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EXHIBIT 4.2
RIGHTS AGREEMENT
Dated as of _______________, 1997
between
HOME PRODUCTS INTERNATIONAL, INC.
and
[RIGHTS AGENT]
as Rights Agent
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TABLE OF CONTENTS
Section 1. Certain Definitions............................................................... 1
Section 2. Appointment of Rights Agent....................................................... 7
Section 3. Issuance of Rights Certificates................................................... 7
Section 4. Form of Rights Certificates...................................................... 10
Section 5. Countersignature and Registration................................................ 11
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates;
Mutilated, Destroyed, Lost or Stolen Rights Certificates....................... 12
Section 7. Exercise of rights; Exercise Price;
Expiration Date of Rights...................................................... 13
Section 8. Cancellation and Destruction of Rights Certificates.............................. 16
Section 9. Reservation and Availability of Preferred Shares................................. 16
Section 10. Record Date of Preferred Share Ownership......................................... 18
Section 11. Adjustment of Exercise Price, Number and Kind of Shares and
Number of Rights............................................................... 18
Section 12. Certificate of Adjusted Exercise Price or Number of Shares....................... 28
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............. 28
Section 14. Fractional Rights and Fractional Shares.......................................... 33
Section 15. Rights of Action................................................................. 33
Section 16. Agreements of Holders of Rights.................................................. 34
Section 17. Rights Certificate Holder Not Deemed a Stockholder............................... 35
Section 18. Concerning the Rights Agent...................................................... 35
Section 19. Merger or Consolidation of the Rights Agent...................................... 36
Section 20. Duties of the Rights Agent....................................................... 37
Section 21. Resignation or Removal of the Rights Agent....................................... 39
Section 22. Issuance of New Rights Certificates.............................................. 41
Section 23. Redemption....................................................................... 41
Section 24. Exchange......................................................................... 43
Section 25. Notice to Holders of Rights Certificates of Certain Events....................... 45
Section 26. Other Notices.................................................................... 46
Section 27. Supplements and Amendments....................................................... 47
Section 28. Successors....................................................................... 48
Section 29. Certain Determinations and Actions by the Board.................................. 48
Section 30. Benefits of this Agreement....................................................... 48
Section 31. Severability..................................................................... 49
Section 32. Governing Law.................................................................... 49
Section 33. Counterparts..................................................................... 49
Section 34. Descriptive Headings............................................................. 49
Exhibit A - Form of Certificate of Designations of
Series B Junior Participating Preferred Stock............................... A-1
Exhibit B - Form of Rights Certificate.................................................. B-1
Exhibit C - Summary of Rights to Purchase Shares of
Series B Junior Participating Preferred Stock............................... C-1
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RIGHTS AGREEMENT
This Rights Agreement is entered into as of _______________, 1997 (this
"Agreement") between Home Products International, Inc., a Delaware corporation
(the "Company"), and [Rights Agent], a national banking association (the
"Rights Agent").
R E C I T A L S :
---------------
A. The Board of Directors of the Company desires to provide all
stockholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that all such stockholders
receive fair and equal treatment in the event of any proposed takeover of the
Company; and
B. On March ___, 1997, the Board of Directors of the Company authorized
and declared a dividend of one preferred stock purchase right (individually a
"Right" and collectively the "Rights") for each share of Common Stock (as
hereinafter defined) of the Company outstanding at the Close of Business on
April ___, 1997 (the "Record Date"), each Right representing the right to
purchase one one-hundredth of a Preferred Share (as hereinafter defined) upon
the terms and subject to the conditions herein after set forth, and
contemplates that one Right will be issued with respect to each share of Common
Stock which shall become outstanding after the Record Date and prior to the
earlier of the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined), including any shares of Common Stock issued by reason of
the exercise of any option, warrant, right (other than the Rights) or
conversion or exchange privilege contained in any option, warrant, right (other
than the Rights) or convertible or exchangeable security issued by the Company
prior to the Distribution Date, unless the Board (as hereinafter defined) shall
expressly provide to the contrary at the time of issuance of any such option,
warrant, right or convertible or exchangeable security.
C L A U S E S :
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NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For all purposes of this Agreement,
unless the context otherwise requires, the following terms shall have the
respective meanings set forth below:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the shares of Common Stock of the Company then outstanding, but
shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii)
any employee benefit plan or other compensation program or arrangement of the
Company or of any such Subsidiary or (iv) any Person holding such shares of
Common Stock for or pursuant to the terms of any such plan, program or
arrangement (the Persons specified in clauses (i) through (iv) being
hereinafter collectively called "Exempt Persons"). Notwithstanding the
preceding sentence, no Person shall become an "Acquiring Person" as the result
of an acquisition by the Company of shares of its Common Stock which, by reason
of reducing the number of its then outstanding shares of Common Stock,
increases the percentage of its then outstanding shares of Common Stock
Beneficially Owned by such Person to 15% or more; provided, however, that if
such Person shall, after such purchase by the Company, become the Beneficial
Owner of any additional shares of
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Common Stock of the Company, then such Person shall be deemed to be an
"Acquiring Person."
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2, as in effect on the date of this
Agreement, under the Exchange Act.
(c) "Beneficial Owner" (including the terms "Beneficially Own" and
"Beneficial Ownership"), when used with respect to any Person, shall be deemed
to include any securities which:
(i) such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly (determined
as provided in Rule 13d-3, as in effect on the date of this
Agreement, under the Exchange Act);
(ii) such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has:
(A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the
satisfaction of any conditions, or both) pursuant to any written or
oral agreement, arrangement or understanding (other than customary
agreements with and among underwriters and selling group members
with respect to a bona fide public offering of securities), upon
the exercise of any options, warrants, rights (other than the
Rights) or conversion or exchange privileges or otherwise;
provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own: (I) securities tendered pursuant
to a tender or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange or (II)
securities issuable upon exercise of the Rights at any time prior
to the Distribution Date; or
(B) the right to vote pursuant to any written or oral
agreement, arrangement or understanding; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own, any security otherwise subject to this item (B)
if such agreement, arrangement or understanding to vote (I) arises
solely from a revocable proxy or consent given to such Person or
any of such Person's Affiliates or Associates in response to a
public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations under the
Exchange Act and (II) is not also then reportable by such Person on
Schedule 13D (or any comparable or successor report then in effect)
under the Exchange Act; or
(C) the right to dispose of pursuant to any written or oral
agreement, arrangement or understanding (other than customary
agreements with and among underwriters and selling group members
with respect to a bona fide public offering of securities); or
(iii) are beneficially owned, directly or indirectly, by any
other Person with which such Person or any of such Person's
Affiliates or Associates has any written or oral agreement,
arrangement or understanding (other than customary agreements with
and among underwriters and selling group members with respect to a
bona fide public offering of securities) for the purpose of
acquiring, holding, voting (except to the extent contemplated by
the proviso to item (B) of subparagraph (ii) of the first
paragraph of this definition) or disposing of any securities of
the Company.
