONS THEREOF UPON EXERCISE OF SUCH RIGHTS SHALL INITIALLY BE
[$__.00], SHALL BE SUBJECT TO ADJUSTMENT FROM TIME TO TIME AS PROVIDED IN
SECTIONS 11 AND 13(A) HEREOF, AND SHALL BE PAYABLE IN ACCORDANCE WITH PARAGRAPH
(C) BELOW.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for the Common Shares (or other
securities, as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 6 hereof by certified check, cashier's
check or money order payable to the order of the Corporation, the Rights Agent
shall thereupon promptly (i) (A) requisition from any transfer agent of the
Common Shares certificates for the number of Common Shares to be purchased and
the Corporation hereby irrevocably authorizes its transfer agent to comply with
all such requests, or (B) if the Corporation, in its sole discretion, shall have
elected to deposit the Common Shares issuable upon exercise of the Rights
hereunder into a depositary, requisition from the depositary agent depositary
receipts representing such number of Common Shares as are to be purchased (in
which case certificates for the Common Shares represented by such receipts shall
be deposited by the transfer agent with the depositary agent) and the
Corporation will direct the depositary agent to comply with such requests, (ii)
when appropriate, requisition from the Corporation the amount of cash to be paid
in lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event that the Corporation is obligated to issue other securities of the
Corporation pursuant to Section 11(a) hereof, the Corporation will make all
arrangements necessary so that such other securities are available for
distribution by the Rights Agent, if and when appropriate.
In addition, in the case of an exercise of the Rights by a holder pursuant
to Section 11(a)(ii), the Rights Agent shall return such Right Certificate to
the registered holder thereof after imprinting, stamping or otherwise indicating
thereon that the rights represented by such Right Certificate no longer include
the rights provided by Section 11(a)(ii) of the Rights Agreement and if less
than all the Rights represented by such Right Certificate were so exercised, the
Rights Agent shall indicate on the Right Certificate the number of Rights
represented thereby which continue to include the rights provided by Section
11(a)(ii).
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right Certificate or to his duly
authorized assigns,
7
subject to the provisions of Section 14 hereof, or the Rights Agent shall place
an appropriate notation on the Right Certificate with respect to those Rights
exercised.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any Affiliate thereof) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any Affiliate thereof) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has a continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The
Corporation shall use all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Right Certificates or other Person as a result of its
failure to make any determinations with respect to an Acquiring Person or its
Affiliates or transferees hereunder. The Rights Agent will endeavor to comply
with the provisions hereof to the extent it has received instructions from the
Corporation concerning such matters.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Corporation shall be obligated to undertake any action
with respect to a registered holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(x)(i) completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates thereof as the
Corporation shall reasonably request or (y) in the case of an automatic exercise
pursuant to Section 7(a), complied with the method for exchanging Rights for
Common Shares provided in such Section 7(a).
Section 8. CANCELLATION OF RIGHT CERTIFICATES. All Right Certificates
surrendered for the purpose of exercise (other than an exercise pursuant to
Section 11(a)(ii)), transfer, split up, combination or exchange shall, if
surrendered to the Corporation 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 Right Certificates shall be issued
in lieu thereof except as expressly permitted by any of the provisions of this
Rights Agreement. The Corporation shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Corporation otherwise
than upon the exercise thereof. The Rights Agent shall deliver all canceled
Right Certificates to the Corporation.
Section 9. RESERVATION AND AVAILABILITY OF COMMON SHARES. The Corporation
covenants and agrees that at all times after the occurrence of a Section
11(a)(ii) Event it will, to the extent reasonably practicable, cause to be
reserved and kept available out of its authorized and unissued Common Shares
(and/or other securities), or any authorized and issued Common Shares (and/or
other securities) held in its treasury, the number of Common Shares (or other
securities, as the case may be) that will be sufficient to permit the exercise
in full of all outstanding Rights pursuant to this Agreement.
So long as the Common Shares (or other securities, as the case may be)
issuable upon the exercise of the Rights may be listed on any national
securities exchange, or admitted for quotation on any on a quotation system
sponsored by a registrant national securities association, the Corporation shall
use its best efforts to cause, from and after such time as the Rights become
exercisable, all shares reserved for such issuance to be listed on such exchange
or admitted for quotation on such system, as the case may be upon official
notice of issuance upon such exercise.
The Corporation covenants and agrees that it will take all such action as
may be necessary to ensure that all Common Shares (or other securities, as the
case may be) delivered upon exercise of Rights shall, at
8
the time of delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and non-assessable shares or securities.
The Corporation further covenants and agrees that it will pay when due and
payable any and all U.S. federal and state transfer taxes and charges which may
be payable in respect of the issuance or delivery of the Right Certificates or
of any Common Shares (or other securities, as the case may be) upon the exercise
of Rights. The Corporation shall not, however, be required to pay any transfer
tax which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of certificates
or depositary receipts for the Common Shares (or other securities, as the case
may be) in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise, or to issue or to
deliver any certificates or depositary receipts for Common Shares (or other
securities, as the case may be) upon the exercise of any Rights, until any such
tax shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Corporation's reasonable satisfaction that no such tax is due.
The Corporation shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date (or, if required by law, at
such earlier time following the Distribution Date as so required), a
registration statement under the Act, with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act and the rules and regulations
thereunder) until the date of the expiration of the rights provided by Section
11(a)(ii). The Corporation will also take such action as may be appropriate
under the blue sky laws of the various states.
Unless otherwise instructed by the Corporation in writing, the Rights
Agent may assume that any Right exercised is permitted to be exercised under
applicable law and shall have no liability for acting in reliance upon such
assumption.