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(d) "Board" shall mean the Board of Directors of the Company.
(e) "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in the State of Illinois are authorized or
obligated by law or executive order to close.
(f) "Certificate of Designations" shall mean the Certificate of
Designations for the Preferred Shares in substantially the form attached hereto
as Exhibit A.
(g) "Close of Business" on any given date shall mean 5:00 P.M., Chicago,
Illinois time, on such date or, if such date is not a Business Day, then 5:00
P.M., Chicago time, on the next succeeding Business Day.
(h) "Common Stock," when used with reference to the Company, shall mean
the Common Stock, $___ par value, of the Company. "Common Stock," when used
with reference to any Person other than the Company, shall mean the capital
stock with the greatest voting power (or the other equity securities or equity
interests having the power to control or direct management) of such Person or,
if such Person is a Subsidiary of another Person, of the Person which
ultimately controls such first-mentioned Person and which has issued and
outstanding such capital stock, equity securities or equity interests.
(i) "Continuing Director" shall mean (i) any member of the Board, while
such a member, who is not a Restricted Person, or a representative or nominee
of a Restricted Person, and was a member of the Board prior to the date of this
Agreement and (ii) any individual who subsequently becomes a member of the
Board and is not a Restricted Person, or a representative or nominee of a
Restricted Person, if such individual's nomination for election or election to
the Board is recommended or approved by a majority of the Continuing Directors
then in office.
(j) "Distribution Date" shall have the meaning set forth in Section 3(a).
(k) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11(b).
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect on the date of this Agreement.
(m) "Exchange Rate" shall have the meaning set forth in Section 24(a).
(n) "Exempt Persons" shall have the meaning set forth in the definition of
"Acquiring Person."
(o) "Exercise Price" shall have the meaning set forth in Section 7(b).
(p) "Fair Market Value" shall have the meaning and be determined as set
forth in Section 11(d).
(q) "Final Expiration Date" shall have the meaning set forth in Section
7(a).
(r) "Interested Stockholder" shall mean any Restricted Person or any
Affiliate or Associate of any other Person in which such Restricted Person has
an interest, or any Person acting, directly or indirectly, on behalf of or in
concert with any such Restricted Person.
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(s) "NASDAQ" shall have the meaning set forth in Section 9(c).
(t) "Permitted Offer" shall mean any tender or exchange offer for all of
the outstanding shares of Common Stock of the Company at a price and on terms
determined, prior to the purchase of shares under such tender or exchange
offer, by at least a majority of the members of the Board who are Continuing
Directors and who are not officers of the Company to be appropriate (taking
into account all factors which such Continuing Directors deem relevant,
including, without limitation, prices reasonably obtainable if the Company or
its assets were sold on an orderly basis designed to realize maximum value) and
otherwise in the best interests of the Company and its stockholders (other than
the Person or any Affiliate or Associate thereof on whose behalf or for whose
benefit such tender or exchange offer is being made).
(u) "Person" shall mean any individual, firm, corporation, partnership or
other entity, and shall include any successor (by merger or otherwise) of any
of the foregoing.
(v) "Preferred Shares" shall mean the shares of Junior Participating
Preferred Stock.
(w) "Preferred Stock," when used with reference to the Company, shall mean
the Series B Junior Participating Preferred Stock, $.01 par value, of the
Company, which series shall have the powers, preferences and other rights set
forth in the Certificate of Designations.
(x) "Principal Party" shall have the meaning set forth in Section 13(e).
(y) "Redemption Date" shall have the meaning set forth in Section 7(a).
(z) "Redemption Price" shall have the meaning set forth in Section 23(a).
(aa) "Restricted Person" shall mean an Acquiring Person, an Adverse Person
or any Affiliate or Associate of an Acquiring Person or an Adverse Person.
(bb) "Rights Certificates" shall mean the certificates evidencing the
Rights after the Distribution Date.
(cc) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii).
(dd) "Section 13 Event" shall mean any transaction described in Section
13(a).
(ee) "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
(ff) "Security" shall have the meaning set forth in Section 11(d).
(gg) "Share Acquisition Date" shall mean the first date on which there
shall be a public announcement (which shall include, without limitation, any
press release or publicly available filing with the Securities and Exchange
Commission or any other federal or state governmental authority or agency) by
the Company or an Acquiring Person that an Acquiring Person has become such.
(hh) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power or the other equity securities or
equity interests having the power to control or direct management) is owned,
directly or indirectly, by such Person.
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(ii) "Summary of Rights" shall mean the Summary of Rights to Purchase
shares of Junior Participating Preferred Stock in substantially the form
attached hereto as Exhibit C.
(jj) "Trading Day" shall have the meaning set forth in Section 11(d)(i).
(kk) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights
(which holders, as provided in Section 3, shall, prior to the Distribution
Date, also be the holders of the Common Stock of the Company) in accordance
with the terms and conditions of this Agreement. The Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable. In the event the
Company appoints one or more Co-Rights Agents, the respective obligations and
duties of the Rights Agent and of any Co-Rights Agent shall be as the Company
shall specify in writing. The Rights Agent shall have no duty to supervise,
and shall not be liable for the acts or omissions of, any Co-Rights Agent.
SECTION 3. ISSUANCE OF RIGHTS CERTIFICATES. (a) Until the earliest of
(i) the Close of Business on the 10th Business Day after the Share Acquisition
Date (or, if the Share Acquisition Date shall have occurred prior to the Record
Date, the Close of Business on the 10th Business Day after the Record Date), or
(ii) the Close of Business on the 10th Business Day (or, anything in Section 27
to the contrary notwithstanding, such other Business Day as may be determined
by action of the Board prior to the occurrence of any Section 11(a)(ii) Event)
after the date of the commencement by any Person (other than an Exempt Person)
of, or the first public announcement of the intention of any Person (other than
an Exempt Person) to commence, a tender or exchange offer if, upon the
consummation thereof, such Person would be the Beneficial Owner of 15% or more
of the shares of Common Stock of the Company then outstanding, including any
such date which is after the date of this Agreement and prior to the date of
issuance of the Rights (the earliest of the dates specified in clauses (i) and
(ii) being hereinafter called the "Distribution Date"), the Rights shall be
evidenced and be transferable only as provided in Section 3(b). As soon as
practicable after the Distribution Date or, in the case of any shares of Common
Stock of the Company which are issued or otherwise become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date and the Final
Expiration Date, including any shares of Common Stock issued by reason of the
exercise of any option, warrant, right (other than the Rights) or conversion or
exchange privilege contained in any option, warrant, right (other than the
Rights) or convertible or exchangeable security issued by the Company prior to
the Distribution Date, unless the Board shall have expressly provided to the
contrary at the time of issuance of any such option, warrant, right or
convertible or exchangeable security, simultaneously with the issuance of stock
certificates for such shares of Common Stock, the Company shall prepare and
execute, the Rights Agent shall countersign and the Company shall deliver or
cause to be delivered (or the Rights Agent shall, if requested, deliver), by
first-class mail, postage prepaid, to each record holder of shares of Common
Stock of the Company as of the Close of Business on the Distribution Date or,
in the case of shares of Common Stock issued or otherwise becoming outstanding
after the Distribution Date (unless otherwise provided with respect thereto as
aforesaid), to each record holder of the shares of Common Stock so being issued
or becoming outstanding at the time of such occurrence, at its last address
shown on the registry books of the transfer agent for the Common Stock of the
Company, one or more Rights Certificates evidencing one Right for each share of
Common Stock of the Company so held, issued or becoming outstanding. As of and
after the Distribution Date, the Rights shall be evi-
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denced solely by the Rights Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company
shall send a copy of the Summary of Rights, by first-class mail, postage
prepaid, to each record holder of shares of Common Stock of the Company as of
the Close of Business on the Record Date, at its last address shown on the
registry books of the transfer agent for the Common Stock of the Company.
Until the Distribution Date, no Rights Certificates shall be issued; each stock
certificate for shares of Common Stock of the Company outstanding as of the
Record Date, until the earliest of the Distribution Date, the Redemption Date
and the Final Expiration Date, shall be deemed also to constitute a certificate
for the Rights associated with the shares represented thereby, together with a
copy of the Summary of Rights attached thereto; and the registered holder of
such shares shall also be the registered holder of the associated Rights.
Until the earliest of the Distribution Date, the Redemption Date and the Final
Expiration Date, the surrender for transfer of any such stock certificate, with
or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the shares of Common
Stock represented thereby.
(c) Any stock certificate for shares of Common Stock of the Company which
shall be delivered by or on behalf of the Company (including, without
limitation, stock certificates for shares of Common Stock which are reacquired
by the Company and then transferred) after the Record Date and prior to the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date shall have impressed, printed or written thereon, or otherwise affixed
thereto, the following legend:
"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights Agreement
dated as of ______________, 1997 (the "Rights Agreement") between
Home Products International Inc. (the "Company") and [Rights
Agent], as Rights Agent, the terms, provisions and conditions of
which are incorporated herein by reference and made a part hereof.
The Rights Agreement is on file at the principal office of
Company and the principal office of such Rights Agent, and Company
will mail to the holder of this certificate a copy without charge
after receipt of a written request therefor. 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. Under certain circumstances, as
set forth in the Rights Agreement, Rights Beneficially Owned by a
Restricted Person (as such terms are defined in the Rights
Agreement), or by specified transferees from a Restricted Person,
shall be or may become void."
Each stock certificate containing the foregoing legend, until the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date, shall
be deemed also to constitute a certificate for the Rights associated with the
shares represented thereby, and the registered holder of such shares shall also
be the registered holder of the associated Rights. Until the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date, the
surrender for transfer of any such stock certificate shall also constitute the
transfer of the Rights associated with the shares of Common Stock represented
thereby. The omission of the foregoing legend shall not in any manner
whatsoever affect the application or interpretation of Section 7(d).
(d) In the event that the Company shall reacquire any shares of its Common
Stock after the Record Date and prior to the Distribution Date, the Rights
associated with such shares shall be deemed canceled and retired, the Company
not being entitled to exercise any Rights associated with shares of its Common
Stock which are no longer outstanding.
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SECTION 4. FORM OF RIGHTS CERTIFICATES. (a) The Rights Certificates
(including the forms of election to purchase and assignment to be set forth on
the reverse side thereof) shall be in substantially the form attached hereto as
Exhibit B and may have such marks of identification or designation and such
legends, summaries or endorsements set forth thereon as the Company may deem
appropriate and are not inconsistent with the provisions of this Agreement, or
as may be required to conform to customary practice or to comply with any
applicable law or 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. Subject to Sections 11 and 22, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date (or, in the case of Rights
with respect to shares of Common Stock issued or becoming outstanding after the
Record Date, the same date as the stock certificate evidencing such shares),
shall entitle the holders thereof to purchase such number of one one-hundredths
of a Preferred Share at the Exercise Price as shall be set forth therein, but
the number of such one one-hundredths of a Preferred Share and the Exercise
Price shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3(a) or Section 22
that represents Rights Beneficially Owned by: (i) a Restricted Person, (ii) a
transferee from a Restricted Person who becomes a transferee after the
Acquiring Person or Adverse Person becomes such or (iii) a transferee from a
Restricted Person who becomes a transferee prior to or concurrently with the
Acquiring Person or Adverse Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from such
Acquiring Person or Adverse Person (or any Affiliate or Associate thereof) to
holders of equity interests in such Acquiring Person or Adverse Person (or any
such Affiliate or Associate) or to any Person with whom such Acquiring Person
or Adverse Person (or any such Affiliate or Associate) has any continuing
written or oral agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer which the Board has determined is part of
a plan, arrangement or understanding which has as a primary purpose or effect
the avoidance of Section 7(d), and any Rights Certificate issued pursuant to
Section 6, 11 or 22 upon the transfer, exchange, replacement or adjustment of
any other Rights Certificate referred to in this sentence, shall have deleted
therefrom the second sentence of the legend on the Form of Rights Certificate
attached hereto as Exhibit B and, in lieu thereof, shall contain the following
two sentences:
"The Rights represented by this Rights Certificate are or
were Beneficially Owned by a Restricted Person (as such term is
defined in such Agreement). This Rights Certificate and the
Rights represented hereby shall be or may become void under the
circumstances specified in Section 7(d) of such Agreement."
The Company shall give prompt written notice to the Rights Agent after becoming
aware of the existence and identity of any Restricted Person. The failure to
insert the foregoing sentences on any such Rights Certificate or any defect
therein shall not in any manner whatsoever affect the application or
interpretation of Section 7(d). The Company shall specify to the Rights Agent
in writing which Rights Certificates are to be so legended.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President, or any of its Vice Presidents, either manually or by
facsimile signature, and shall have affixed thereto the Company's seal or a
facsimile thereof attested by its Secretary or any of its Assistant
Secretaries, either manually or by facsimile signature. The Rights
Certificates shall be manually countersigned by an authorized signatory of the
Rights Agent and shall not be valid or obligatory for any purpose unless so
countersigned. In case any officer of the Company who shall have executed any
Rights Certificate or who shall have attested the Company's seal thereon shall
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cease to be such officer of the Company before such Rights Certificate shall
have been countersigned by an authorized signatory of the Rights Agent and
issued and delivered by or on behalf of the Company, such Rights Certificate,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by or on behalf of the Company with the same force and effect as though the
individual who executed such Rights Certificate or who attested the Company's
seal thereon had not ceased to be such officer; and any Rights Certificate may
be executed on behalf of the Company and the Company's seal may be attested by
any individual who, at the actual date of such execution or attestation, shall
be a proper officer of the Company, although at the date of execution of this
Rights Agreement such person was not such an officer.