Section 10. COMMON SHARES RECORD DATE. Each Person in whose name any
certificate for Common Shares (or other securities, as the case may be) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the Common Shares (or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such 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 Common Shares (or other securities, as the case
may be) transfer books of the Corporation 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 Common Shares (or
other securities, as the case may be) transfer books of the Corporation are
open.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Corporation shall at any time after the date of
this Agreement (A) declare a dividend on the Common Shares payable in Common
Shares, (B) subdivide the outstanding Common Shares, (C) combine the outstanding
Common Shares into a smaller number of Common Shares or (D) issue any shares of
its capital stock in a reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, (x) 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 (y) the number
and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Common Shares transfer books of the Corporation were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided,
9
however, that in no event shall the consideration to be paid upon the exercise
of any Rights be less than the aggregate par value of the shares of capital
stock of the Corporation issuable upon exercise of such Rights. Notwithstanding
anything to the contrary in the preceding sentence, in the event that any time
after the date of this Agreement and prior to the Distribution Date the
Corporation shall take any action described in clause (A), (B) or (C) of the
preceding sentence, then in any such case no adjustment shall be made pursuant
to the immediately preceding sentence and (i) the number of Common Shares
receivable after such event upon exercise of any Right shall be adjusted by
multiplying the number of Common Shares so receivable immediately prior to such
event by a fraction, the numerator of which shall be the number of Common Shares
outstanding immediately prior to such event and the denominator of which shall
be the number of Common Shares outstanding immediately after such event (except
that in the case of the declaration of a stock dividend the denominator shall be
the number of shares outstanding immediately after payment of such dividend,
excluding any shares issued after the record date other than in connection with
such dividend), and (ii) each Common Share outstanding immediately after such
event shall have associated with respect to it that number of Rights that each
Common Share outstanding immediately prior to such event had associated with
respect to it. 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) In the event any Person, alone or together with its
Affiliates, shall become an Acquiring Person, then proper provision shall be
made so that each holder of a Right (except as provided below and in Section
7(e) hereof) thereafter be entitled to receive, upon exercise thereof at a price
equal to the then current Purchase Price for a whole Common Share, in accordance
with the terms of this Agreement, such number of Common Shares as shall equal
the result obtained by (x) multiplying the then current Purchase Price per whole
Common Share by the number of one-tenths of a Common Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event (e.g., if a Right was exercisable immediately prior to a Section 11(a)(ii)
Event for two one-tenths of a share of Common Stock and the Purchase Price per
whole Common Share was $10, the product would be $20), and dividing that product
by (y) 50% of the then current per share market price of the Common Shares
(determined pursuant to Section 11(d) hereof) on the date of such first
occurrence (such number of shares being referred to as the "Adjustment Shares");
provided, however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii).
(iii) In the event that the number of Common Shares that are
authorized by the Corporation's certificate of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing Section 11(a)(ii), the Corporation shall (A) determine the excess
of (1) the value of the Adjustment Shares based on the "current per share market
price" determined pursuant to Section 11(d) (the "Current Value") over (2) the
Purchase Price (such excess being hereinafter referred to as the "Spread"), and
(B) in respect of each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash, (2)
a reduction in the Purchase Price, (3) other equity securities of the
Corporation (including, without limitation, shares, or units of shares, of
preferred stock that the Board of Directors of the Corporation has determined to
have the same value as the Common Shares (such shares of preferred stock being
referred to herein as "common share equivalents")), (4) debt securities of the
Corporation, (5) other assets or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate value has been
determined by the Board of Directors of the Corporation based upon the advice of
a nationally recognized investment banking firm selected by the Board of
Directors of the Corporation; PROVIDED, HOWEVER, that if the Corporation shall
not have made adequate provision to deliver value pursuant to clause (B) above
within 30 days following the first occurrence of a Section 11(a)(ii) Event, then
the Corporation shall be obligated to, deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, Common Shares
(to the extent available) and, if necessary, cash, that in the aggregate are
equal to the Spread. If the Board of Directors of the Corporation shall
determine in good faith that it is likely that sufficient additional shares of
Common Shares could be authorized for issuance upon exercise in full of the
Rights, the 30-day period set forth above may be extended to the extent
necessary, but not to more then 120 days following the first occurrence of a
Section 11(a)(ii) Trigger Date so that Corporation may seek stockholder approval
for the authorization of such additional shares of Common Shares (such period,
as it may be extended, being hereinafter referred to as the "Substitution
Period"). To the extent the Corporation determines that
10
some action need be taken pursuant to the first and/or second sentences of this
Section 11(a) (iii), the Corporation (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights and (y)
may suspend the exercisability of the Rights until the expiration of the
Substitution Period to seek any authorization of additional Common Shares and/or
to decide the appropriate form of distribution to be made pursuant to such first
sentence and to determine the value thereof. In the event of any such
suspension, the Corporation shall deliver notice to the Rights Agent and issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as notice to the Rights Agent and a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the Common Shares shall be the current
market price (as determined pursuant to Section 11(d) hereof) per Common Share
on the date of the first occurrence of a Section 11(a)(ii) Trigger Date and the
value of any common share equivalent shall be deemed to have the same value as a
Common Share on such date.
(b) In case the Corporation shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of Common
Shares entitling them (for a period expiring within 45 calendar days after such
record date) to subscribe for or purchase Common Shares (or shares having the
same rights and privileges as the Common Shares ("equivalent common shares")) or
securities convertible into Common Shares or equivalent common shares at a price
per Common Share or equivalent common share (or having a conversion price per
share, if a security convertible into Common Shares or equivalent common shares)
less than the then current per share market price of the Common 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 Common Shares
outstanding on such record date plus the number of Common Shares which the
aggregate offering price of the total number of Common Shares and/or equivalent
common 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 Common
Shares outstanding on such record date plus the number of additional Common
Shares and/or equivalent common shares to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of Rights be less than the aggregate
par value of the shares of capital stock of the Corporation issuable upon
exercise of such Rights. 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 determined in good faith by the Board of
Directors, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent. Common Shares owned by or
held for the account of the Corporation 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, options
or warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) In case the Corporation shall fix a record date for the making of a
distribution to all holders of the Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Common 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 (as determined pursuant
to Section 11(d) hereof) of the Common Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Common Share and the denominator of which shall be such
current per share market price of the Common Shares; provided, however, that in
no event shall the consideration to be paid upon the exercise of any Rights be
less than the aggregate par value of the shares of capital stock of the
Corporation to be issued upon exercise of such Rights. 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 which would then be in effect if such record date had not
been fixed.
11
(d) 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)), including, without limitation the Common Shares, on any date shall be
deemed to be the average of the daily closing prices per share of such Security
for the thirty (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 shares of such Security or
securities convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of thirty (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 by the National Association of Securities
Dealers, Inc. Automated Quotations System ("NASDAQ") or such other system then
in use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board
of Directors. If on any such date no such market maker is making a market in the
Security, the fair value of the Security on such date as determined in good
faith by the Board of Directors shall be used. 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.
(e) Notwithstanding anything herein to the contrary (except the last
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
ten-thousandth of a Common Share or 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 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment or
(ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(i) or
13(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Corporation other than Common
Shares, thereafter the number of other shares so receivable upon exercise of any
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 Common
Shares contained in Section 11(a) through (c), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Common Shares shall apply on
like terms to any such other shares.
(g) All Rights originally issued by the Corporation subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
(h) Unless the Corporation 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 Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price that number of Common Shares
(calculated to the nearest ten-thousandth of a Common Share) obtained by (i)
multiplying (x) the number of Common Shares covered by a Right immediately prior
to this
12
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 Corporation may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of Common Shares purchasable upon the exercise of a Right. Each of
the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of Common Shares for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to the adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Corporation shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made. This record date may be
the date on which the Purchase Price is adjusted or any day thereafter, but, if
the Right Certificates have been issued, shall be at least ten (10) days later
than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Corporation shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Corporation, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if required
by the Corporation, new Right Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment. Right Certificates so to
be distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of 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 Common Shares issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of Common Shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the aggregate par value, if any, of the number of Common
Shares or other securities issuable in respect of the Purchase Price upon
exercise of a Right, the Corporation shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue such number of fully paid and non-assessable Common
Shares or other securities at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Corporation may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date the Common
Shares or other securities of the Corporation, if any, issuable upon such
exercise over and above the Common Shares or other securities of the
Corporation, if any, issuable upon exercise on the basis of the Purchase Price
in effect prior to such adjustment; provided, however, the Corporation shall
deliver to such holder a due xxxx or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
(m) Notwithstanding anything in this Section 11 to the contrary, the
Corporation shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustment expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that (i) any consolidation or subdivision of the Common Shares, (ii)
issuance wholly for cash of Common Shares at less than the current market price,
(iii) issuance wholly for cash of Common Shares or securities which by their
terms are convertible into or exchangeable for Common Shares, (iv) stock
dividends, or (v) issuance of rights, options or warrants referred to in this
Section 11, hereafter made by the Corporation to holders of its Common Shares
shall not be taxable to such shareholders.
13
(n) The Corporation covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Corporation in a transaction which does not violate Section 11
(Offer) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Corporation in a transaction which does not violate Section 11
(Offer) hereof), or (iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or of its Subsidiaries in one or more
transactions each of which does not violate Section 11 (Offer) hereof), if (x)
at the time of or immediately after such consolidation, merger, sale or transfer
there are any charter or by-law provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect or other actions
taken, which would materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the shareholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates. The Corporation shall not
consummate any such consolidation, merger, sale or transfer unless prior thereto
the Corporation and such other Person shall have executed and delivered to the
Rights Agent a supplemental agreement evidencing compliance with this Section
11(n).
(o) The Corporation covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 27 hereof, take
(or permit any Subsidiary to take) any action the purpose of which is to, or if
at the time such action is taken it is reasonably foreseeable that the effect of
such action is to materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
(p) The exercise of Rights under Section 11(a)(ii) shall only result in
the loss of rights under Section 11(a)(ii) to the extent so exercised and shall
not otherwise affect the rights represented by the Rights under this Rights
Agreement, including the rights represented by Section 13.
(q) Notwithstanding anything to the contrary set forth herein, in the
event that the Corporation declares a dividend per share (whether cash,
securities, rights or other distribution) in respect of the Common Shares for
holders as of a record date (the "Dividend Record Date") and if Rights become
exercisable (automatically or otherwise) and are exercised after the date of
such declaration but prior to the Dividend Record Date, the aggregate amount (or
number of securities or other rights) of such dividend shall remain the same and
the per share dividend shall be reduced to reflect the increased number of
Common Shares outstanding following such exercise of Rights.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Corporation shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief statement of the facts accounting for such adjustment,
(b) file with the Rights Agent and with each transfer agent for the Common
Shares a copy of such certificate and (c) mail a brief summary thereof to each
holder of a Right Certificate in accordance with Section 26 hereof, provided,
however, that in the event that at any time prior to the Distribution Date the
Company shall take any action described in clause (A), (B) or (C) of Section
11(a)(i), then the Company shall not be required to satisfy the obligations set
forth in clauses (a), (b) and (c) above. Notwithstanding anything in the
foregoing to the contrary, prior to the earlier to occur of the Distribution
Date and the Share Acquisition Date, the Company may, in its discretion, satisfy
the obligation set forth in clause (c) above by including such summary in its
next regular report to shareholders. The Rights Agent shall not be deemed to
have knowledge of such adjustment unless and until it shall have received such
certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER. (a) (a) In the event that, on or following the Shares Acquisition Date,
directly or indirectly, (x) the Corporation shall consolidate with, or merge
with and into, any Person, (y) the Corporation shall consolidate with, or merge
with, any Person, and the Corporation shall be the continuing or surviving
corporation of such consolidation or merger (other than, in a case of any
transaction described in (x) or (y), a merger or consolidation which would
result in all of the securities generally entitled to vote in the election of
directors ("voting securities") of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the voting securities
of the Corporation or such surviving entity outstanding
14
immediately after such merger or consolidation and the holders of such
securities not having changed as a result of such merger or consolidation), or
(z) the Corporation 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 more than 50% of
the assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to any Person (other than the Corporation or any Subsidiary of the