(b) After the Distribution Date, the Rights Agent shall keep or cause to
be kept, at its principal office, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each Rights Certificate, the date of each
Rights Certificate and (if required by the Company) the date of
countersignature by the Rights Agent.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. (a)
Subject to Sections 4(b), 7(d) and 14, at any time after the Close of Business
on the Distribution Date and prior to the Close of Business on the earlier of
the Redemption Date and the Final Expiration Date, any Rights Certificate
(other than any Rights Certificate which shall have been exchanged pursuant to
Section 24) may be transferred, split up, combined or exchanged for one or more
other Rights Certificates, entitling the registered holder to purchase the same
number of one one-hundredths of a Preferred Share (or after a Triggering Event,
the securities, cash and other property purchasable in lieu thereof) as the
Rights Certificate or Rights Certificates surrendered entitled such registered
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange one or more Rights Certificates shall make such request in
a writing delivered to the Rights Agent, and shall surrender the Rights
Certificates to be transferred, split up, combined or exchanged, with the form
of assignment on the reverse side thereof duly executed, together with such
signature guarantees and other documentation as the Rights Agent may reasonably
request, at the principal office of the Rights Agent. Thereupon the Company
shall prepare and execute, the Rights Agent shall countersign and the Company
shall deliver or cause to be delivered (or the Rights Agent shall, if
requested, deliver), subject to Section 4(b), 7(d) and 14, to the person
entitled thereto one or more Rights Certificates as so requested. The Company
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates and reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Rights Certificate, and, in the case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them or, in the case of
mutilation, upon surrender to the Rights Agent of the mutilated Rights
Certificate, and, at the Company's request, reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, the Company
shall prepare and execute, the Rights Agent shall countersign and the Company
shall deliver or cause to be delivered (or the Rights Agent shall, if
requested, deliver) to the registered holder thereof a new Rights Certificate
of like tenor in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.
SECTION 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Subject to Section 7(d), the registered holder of any Rights Certificate
may exercise the Rights
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evidenced thereby (except as otherwise provided herein), in whole or in part,
at any time after the Distribution Date and prior to the earliest of (i) the
Close of Business on March ___, 2007 (the "Final Expiration Date"), (ii) the
time at which the Rights are redeemed as provided in Section 23 (the
"Redemption Date") and (iii) the time at which such Rights are exchanged as
provided in Section 24, upon surrender of such Rights Certificate, with the
form of election to purchase on the reverse side thereof duly executed,
together with such signature guarantees and other documentation as the Rights
Agent may reasonably request, to the Rights Agent at its principal office,
accompanied by payment (as provided in subsection (c) of this Section 7) of the
Exercise Price for each one one-hundredth of a Preferred Share (or after a
Triggering Event, the securities, cash and other property purchasable in lieu
thereof) as to which the surrendered Rights are then being exercised.
(b) The price (the "Exercise Price") for each one one-hundredth of a
Preferred Share purchased upon exercise of the Rights shall initially be $40,
shall be subject to adjustment from time to time as provided in Sections 11 and
13 and shall be payable in lawful money of the United States of America in
accordance with subsection (c) of this Section 7.
(c) Upon receipt of a Rights Certificate representing then exercisable
Rights, with the form of election to purchase and certification of status on
the reverse side thereof duly executed, together with such signature guarantees
and other documentation as the Rights Agent may reasonably request, accompanied
by payment of the Exercise Price for the number of one one-hundredths of a
Preferred Share (or after a Triggering Event, the securities, cash and other
property purchasable in lieu thereof) being purchased, plus the amount of any
applicable transfer tax (as determined by the Rights Agent) required to be paid
by the holder of such Rights Certificate in accordance with Section 9, the
Rights Agent shall, subject to the terms and conditions of this Agreement,
thereupon promptly (i) requisition from any transfer agent for the Preferred
Shares (or, if the Rights Agent is such a transfer agent, make available) stock
certificates for the number of one one-hundredths of a Preferred Share being
purchased, the Company hereby irrevocably authorizing any such transfer agent
to comply with all such requests, (ii) if the Company shall have elected to
deposit the Preferred Shares issuable upon exercise of the Rights with a
depository agent, requisition from the depository agent depository receipts for
the number of one one-hundredths of a Preferred Share being purchased (in which
case stock certificates for the Preferred Shares represented by such depository
receipts shall be deposited by the transfer agent for the Preferred Shares with
the depository agent), the Company hereby irrevocably authorizing any such
depository agent to comply with all such requests, (iii) after a Triggering
Event, requisition or obtain from the appropriate Person or Persons such
securities, cash and other property as may then be purchasable in lieu of
Preferred Shares, the Company hereby irrevocably authorizing all such requests,
(iv) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of the issuance of any fractional share in accordance with Section
14 and (v) promptly after receipt of such stock certificates, depository
receipts, securities, cash and/or other property, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered (when appropriate) in such name or names as may be
designated by such registered holder.
(d) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of any Section 11(a)(ii) Event, any Rights
Beneficially Owned by: (i) a Restricted Person, (ii) a transferee from a
Restricted Person who becomes a transferee after the Acquiring Person or
Adverse Person becomes such or (iii) a transferee from a Restricted Person who
becomes a transferee prior to or concurrently with the Acquiring Person or
Adverse Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from such Acquiring Person or
Adverse Person (or any Affiliate or Associate thereof) to holders of equity
interests in such Acquiring Person or Adverse Person (or any such
12
Associate or Affiliate) or to any Person with whom such Acquiring Person or
Adverse Person (or any such Associate or Affiliate) has any continuing written
or oral agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(d) shall be or become 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, from and after such first occurrence. The Company shall use all
reasonable efforts to ensure that the provisions of this Section 7(d) and
Section 4(b) are complied with, but shall have no liability to any holder of
the Rights Certificates or to any other Person as a result of the Company's
failure to make any applicable finding or determination with respect to any
Restricted Person, or any transferee therefrom.
(e) Notwithstanding subsection (a) of this Section 7, a Right may be
exercised by the holder thereof on or after the Distribution Date and prior to
the receipt of the associated Rights Certificate by notifying the Rights Agent
in writing and furnishing to the Rights Agent such information and evidence as
to such election as the Rights Agent may reasonably request; provided, however,
that the Rights Agent shall not be required to take any of the actions
specified in subsection (c) of this Section 7 until such holder shall have
fully satisfied the applicable requirements specified therein.
(f) Neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to any Rights or Rights Certificate upon the
purported exercise or transfer thereof unless the registered holder thereof
shall have (i) completed and signed the certification of status following the
form of election to purchase or the form of assignment, as the case may be, set
forth on the reverse side of the Rights Certificate surrendered for such
exercise or transfer and (ii) provided such additional evidence as to the
identity of the Beneficial Owner (or former Beneficial Owner) thereof or the
Affiliates or Associates thereof as the Company shall reasonably request.