Corporation in one or more transactions each of which does not violate Section
11 (Offer) hereof), then, and in each such case, proper provision shall be made
so that (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at a price
equal to the then current Purchase Price for a whole Common Share, in accordance
with the terms of this Agreement and in lieu of Common Shares, such number of
freely tradeable Common Shares of the Principal Party (as hereinafter defined),
not subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by (A) multiplying the then current
Purchase Price for a whole Common Share by the number of one-tenths of a Common
Share for which a Right is then exercisable (without taking into account any
adjustment previously made pursuant to Section 11(a)(ii)) and dividing that
product by (B) 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 Section 13
Event, all the obligations and duties of the Corporation pursuant to this
Agreement; (iii) the term "Corporation" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its Common Shares) 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 the Common Shares
thereafter deliverable upon the exercise of the Rights.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Corporation are converted in such
merger or consolidation, and if no securities are so issued, the Person that is
the other party to such merger or consolidation (including, if applicable, the
Corporation if it is the surviving corporation); 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 of the foregoing
cases, (1) if the Common Shares of such Person are not at such time and have not
been continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; (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; and (3) in case such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Corporation shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
its authorized Common Shares which have not been issued or reserved for issuance
to permit the exercise in full of the Rights in accordance with this Section 13
and unless prior thereto the Corporation and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any consolidation,
merger, sale or transfer mentioned in paragraph (a) of this Section 13, the
Principal Party at its own expense shall:
15
(i) prepare and file a registration statement under the Act
with respect to the Rights and the securities purchasable upon exercise of the
Rights on an appropriate form, and use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the rights
and the securities purchasable upon exercise of the Rights under the blue sky
laws of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not be applicable to a transaction described in subparagraph (x) or (y) of
Section 13(a) if: (i) such transaction is consummated with a Person or Persons
which acquired Common Shares pursuant to a Permitted Offer (or a wholly owned
Subsidiary of any such Person or Persons); (ii) the price per Common Share
offered in such transaction is not less than the price per Common Share paid to
all holders of Common Shares whose shares were purchased pursuant to such
Permitted Offer; and (iii) the form of consideration offered in such transaction
is the same as the form of consideration paid pursuant to such Permitted Offer.
Upon consummation of any such transaction contemplated by this Section 13(d),
all Rights hereunder shall expire.
In no event shall the Rights Agent have any liability in respect of any
such Principal Party transactions, including, without limitation, the propriety
thereof. The Rights Agent may rely and be fully protected in relying upon a
certificate of the Corporation stating that the provisions of this Section 13
have been fulfilled. Notwithstanding anything in this Agreement to the contrary,
the prior written consent of the Rights Agent must be obtained in connection
with any supplemental agreement which alters the rights or duties of the Rights
Agent.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) (a) The
Corporation shall not be required to issue fractions of Rights or to distribute
Right Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price 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 Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors.
If on any such date no such market maker is making a market in the Rights, the
fair value of the Rights on such date as determined in good faith by the Board
of Directors shall be used.
(b) The Corporation shall not be required to issue fractions of Common
Shares upon exercise of the Rights or to distribute certificates which evidence
fractional Common Shares. In lieu of fractional Common Shares, the Corporation
shall pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Common Share. For the purposes of
this Section 14(b), the current market value of a Common Share shall be the
closing price of a
16
Common Share (as determined pursuant to Section 11(d) hereof) for the Trading
Day immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional share upon exercise
of a Right (except as provided above).
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 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Corporation to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holder of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such purpose, duly endorsed
or accompanied by a proper instrument of transfer and with the appropriate form
fully executed;
(c) subject to Section 6 and Section 7(f) hereof, the Corporation and the
Rights Agent may deem and treat the person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Shares certificate made by anyone other than the
Corporation or the Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Corporation nor the Rights Agent shall have any liability to any holder of a
Right or a beneficial interest in a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Corporation must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Common Shares or any other
securities of the Corporation which may at any time be issuable on the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Corporation 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
stockholders (except as
17
provided in Section 25 hereof), or to receive dividends or other distributions
or to exercise any preemptive or subscription rights, or otherwise, until the
Right or Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. CONCERNING THE RIGHTS AGENT. The Corporation agrees to pay to
the Rights Agent such compensation as shall be agreed to in writing between the
Corporation and the Rights Agent for all services rendered by it hereunder as
from time to time agreed by the Corporation and the Rights Agent 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 it duties hereunder. The
Corporation also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including, without limitation, the costs
and expenses of defending against any claim (whether asserted by the
Corporation, a holder of Rights, or any other Person) of liability in the
premises, including reasonable attorney's fees and expenses. In no event shall
the Rights Agent be liable for special, indirect or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or damage and
regardless of the form of action. The provisions of this Section 18 shall
survive the expiration of the Rights, the resignation or removal of the Rights
Agent and the termination of this Agreement.
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 Right Certificate
delivered to the Rights Agent pursuant to Sections 6 and 7 of this certificate
for Common Shares or for other securities of the Corporation, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, instruction, direction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed and executed by the
proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. 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 all or substantially
all of the stock transfer or all or substantially all of the corporate trust
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Agreement,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of a predecessor
Rights Agent and deliver such Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in all
such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed at such
time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
18
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes only those
duties and obligations expressly imposed by this Agreement, and no implied
duties or obligations shall be read into this Agreement against the Rights
Agent, upon the following terms and conditions, by all of which the Corporation
and the holders of Right Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel of its selection (who
may be legal counsel for the Corporation), 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 an Acquiring Person and the
determination of the current market price of any Security) be proved or
established by the Corporation prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Corporation 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 only for its own gross
negligence, bad faith or willful misconduct; provided, however, that under no
circumstances shall the Rights Agent be liable hereunder for any special,
indirect or consequential loss or damages of any kind.