(g) In case the registered holder of any Rights Certificate shall
exercise less than all of the Rights evidenced thereby, then, subject to the
provisions of Section 14, a new Rights Certificate evidencing the Rights
remaining unexercised shall be prepared and executed by the Company and
countersigned and delivered by the Rights Agent to the registered holder of
such surrendered Rights Certificate or to such registered holder's duly
authorized assigns.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or 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
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for
cancellation, and the Rights Agent shall cancel, any other Rights Certificate
purchased or reacquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Rights Certificates to
the Company or shall, at the written request of the Company, destroy such
canceled Rights Certificates and deliver a certificate of the destruction
thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES. (a) The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares, (and following
the occurrence of a Triggering Event, out of its authorized and unissued shares
of Common Stock and/or other securities, or out of any authorized and issued
shares held in its treasury), the number of Preferred Shares (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
required
13
to permit the exercise in full of all outstanding Rights.
(b) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all one one-hundredths of a Preferred Share
delivered upon exercise of the Rights shall, at the time of delivery of the
stock certificates therefor in accordance with Section 7(c) (including the
receipt of payment of the Exercise Price), be duly and validly authorized and
issued and fully paid and nonassessable.
(c) The Company covenants and agrees that it will use its best efforts to
cause, from and after such time as the Rights shall become exercisable, all
Preferred Shares issued or reserved for issuance to be listed, upon official
notice of issuance, on the principal national securities exchange, if any, on
which its Common Stock is listed or, if the principal market for Common Stock
is not on any national securities exchange, to be eligible for quotation on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") or any successor thereto or other comparable quotation system.
(d) The Company covenants and agrees that it will use its best efforts to
(i) file, as soon as practicable after the occurrence of any Section 11(a)(ii)
Event for which the consideration to be delivered by the Company upon exercise
of the Rights has been determined in accordance with Section 11(a)(iii), or as
soon as required by law after the Distribution Date, as the case may be, a
registration statement on an appropriate form under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (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 which at all times meets the requirements of the Securities
Act) until the earliest of (A) the date as of which the Rights are no longer
exercisable for such securities, (B) the Redemption Date and (C) the Final
Expiration Date. The Company further covenants and agrees that it will take
such action as may be appropriate under, and which will ensure compliance with,
the securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate in connection with the exercisability of the Rights. The Company
may temporarily suspend, for not more than 90 days after the applicable date
specified in the first sentence of this subsection (d), the exercisability of
the Rights in order to prepare and file such registration statement and permit
it to become effective and to complete such securities or "blue sky" law
action. Upon such suspension, the Company shall issue a public announcement
stating that the exercisability of the Rights has been temporarily suspended,
and the Company shall also issue a public announcement at such time as the
suspension shall no longer be in effect. Failure of the Company to notify the
Rights Agent of any such suspension shall not affect the effectiveness thereof.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
or exemption in such jurisdiction shall have been effected. Until otherwise
notified in writing by the Company, the Rights Agent may assume that each
purported exercise of the Rights is permitted by this Agreement and by
applicable law, and the Rights Agent shall not be liable for acting in reliance
upon such assumption.
(e) The Company covenants and agrees that, subject to Section 6, it will
pay when due and payable any and all federal and state original issue or
transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Rights or the Rights Certificates or of any stock certificate
for Preferred Shares (or Common Stock and/or other securities, as the case may
be) issued upon exercise of the Rights. The Company shall not, however, be
required to pay any transfer tax which may be payable in respect of any
transfer or delivery of any Rights Certificate to a Person other than, or the
issuance of any stock certificate for Preferred Shares (or Common Stock and/or
other securities, as the case may be) upon exercise of any of the Rights
represented by such Rights Certificate in a name other than, the
14
registered holder of such Rights Certificate or to issue or deliver any Rights
Certificate or stock certificate for Preferred Shares upon such transfer or
exercise until any such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender thereof) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
(f) After a Triggering Event, the provisions of this Section 9 shall
apply, to the extent applicable and appropriate, to all shares of capital stock
and other securities then purchasable upon exercise of the Rights.
SECTION 10. RECORD DATE OF PREFERRED SHARE OWNERSHIP. The Person in
whose name any stock certificate for Preferred Shares (or Common Stock and/or
other securities, as the case may be) is issued upon exercise of any of the
Rights shall for all purposes be deemed to have become the holder of record of
the Preferred Shares (or Common Stock and/or other securities, as the case may
be) represented thereby on, and such stock certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
to the Rights Agent with proper payment of the Exercise Price (and all
applicable transfer taxes, if any); provided, however, that if the date of such
surrender and payment shall be a date upon which the registry books of the
transfer agent for the Preferred Shares are closed, such Person shall be deemed
to have become the record holder of such Preferred Shares on, and such stock
certificate shall be dated, the next succeeding Business Day on which such
registry books are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Rights Certificate shall not be entitled to any rights
of a stockholder of the Company with respect to shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
SECTION 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER AND KIND OF SHARES AND
NUMBER OF RIGHTS. The Exercise Price, the number and kind of shares of capital
stock for which each Right is exercisable and the number of Rights outstanding
are subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event that the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares into a greater
number of Preferred Shares, (C) combine or consolidate the outstanding
Preferred Shares into a smaller number of Preferred Shares or (D) issue any
shares of capital stock of any class in a reclassification of the Preferred
Shares (including any such reclassification in connection with a combination or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and in Section 7(d), the Exercise
Price in effect at the Close of Business on the record date for such dividend
or at the effective time of such subdivision, combination, consolidation or
reclassification, and the number and kind of shares of capital stock issuable
upon exercise of the Rights at such date or time, shall be proportionately
adjusted so that the registered holder of each Right exercised after such date
or 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 or time and at a time when the registry books of the transfer agent for
the Preferred Shares were open, such registered holder would have been entitled
to receive by reason of such dividend, subdivision, combination, consolidation
or reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
the exercise thereof. If an event shall occur which would require an
adjustment under both this paragraph (i) and paragraph (ii) of this subsection
(a), the adjustment provided for in this
15
paragraph (i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to such paragraph (ii).
(ii) Subject to Section 24, in the event that any Person, either alone or
together with its Affiliates and Associates, shall become an Acquiring Person,
proper provision shall be made so that the registered holder of each Right,
except as otherwise provided in Section 7(d), shall thereafter have the right
to receive, upon exercise thereof and payment of an amount equal to the then
current Exercise Price, in accordance with this Agreement, in lieu of Preferred
Shares, the number of shares of Common Stock determined by multiplying the then
current Exercise Line by the number of one one-hundredth of a Preferred Share
for which a Right was exercisable immediately prior to a first occurrence
Section 11(a)(ii) Event and (y) of a dividing such product by 50% of the Fair
Market Value (determined as provided in subsection (d) of this Section 11) of
one share of Common Stock on the date of such occurrence (such number of
shares, the "Adjustment Shares").