(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 Right
Certificates (except its countersignature on such Right Certificates) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Corporation of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(e) hereof) or any adjustment required
under the provisions of Section 11 or Section 13 hereof or responsible for the
manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Rights evidenced by Right Certificates after receipt of the
certificate described in Section 12 hereof); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any Common Shares to be issued pursuant to this Agreement or any
Right Certificate or as to whether any Common Shares will, when issued, be
validly authorized and issued, fully paid and non-assessable; nor shall the
Rights Agent be responsible for the legality of the terms hereof in its capacity
as an administrative agent.
(f) The Corporation 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 hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer of the Secretary of the Corporation, and to
apply to such officers for advice or instructions in connection with its duties,
and shall not be liable for any action taken or suffered by it in good faith or
lack of action in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Corporation may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights
19
Agent under this Rights Agreement and the date on or after which such action
shall be taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date any officer of the Corporation actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instruction in response to such application specifying the action to be taken or
omitted.
(h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Corporation or become pecuniarily interested in any transaction in which
the Corporation may be interested, or contract with or lend money to the
Corporation or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Corporation or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Corporation 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 hereunder or in the exercise of its rights if it believes
in good faith that repayment of such funds or adequate indemnification against
such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the
Corporation.
(l) In addition to the foregoing, the Rights Agent shall be protected and
shall incur no liability for, or in respect of, any action taken or omitted by
it in connection with its administration of this Agreement if such acts or
omissions are in reliance upon (i) the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the form
of election to purchase attached hereto unless the Rights Agent shall have
actual knowledge that, as executed, such certification is untrue, or (ii) the
non-execution of such certification including, without limitation, any refusal
to honor any otherwise permissible assignment or election by reason of such
non-execution.
(m) The Corporation agrees to give the Rights Agent prompt written notice
of any event or ownership which would prohibit the exercise or transfer of the
Right Certificates.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon sixty (60) days' notice in writing mailed to the Corporation and to the
transfer agent of the Common Shares by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Right Certificates by
first-class mail. The Corporation may remove the Rights Agent or any successor
Rights Agent upon sixty (60) days' notice in writing, mailed to the Rights Agent
or any successor Rights Agent, as the case may be, and to the transfer agent of
the Common Shares by registered or certified mail, and, subsequent to the
Distribution Date, to holders of the Right Certificates by first-class mail. If
the Rights Agent shall resign or be removed or shall otherwise become incapable
of acting, the Corporation shall appoint a successor to the Rights Agent. If the
Corporation shall fail to make such appointment within a period of sixty (60)
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Right Certificate (who shall, with such
notice, submit his Right Certificate for inspection by the Corporation), then
the Rights Agent or any registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights
20
Agent and, in the event that the Rights Agent is removed, such application to
the court may be brought by the Rights Agent at the expense of the Corporation.
Any successor Rights Agent, whether appointed by the Corporation or by such a
court, shall be a corporation organized and doing business under the laws of the
United States or of the State of New York (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the State of New York), in good standing, having an office in the
State of New York, which is authorized under such laws to exercise corporate
trust or stock transfer powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Corporation shall file notice thereof in writing with the
predecessor Rights Agent and the transfer agent of the Common Shares, and,
subsequent to the Distribution Date, mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the successor
Rights Agent or the appointment of the Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Corporation
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by the Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable upon exercise of the Rights made in
accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of Common Shares
following the Distribution Date and prior to the earlier of the Redemption Date
and the Final Expiration Date, the Corporation (a) shall with respect to Common
Shares so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Corporation, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors, issue
Right Certificates representing the appropriate number of Rights in connection
with such issuance of sale, provided, however, that (i) the Corporation shall
not be obligated to issue any such Right Certificates if, and to the extent
that, the Corporation shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the
Corporation or the Person to whom such Right Certificate would be issued, and
(ii) no Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. REDEMPTION AND TERMINATION. (a) The Board of Directors may, at
its option, redeem all but not less than all the then outstanding Rights at a
redemption price of $0.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"), at any time prior to the earlier of (x)
the time that any Person becomes an Acquiring Person, or (y) the Final
Expiration Date. The Corporation may, at its option, pay the Redemption Price
either in Common Shares (based on the "current per share market price," as
defined in Section 11(d) hereof, of the Common Shares at the time of redemption)
or cash; provided that if the Corporation elects to pay the Redemption Price in
Common Shares, the Corporation shall not be required to issue any fractional
Common Shares and the number of Common Shares issuable to each holder of Rights
shall be rounded down to the next whole share. The redemption of the Rights by
the Board of Directors 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.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23, and without any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price for each Right so held. The Corporation
shall promptly give notice of any such redemption to the Rights Agent and the
holders of Rights in the manner set forth in Section 26, provided, however, that
the failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Any notice
21
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made. Neither
the Corporation nor any of its Affiliates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 and other than in connection with the purchase of
Common Shares prior to the Distribution Date.
Section 24. EXCHANGE. (a) (a) Subject to Section 24(d), the Board of
Directors may, at its option, at any time after the time that any Person becomes
an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) and Section 11(a)(ii) hereof) for
Common Shares of the Corporation at an exchange ratio of one Common Share (or a
lesser ratio as determined by the Board of Directors, if the Corporation does
not have sufficient authorized and unreserved Common Shares) per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Corporation, any Subsidiary of the
Corporation, any employee benefit plan of the Corporation or any such
Subsidiary, any entity holding Common Shares for or pursuant to the terms of any
such plan or any trustee, administrator or fiduciary of such a plan), together
with all Affiliates 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
Corporation ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares equal to
the number of such rights held by such holder multiplied by the Exchange Ratio.
The Corporation 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 Corporation promptly shall mail a
notice of any such exchange to the Rights Agent and all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7(e)) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued (and not reserved for issuance
other than upon exercise of the Rights) to permit any exchange of Rights as
contemplated in accordance with this Section 24, the (i) Corporation shall take
all such action as may be necessary to authorize additional Common Shares for
issuance upon exchange of the Rights, or (ii) the Board of Directors may
determine to exchange Common Shares for then outstanding and exercisable Rights
at such exchange ratio of less than one Common Share per Right, appropriately
adjusted as set forth in Section 24(a) above, so that all (and not less than
all) Common Shares issued but not outstanding or authorized but unissued (and
not reserved for issuance other than upon exercise of the Rights) are issued in
the exchange contemplated by this Section 24.
(d) In any exchange pursuant to this Section 24, the Corporation, at its
option, may substitute common stock equivalents (as defined in Section
11(a)(iii)) for shares of Common Stock exchangeable for Rights, at the initial
rate of one common stock equivalent for each share of Common Stock, as
appropriately adjusted to reflect adjustments in dividend liquidation and voting
rights of common stock equivalents pursuant to the terms thereof, so that each
common stock equivalent delivered in lieu of each share of Common Stock shall
have essentially the same dividend, liquidation and voting rights as one share
of Common Stock.
Section 25. NOTICE OF CERTAIN EVENTS. (a) (a) In case the Corporation
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 Common Shares
22
or to make any other distribution to the holders of its Common Shares (other
than a regular quarterly cash dividend), (ii) to offer to the holders of its
Common Shares rights or warrants to subscribe for or to purchase any additional
Common Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Common Shares (other than a
reclassification involving only the subdivision of outstanding Common Shares),
(iv) to effect any consolidation or merger into or with any other Person (other
than a Subsidiary of the Corporation in a transaction which does not violate
Section 11 (Offer) hereof), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other transfer) in
one or more transactions, of 50% or more of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or any of its Subsidiaries in one or
more transactions each of which does not violate Section 11(Offer) hereof), or
(v) to effect the liquidation, dissolution or winding up of the Corporation,
then, in each such case, the Corporation shall give to each holder of the Right
Certificate and the Rights Agent, in accordance with Section 26 hereof, a notice
of such proposed action to the extent feasible and file a certificate with the
Rights Agent to that effect, 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, sale, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of the Common 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 twenty (20) days prior to the record date
for determining holders of the Common Shares for purposes of such action, and in
the case of any such other action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of the Common Shares, whichever shall be the earlier.
(b) Notwithstanding anything in this Agreement to the contrary, prior to
the Distribution Date a filing by the Corporation with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of the
securities of the Corporation, including the Rights, for purposes of this
Agreement and no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then (i) the Corporation shall as
soon as practicable thereafter give to the Rights Agent and each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) or
Section 13 hereof, as the case may be, and (ii) all references in the preceding
paragraph (a) to Common Shares shall be deemed thereafter to refer also, if
appropriate, to capital stock equivalents, as provided for in Section
11(a)(iii).
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 Right Certificate to
or on the Corporation 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:
FOG CUTTER CAPITAL GROUP INC.
0000 XX XXXXXXXXX
XXXXXXXX, XXXXXX 00000
ATTENTION: CHIEF EXECUTIVE OFFICER
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Corporation or by the
holder of any 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 Corporation) as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx, Xxxxx 00x
Xxx Xxxx, Xxx Xxxx 00000
Attention: Stock Transfer Administration
Notices or demands authorized by this Agreement to be given or made by the
Corporation or the Rights Agent to the
23
holder of any Right Certificate or, if prior to the Distribution Date, to the
holder of certificates representing Common Shares, shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books of the Corporation.
Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date,
the Corporation and the Rights Agent shall, if the Board of Directors so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing Common Shares. From and
after the Distribution Date, the Corporation and the Rights Agent shall, if the
Board of Directors so directs, supplement or amend this Agreement without the
approval of any holders of Right Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein, (iii) to
shorten or lengthen any time period hereunder or (iv) to change or supplement
the provisions hereunder in any manner which the Board of Directors may deem
necessary or desirable and which shall not adversely effect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate of
an Acquiring Person); provided, however, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at such time as
the Rights are not then redeemable; or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of, and/or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Corporation which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment, provided that
such supplement or amendment does not adversely affect the rights or obligations
of the Rights Agent under Section 18 or Section 20 of this Agreement. Prior to
the Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.
Section 28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS OF THE
CORPORATION, ETC. The Board of Directors shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors, or the Corporation, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement and
whether any proposed amendment adversely affects the interests of the holders of
Right Certificates). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith, shall (x) be final, conclusive and binding on the Corporation, the
Rights Agent, the holders of the Right Certificates and all other parties, and
(y) not subject the Board to any liability to the holders of the Right
Certificates.
Section 29. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Corporation or the Rights Agents shall bind and
inure to the benefit of their respective successors and assigns hereunder.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Corporation, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Corporation, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 31. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. GOVERNING LAW. This Agreement, each Right and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Maryland and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
24
be made and performed entirely within such State, provided, however, that the
rights of the Rights Agent shall be governed by and construed in accordance with
the laws of the State of New York. The parties hereto hereby waive the right to
a jury trial in any action arising out of this Agreement.
Section 33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 34. DESCRIPTIVE HEADINGS. Descriptive Headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
25
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date and year first
above written.
FOG CUTTER CAPITAL GROUP INC.
By: /s/ R. Xxxxx Xxxxxxxxx
----------------------------------------
Name: R. Xxxxx Xxxxxxxxx
Title: Senior Vice President
THE BANK OF NEW YORK
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Asst. Vice President
Exhibit A
[Form of Right Certificate]
No. R- Rights
----------------
NOT EXERCISABLE AFTER THE EARLIER OF OCTOBER 28, 2012 AND THE DATE ON WHICH THE
RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET FORTH IN
THE RIGHTS AGREEMENT. AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR
HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR AN AFFILIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY
HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BE NULL AND
VOID. [THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BE OR MAY BECOME NULL AND VOID
IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
RIGHT CERTIFICATE
FOG CUTTER CAPITAL GROUP INC.