(iii) In the event that there shall not be sufficient treasury shares or
authorized but unissued (and unreserved) Common Shares to permit the exercise
in full of the Rights in accordance with the foregoing subparagraph (ii) and
the Rights become so exercisable (and the Board has determined to make the
Rights exercisable into fractions of a Preferred Share), notwithstanding any
other provision of this Agreement, to the extent necessary and permitted by
applicable law, each Right shall thereafter represent the right to receive,
upon exercise thereof at the then current Purchase Price in accordance with the
terms of this Agreement, (x) a number of (or fractions of) Common Shares (up to
the maximum number of Common Shares which may permissibly be issued) and (y)
one one-hundredth of a Preferred Share or a number of, or fractions of other
equity securities of the Corporation (or, in the discretion of the Board of
Directors, debt) which the Board of Directors of the Corporation has determined
to have the same aggregate current market value (determined pursuant to Section
11(d)(i) and (ii) hereof, to the extent applicable,) as one Common Share (such
number of, or fractions of, Preferred Shares, debt, or other equity securities
or debt of the Corporation) being referred to as a "capital stock equivalent"),
equal in the aggregate to the number of Adjustment Shares; provided, however,
if sufficient Common Shares and/or capital stock equivalents are unavailable,
then the Company shall, to the extent permitted by applicable law, take all
such action as may be necessary to authorize additional Common Shares or
capital stock equivalents for issuance upon exercise of the Rights, including
the calling of a meeting of stockholders; and provided, further, that if the
Company is unable to cause sufficient Common Shares and/or capital stock
equivalents to be available for issuance upon exercise in full of the Rights,
then each Right shall thereafter represent the right to receive the Adjusted
Number of Shares upon exercise at the Adjusted Purchase Price (as such terms
are hereinafter defined). As used herein, the term "Adjusted Number of Shares"
shall be equal to that number of (or fractions of) Common Shares (and/or
capital stock equivalents) equal to the product of (x) the number of Adjustment
Shares and (y) a fraction, the numerator of which is the number of Common
Shares (and/or capital stock equivalents) available for issuance upon exercise
of the Rights and the denominator of which is the aggregate number of
Adjustment Shares otherwise issuable upon exercise in full of all Rights,
assuming there were a sufficient number of Common Shares available (such
fraction being referred to as the "Proration Factor"). The "Adjusted Purchase
Price" shall mean the product of the Purchase Price and the Proration Factor.
The Board of Directors may, but shall not be required to, establish procedures
to allocate the right to receive Common Shares and capital stock equivalents
upon exercise of the Rights among holders of Rights.
(b) In the event that the Company shall fix a record date for the making
of any distribution to all registered holders of Preferred Shares of options,
warrants or rights entitling
16
them (for a period expiring not later than 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares of capital
stock of any class of the Company having the same (or more
favorable) powers, preferences and rights as the Preferred Shares ("Equivalent
Preferred Shares"), or securities convertible into or exchangeable for
Preferred Shares or Equivalent Preferred Shares, at a price per Preferred Share
or per Equivalent Preferred Share (or having a conversion or exchange price per
share, in the case of securities convertible into or exchangeable for Preferred
Shares or Equivalent Preferred Shares) less than the Fair Market Value
(determined as provided in subsection (d) of this Section 11) of one Preferred
Share on such record date, the Exercise Price to be in effect after such record
date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date, plus
the number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or Equivalent Preferred Shares so to be offered
(and/or the aggregate initial conversion or exchange price, in the case of
convertible or exchangeable securities so to be offered) would purchase at such
Fair Market Value, and the denominator of which shall be the number of
Preferred Shares outstanding on such record date, plus the total number of
Preferred Shares and/or Equivalent Preferred Shares so to be offered (and/or
into or for which the convertible or exchangeable securities so to be offered
are initially convertible or exchangeable); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon the exercise thereof. In case all or part of such subscription price may
be paid in a form other than cash, the value of such non-cash consideration
shall be its Fair Market Value (determined as provided in such subsection (d)).
Preferred Shares owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any computation provided for in this
subsection (b). The adjustment required by this subsection (b) shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Exercise Price shall be adjusted to the
Exercise Price which would have been in effect if such record date had not been
fixed.
(c) In the event that the Company shall fix a record date for the making
of any distribution to all registered holders of Preferred Shares (including
any such distribution made in connection with a combination or merger in which
the Company is the continuing or surviving corporation) of cash (other than a
regular quarterly cash dividend), options, warrants, rights (other than those
referred to in subsection (b) of this Section 11), securities, evidences of
indebtedness or other property (excluding any dividend payable in Preferred
Shares, but including any dividend payable in other shares of capital stock),
the Exercise Price to be in effect after such record date shall be determined
by multiplying the Exercise Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the Fair Market Value
(determined as provided in subsection (d) of this Section 11) of one
one-hundredth of a Preferred Share on such record date, less the Fair Market
Value (as so determined) of the cash, options, warrants, rights, securities,
evidences of indebtedness or other property so to be distributed and properly
attributable to one one-hundredth of a Preferred Share, and the denominator of
which shall be such Fair Market Value of one one-hundredth of a Preferred
Share; provided, however, that in no event shall the consideration to be paid
upon the exercise of one Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon the exercise thereof. The
adjustment required by this subsection (c) shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not so
made, the Exercise Price shall be adjusted to the Exercise Price which would
have been in effect if such record date had not been fixed.
(d) For the purpose of any computation required under this Agreement,
"Fair Market Value," when used with respect to Preferred Shares or shares of
Common Stock or other
17
capital stock of any class (collectively, a "Stock"), to any option, warrant,
right or other security or evidence of indebtedness (collectively, a
"Security") or to any other property, shall be determined as provided in this
subsection (d):
(i) In the case of any Stock or Security which is publicly traded,
the Fair Market Value on any date shall be deemed to be the average of
the daily closing prices per share of such Stock or per unit of such
Security for the 30 consecutive Trading Days immediately prior to such
date; provided, however, that in the event that the Fair Market Value per
share of any Stock is determined during a period commencing after the
public announcement by its issuer of (A) a dividend or distribution on
such Stock payable in shares of such Stock or securities convertible into
or exchangeable for shares of such Stock or (B) a subdivision,
combination, consolidation or reclassification of such Stock, and ending
prior to the expiration of the 30 Trading Days after the ex-dividend date
for such dividend or distribution, or the record date for such
subdivision, combination, consolidation or reclassification, then, in
each such case, the Fair Market Value of such Stock shall be properly
adjusted to take into account "ex-dividend" trading. The closing price
for each day shall be the last sale price, regular way, or, in case no
such sale shall take place on such day, the average of the closing bid
and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange
or, if such Stock or 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 or
admitted to trading on the principal national securities exchange on
which such Stock or Security is listed or admitted to trading; or if such
Stock or 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 last quoted high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or any other similar
system then in use; or if on any such day no bid for such Stock or
Security is quoted by any such organization, the average of the closing
bid and asked prices, as furnished by a professional market maker making
a market in such Stock or Security selected by the Board. If during any
relevant period no market maker is making a market in such Stock or
Security, its Fair Market Value on a specified date shall be determined
reasonably and with utmost good faith to the holders of the Rights by the
Board; provided, however, that if at the time of such determination there
shall be an Acquiring Person, the Fair Market Value of such Stock or
Security on such date shall be determined by a nationally recognized
investment banking firm selected by the Board, which determination shall
be described in a statement filed with the Rights Agent and shall be
binding on the Company, the Rights Agent and the holders of the Rights.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which such Stock or Security is listed or admitted
to trading is open for the transaction of business or, if such Stock or
Security is not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) In the case of any Stock or Security which is not publicly
traded, the Fair Market Value on any date shall be the fair value per
share of such Stock or per unit of such Security as determined reasonably
and with utmost good faith to the holders of the Rights by the Board;
provided, however, that if at the time of such determination there shall
be an Acquiring Person or an Adverse Person, the Fair Market Value of
such Stock or Security on such date shall be determined by a nationally
recognized investment banking firm selected by the Board, which
determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Company, the Rights Agent and the
holders of the Rights.
18
(iii) In the case of any property which is not a Stock or a
Security, the Fair Market Value on any date shall be determined
reasonably and with utmost good faith to the holders of Rights by the
Board; provided, however, that if at the time of such determination there
shall be an Acquiring Person, the Fair Market Value of such property on
such date shall be determined by a nationally recognized investment
banking firm selected by the Board, which determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Company, the Rights Agent and the holders of the Rights.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Exercise
Price then in effect; provided, however, that any adjustments which by reason
of this subsection (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 whole cent, to the nearest one
ten-thousandth of a share of Common Stock or other capital stock of any class
(other than Preferred Shares) or to the nearest one one-millionth of a
Preferred Share, as the case may be. Notwithstanding the first sentence of
this subsection (e), any adjustment required by this Section 11 shall be made
no later than the earliest of (i) three years after the date of the occurrence
requiring such adjustment, (ii) the Redemption Date and (iii) the Final
Expiration Date.
(f) If as a result of an adjustment required by any Triggering Event the
holder of any Rights thereafter exercised shall become entitled to receive any
shares of capital stock of any class of the Company (other than Preferred
Shares), the number of such other shares so receivable upon exercise of any
Rights shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as reasonably possible to the provisions with
respect to the Preferred Shares contained in this Section 11, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised the option provided in
subsection (i) of this Section 11, upon each adjustment of the Exercise Price
as a result of the calculations required by subsection (b) or (c) of this
Section 11, each Right outstanding immediately prior to the making of such
Exercise Price adjustment shall thereafter evidence the right to purchase, at
the adjusted Exercise Price, the number of one one-hundredths of a Preferred
Share (calculated to the nearest one one-millionth) determined by (i)
multiplying the number of one one-hundredths of a Preferred Share purchasable
upon exercise of such Right immediately prior to such adjustment by the
Exercise Price in effect immediately prior to such adjustment and (ii) dividing
the product so obtained by the Exercise Price in effect immediately after such
adjustment.
(i) The Company may elect, on or after the date on which any adjustment
of the Exercise Price is required to be made hereunder, to adjust the number of
Rights outstanding in substitution for making an adjustment in the number of
one one-hundredths of a Preferred Share purchasable upon exercise of each
Right. Each Right outstanding after such an adjustment in the number of Rights
shall be exercisable for the same number of one one-hundredths of a Preferred
Share as such Right was exercisable for immediately prior to such adjustment;
but each Right held of record prior to such adjustment shall become the number
of Rights (calculated to the nearest one ten-thousandth) determined by dividing
the Exercise Price in effect
19
immediately prior to the occurrence requiring the adjustment of the Exercise
Price by the Exercise Price in effect immediately after such adjustment of the
Exercise Price. The Company shall make a prompt public announcement of its
election to adjust the number of Rights outstanding, indicating the record date
for the adjustment and, if known at the time of such announcement, the amount
of the adjustment to be made. Such record date may be the date on which the
Exercise Price is required to be adjusted or any day thereafter, unless the
Rights Certificates shall have been issued, in which case such record date
shall be at least 10 days after the date of such public announcement. If the
Rights Certificates shall have been issued, upon each adjustment of the number
of Rights outstanding pursuant to this subsection (i), the Company shall, as
promptly as practicable, cause to be distributed to each registered holder of
the Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14, the additional Rights to which such registered holder
shall be entitled as a result of such adjustment; or, at its option, the
Company shall cause to be distributed to each such registered holder, in
substitution and replacement for the Rights Certificates held by such
registered holder prior to the date of such adjustment, but only upon surrender
thereof (if so required by the Company), new Rights Certificates evidencing all
the Rights to which such registered holder shall be entitled after such
adjustment. Rights Certificates so distributed shall be executed and
countersigned in the manner provided in Section 5 (and may designate, at the
option of the Company, the adjusted Exercise Price) and shall be registered in
the names of the registered holders of the Rights Certificates on the record
date specified in the aforesaid public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or the
number of one one-hundredths of a Preferred Share issuable upon exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may continue
to designate the Exercise Price and the number of one one-hundredths of a
Preferred Share which were designated in the Rights Certificates originally
issued hereunder.
(k) Before taking any action which would cause an adjustment reducing the
Exercise Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require an adjustment of
the Exercise Price effective as of the record date for a particular event, the
Company may elect to defer until the occurrence of such event the issuing to
the holder of any Rights exercised after such record date of the Preferred
Shares (and/or the other shares of capital stock, securities or other property
of the Company, if any) issuable upon such exercise in excess of the Preferred
Shares (and/or the other shares of capital stock, securities or other property
of the Company, if any) issuable upon such exercise on the basis of the
Exercise Price in effect immediately prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such excess
upon the occurrence of such event.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Board shall be entitled to make reductions in the Exercise Price, in addition
to the adjustments expressly required by this Section 11, as and to the extent
that the Board, in its sole discretion, shall determine to be advisable in
order that any dividend on the Preferred Shares payable in Preferred Shares,
any subdivision, combination or consolidation of the Preferred Shares (by
reclassification or otherwise than by payment of dividends in Preferred Shares)
into a greater or lesser number of Preferred Shares, any issuance of Preferred
Shares solely for cash at less than
20
the Fair Market Value thereof, any issuance solely for cash of Preferred
Shares or securities which by their terms are convertible into
or exchangeable for Preferred Shares or any issuance of options, warrants,
rights, securities, evidences of indebtedness or other property subject to
subsection (b) or (c) of this Section 11, hereafter made by the Company to the
holders of the Preferred Shares, shall not be taxable to such holders.
(n) After the Distribution Date, the Company shall not consolidate or
merge with any other Person (other than a wholly-owned Subsidiary of the
Company in a transaction not prohibited by Section 11(o)), or sell or otherwise
transfer (or permit one or more of its Subsidiaries to sell or otherwise
transfer), in one or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company or one or more of its wholly-owned Subsidiaries in one or more
transactions, each of which is not prohibited by Section 11(o)), if (i) at the
time of or immediately after the consummation of such transaction there are any
options, warrants, rights, conversion or exchange privileges or securities
outstanding or any written or oral agreements, arrangements or understandings
(including provisions contained in the Company's Certificate of Incorporation
or By-laws) in effect which, as a result of the consummation of such
transaction, would eliminate or substantially diminish the benefits intended to
be afforded by the Rights, or (ii) prior to, at the time of or immediately
after the consummation of such transaction the stockholders of the Person who
constitutes, or would constitute, the Principal Party for the purpose of
subsection (a) of this Section 13 shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates.