This Right Certificate certifies that , or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the holder (upon the terms and subject to the conditions set forth in
the Rights Agreement dated as of October 18, 2002 (the "Rights Agreement")
between Fog Cutter Capital Group Inc., a Maryland corporation (the "Company"),
and The Bank of New York, a New York banking corporation (the "Rights Agent"))
to purchase from the Company, at any time after the Distribution Date and prior
to the Expiration Date, one one-tenth of a fully paid, nonassessable share of
the Common Stock, par value $.0001 (the "Common Shares"), of the Company at a
purchase price of $15.00 per whole Common Share (the "Purchase Price"), payable
in lawful money of the United States of America, upon surrender of this Right
Certificate, with the form of election to purchase and related certificate duly
executed, and payment of the Purchase Price at an office of the Rights Agent
designated for such purpose.
Terms used herein and not otherwise defined herein have the meanings
assigned to them in the Rights Agreement.
The number of Rights evidenced by this Right Certificate (and the number
and kind of shares issuable upon exercise of each Right) and the Purchase Price
set forth above are as of October 18, 2002, and may have been or in the future
be adjusted as a result of the occurrence of certain events, as more fully
provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidence
by this Right Certificate
----------------------
* If applicable, insert this portion of the legend and delete the preceding
sentence.
are beneficially owned by (a) an Acquiring Person or an Affiliate of an
Acquiring Person, (b) a transferee of a Acquiring Person (or any such Affiliate
thereof) who becomes a transferee after the Acquiring Person becomes such, or
(c) under certain circumstances specified in the Rights Agreement, a transferee
of an Acquiring Person (or any such Affiliate thereof) who becomes a transferee
prior to or concurrently with the Acquiring Person becoming such, such Rights
shall become null and void without any further action, and no holder hereof
shall have any rights whatsoever with respect to such Rights, whether under any
provision of the Rights Agreement or otherwise.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Upon surrender at the principal office or offices of the Rights Agent
designated for such purpose and subject to the terms and conditions set forth in
the Rights Agreement, any Rights Certificate or Certificates may be transferred
or exchanged for another Rights Certificate or Certificates evidencing a like
number of Rights as the Rights Certificate or Certificates surrendered.
Subject to the provisions of the Rights Agreement, the Board of Directors
of the Company may, at its option,
(a) at any time prior to the earlier of (i) the time that any Person
becomes an Acquiring Person or (ii) the Final Expiration Date, redeem all but
not less than all the then outstanding Rights at a redemption price of $.001 per
Right (subject to adjustment); or
(b) at any time after the time that any Person becomes an Acquiring Person
(but before such Person, together with all Affiliates of such Person, becomes
the Beneficial Owner of 50% or more of the Common Shares then outstanding),
exchange all or part of the then outstanding Rights (other than Rights held by
the Acquiring Person and certain related Persons) for Common Shares at an
exchange ratio of one Common Share per Right (subject to adjustment).
No fractional Common Shares will be issued upon the exercise of any Right
or Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Certificates for the number of whole Rights not exercised,
or the Rights Agent shall place an appropriate notation on this Right
Certificate with respect to those Rights exercised.
No holder of this Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of capital stock
which may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by an authorized signatory of the Rights
Agent.
A-2
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by its authorized officers.
Dated as of _____ , _____
FOG CUTTER CAPITAL GROUP INC.
By:
-----------------------------------
Title:
THE BANK OF NEW YORK
as Rights Agent
By:
-----------------------------------
Authorized Signatory
A-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed if the registered holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ____________________________________________________________
hereby sells, assigns and transfers unto ______________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _________________________
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: ,
----------------------- -----
----------------------------------
Signature
Signature Guaranteed:
A-4
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate _________
are ________ are not being assigned by or on behalf of a Person who is or was an
Acquiring Person or an Affiliate of any such Acquiring Person (as such terms are
defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it_________ did ______ did not acquire the Rights evidenced by this
Right Certificate from any Person who is, was or became an Acquiring Person or
an Affiliate of an Acquiring Person;
(3) the action requested by the undersigned is not prohibited
by the provisions of the Rights Agreement, including, without limitation, the
provisions relating to the (i) transfer, split-up, combination and exchange of
rights which are null and void or (ii) exercise by an Acquiring Person or an
Affiliate of an Acquiring Person of any Right which by its terms is null and
void.
Dated: ,
--------------- -----
-------------------------------
Signature
-------------------
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
-------------------
A-5
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise Rights represented
by the Right Certificate.)
To: FOG CUTTER CAPITAL GROUP INC.
The undersigned hereby irrevocably elects to exercise
__________ Rights represented by this Right Certificate to purchase shares of
Common Stock issuable upon the exercise of the Rights (or such other securities
of the Company or of any other person which may be issuable upon the exercise of
the Rights) and requests that certificates for such securities be issued in the
name of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights specified above shall not be all the
Rights evidenced by this Right Certificate, the Rights Agent shall place an
appropriate notation on this Right Certificate with respect to those Rights
exercised or a new Right Certificate for the balance of such Rights shall be
registered in the name of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: ,
------------------------ ------
-------------------------------
Signature
Signature Guaranteed:
A-6
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate are are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate of any such Acquiring Person (as such terms are defined in the
Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it did did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or became an Acquiring Person or an
Affiliate of an Acquiring Person;
(3) the exercise of the Rights evidenced by this Right
Certificate is not prohibited by the terms of the Rights Agreement, including,
without limitation, the provisions relating to the exercise by an Acquiring
Person or an Affiliate of an Acquiring Person of any Right which by its terms is
null and void.
Dated: ,
-------------- -----
-------------------------------
Signature
-----------------
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
------------------
A-7
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE SHARES
The Board of Directors of Fog Cutter Capital Group Inc. (the
"CORPORATION") declared a dividend distribution of one right (a "RIGHT") to
purchase one one-tenth of a share of the Common Stock, $.0001 par value, of the
Corporation (the "COMMON SHARES") for each outstanding share of Common Stock,
payable to the stockholders of record on October 28, 2002 (the "RECORD DATE").
The Board of Directors also authorized and directed the issuance of one Right
with respect to each Common Share issued thereafter until the Distribution Date
(as defined below) and, in certain circumstances, with respect to Common Shares
issued after the Distribution Date. Except as set forth below, each Right, when
it becomes exercisable, entitles the registered holder to purchase from the
Corporation one one-tenth of a Common Share at a price of $15 per whole Common
Share (the "PURCHASE PRICE"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "RIGHTS AGREEMENT")
between the Corporation and The Bank of New York, as Rights Agent (the "RIGHTS
AGENT"), dated as of October 18, 2002.
Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares upon the earliest
to occur of (i) a person or group of affiliated persons having acquired
beneficial ownership of 5% or more of the outstanding Common Shares (except
pursuant to a Permitted Offer, as hereinafter defined) or an existing 5%
beneficial owner acquires an additional 1% or more of the outstanding Common
Shares (except pursuant to a Permitted Offer); or (ii) 10 days (or such later
date as the Board of Directors may determine) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in a person or group becoming an Acquiring
Person (as hereinafter defined) (the earliest of such dates being called the
"DISTRIBUTION DATE"). A person or group whose acquisition of Common Shares
causes a Distribution Date pursuant to clause (i) above is an "ACQUIRING
PERSON." The date that a person or group becomes an Acquiring Person is the
"SHARES ACQUISITION DATE." A person who acquires Common Shares pursuant to a
tender or exchange offer which is for all outstanding Common Shares at a price
and on terms which a majority of the Board of Directors determines (prior to
acquisition) to be adequate and in the best interests of the Corporation and its
stockholders (other than such person, its affiliates) (together with certain
securities offerings by the Corporation, a "PERMITTED OFFER") will not be deemed
to be an Acquiring Person and such person's ownership will not constitute a
Distribution Date.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon the transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares outstanding as of the Record Date, even without such notation or a
copy of this Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate. In most cases, as soon as practicable following the Distribution
Date, separate certificates evidencing the Rights ("RIGHT CERTIFICATES") will be
mailed to holders of record of the Common Shares as of the close of business on
the Distribution Date (and to each initial record holder of certain Common
Shares issued after the Distribution Date), and such separate Right Certificates
alone will evidence the Rights.
THE RIGHTS ARE NOT EXERCISABLE UNTIL THE DISTRIBUTION DATE, and will
expire at the close of business on October 28, 2012, unless earlier redeemed by
the Corporation as described below.
In the event that any person becomes an Acquiring Person, each holder of
Rights (other than Rights that have become void as described below) will
thereafter have the right (the "FLIP-IN RIGHT") to receive, upon exercise of
such Rights, the number of Common Shares (or, in certain circumstances, other
securities of the Corporation) having a value (immediately prior to such
triggering event) equal to two times the aggregate exercise price of such
Rights; provided, however, in the event that a Person has become an Acquiring
Person on the Shares Acquisition Date, (1) the Rights (other than rights held by
the Acquiring Person) shall be deemed to be automatically exercised on the
Shares Acquisition Date, (2) each Holder will be entitled to receive Common
Shares of the Corporation at an exchange ratio of one Common Share (or a lesser
ratio as determined by the Board of Directors, if the Corporation does not have
sufficient authorized and unreserved Common Shares) per Right, in lieu of paying
the Purchase Price and receiving the Common Shares otherwise provided herein.
Notwithstanding the foregoing, following the occurrence of the event described
above, all Rights that are or (under certain circumstances specified in the
Rights Agreement) were beneficially owned by any Acquiring Person or any
affiliate thereof will be null and void.
In the event that, at any time following the Shares Acquisition Date, (i)
the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Corporation's assets or earning power is sold or transferred, then each holder
of Rights (except Rights which previously have been voided as set forth above)
shall thereafter have the right (the "FLIP-OVER RIGHT") to receive, upon
exercise of such Rights, common shares of the acquiring company having a value
equal to two times the aggregate exercise price of the Rights; provided,
however, that the Flip Over Right shall not apply to any transaction described
in clause (i) if (x) such transaction is with a person or persons (or a wholly
owned subsidiary of any such person or persons) that acquired Common Shares
pursuant to a Permitted Offer and (y) the price and form of consideration
offered in such transaction is the same as that paid to all holders of Common
Shares whose shares were purchased pursuant to the Permitted Offer. The holder
of a Right will continue to have the Flip-Over Right whether or not such holder
exercises or surrenders the Flip-In Right.
The Purchase Price payable, and the number of Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Shares, (ii) upon
the grant to holders of the Common Shares of certain rights or warrants to
subscribe for or purchase Common Shares at a price, or securities convertible
into Common Shares with a conversion price, less than the then current market
price of the Common Shares, or (iii) upon the distribution to holders of the
Common Shares of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Common Shares will be issued and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Common Shares on the last trading day prior to the date of exercise.
At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, the Corporation may
redeem the Rights in whole, but not in part, at a price of $.001 per Right (the
"REDEMPTION PRICE"), which redemption shall be effective at such time, on such
basis and with such conditions as the Board of Directors may establish in its
sole discretion. The Corporation may, at its option, pay the Redemption Price in
Common Shares.
All of the provisions of the Rights Agreement may be amended by the Board
of Directors prior to the Distribution Date. After the Distribution Date, the
provisions of the Rights Agreement may be amended by the Board in order to cure
any ambiguity, defect or inconsistency, to make changes which do not adversely
affect the interests of holders of Rights (excluding the interests of any
Acquiring Person), or, subject to certain limitations, to shorten or lengthen
any time period under the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to stockholders of the Corporation, stockholders may, depending
upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.
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