(o) Except as permitted by Sections 23 and 27, the Company covenants and
agrees that, after the Distribution Date, it will not take, or permit any of
its Subsidiaries to take, any action if at the time such action would be taken
it is reasonably foreseeable that such action would eliminate or substantially
diminish the benefits intended to be afforded by the Rights.
(p) In the event that the Company shall at any time after the date of
this Agreement and prior to the Distribution Date (i) declare a dividend on its
outstanding shares of Common Stock payable in shares of Common Stock or (ii)
effect a subdivision, combination or consolidation of its outstanding shares of
Common Stock (by reclassification or otherwise than by payment of dividends in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then, in each such case: (i) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise of each Right
shall be determined by multiplying the number of one one-hundredths of a
Preferred Share so purchasable immediately prior to such event by a fraction,
the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such event and the denominator of which shall
be the number of shares of Common Stock outstanding immediately after such
event; and (ii) each share of Common Stock outstanding immediately after such
event shall have issued with respect to it the same number of Rights which each
share of Common Stock outstanding immediately prior to such event had issued
with respect to it. The adjustment required by this subsection (n) shall be
made successively whenever such a dividend is declared or such a subdivision,
combination or consolidation is effected.
SECTION 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES.
Whenever any adjustment shall be required by Section 11, 13 or 23(g), the
Company shall promptly (i) prepare a certificate setting forth such adjustment
and a brief statement of the facts requiring such adjustment, (ii) file with
the Rights Agent and with each transfer agent for the Preferred Shares or the
Common Stock of the Company a copy of such certificate and (iii) mail a
21
brief summary thereof to each registered holder of the Rights in accordance with
Section 26. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment described therein and shall not be deemed to
have knowledge of any 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) In the event that, on or after the occurrence of any
Section 11(a)(ii) Event, directly or indirectly: (i) the Company shall
consolidate with, or merge with and into, any Interested Stockholder or, if in
such consolidation or merger all holders of the Common Stock of the Company are
not treated the same, any other Person (other than a wholly-owned Subsidiary of
the Company in a transaction not prohibited by Section 11(o)), so that the
Company shall not be the continuing or surviving corporation, (ii) any
Interested Stockholder or, if in such merger all holders of the Common Stock of
the Company are not treated the same, any other Person (other than a
wholly-owned Subsidiary of the Company in a transaction not prohibited by
Section 11(o)) shall merge with and into the Company, so that the Company shall
be the continuing or surviving corporation, and in connection with such merger
either (A) all or part of the outstanding shares of Common Stock of the Company
shall be converted or changed into or exchanged for capital stock or other
securities of any other Person (or the Company), cash and/or other property or
(B) such shares of Common Stock shall remain outstanding, unconverted and
unchanged, or (iii) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or a series
of related transactions, assets or earning power aggregating 50% or more of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any Interested Stockholder or, if in such transaction or transactions the
holders of the Common Stock of the Company are not treated the same, any other
Person or Persons (other than the Company or one or more of its wholly-owned
Subsidiaries in one or more transactions, each of which is not prohibited by
Section 11(o)), then, in each such case, proper provision shall be made so that
(w) the registered holder of each Right, except as otherwise provided in
Section 7(d), shall thereafter have the right to receive, upon exercise thereof
and payment of an amount equal to the product determined by multiplying the
then current Exercise Price by the number of one one-hundredths of a Preferred
Share for which such Right is then exercisable, in accordance with this
Agreement, in lieu of Preferred Shares, the number of freely tradable shares
(which shall be duly authorized, validly issued, fully paid and non-assessable)
of Common Stock of the Principal Party or, in the case of a merger described in
clause (ii) of this sentence in which the Common Stock of the Company shall
remain outstanding, unconverted and unchanged, of the Company, free and clear
of all rights of call or first refusal, liens, encumbrances or other adverse
claims, determined by dividing such product by 50% of the Fair Market Value
(determined as provided in Section 11(d)) of the shares of Common Stock of such
Principal Party (or, if appropriate, the Company) on the date of consummation
of such Section 13 Event; (x) such Principal Party shall thereafter be liable
for, and shall assume, by reason of the consummation of such Section 13 Event,
all the obligations and duties of the Company under this Agreement; (y) the
term "Company" shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 shall apply to
such Principal Party; and (z) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
shares of Common Stock to permit exercise of all outstanding Rights in
accordance with this subsection (a) and the distribution of cash, debt
securities, shares and other property in accordance with Section 11(a)(iv))in
connection with the consummation of such Section 13 Event as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably possible, in relation to the shares of Common Stock thereafter
deliverable upon exercise of the Rights.
(b) The Company shall not consummate any Section 13 Event unless prior
thereto (i) the Principal Party shall have a sufficient number of authorized
shares of its Common
22
Stock which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and (ii) the
Company, the Principal Party and each other Person who may become the
Principal Party as a result of the consummation of such
Section 13 Event shall have executed and delivered to the Rights Agent a
supplemental agreement providing (x) for the implementation of all the terms
and conditions set forth in this Section 13 and (y) that, as soon as
practicable after the date of such Section 13 Event, the Principal Party, at
its own expense, shall:
(A) prepare and file a registration statement on an appropriate form
under the Securities Act with respect to the Rights and the securities
purchasable upon exercise thereof, and use its best efforts to cause such
registration statement to become effective as soon as practicable after
such filing and to remain effective (with a prospectus which at all times
meets the requirements of the Securities Act) until the earliest of the
date as of which the Rights are no longer exercisable for such
securities, the Redemption Date and the Final Expiration Date;
(B) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise thereof under the securities or
"blue sky" laws of such jurisdictions as may be necessary or appropriate
in connection with the exercisability of the Rights;
(C) use its best efforts to list (or continue the listing of) the
Rights and the securities purchasable upon exercise thereof on a national
securities exchange or to meet the eligibility requirements for quotation
on NASDAQ; and
(D) deliver to the registered holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates
complying in all material respects with the requirements for registration
of securities on Form 10 under the Exchange Act.
(c) Notwithstanding anything in this Agreement to the contrary, Section 13
shall not apply to a transaction described in clause (i) or (ii) of subsection
(a) thereof if (i) such transaction is consummated with a Person or Persons who
acquired their shares of Common Stock of the Company pursuant to a Permitted
Offer, (ii) the price per share of Common Stock of the Company provided in such
transaction shall not be less than the price per share of Common Stock of the
Company paid to all holders whose shares were purchased pursuant to such
Permitted Offer and (iii) the form of consideration being offered to the
remaining holders of the Common Stock of the Company pursuant to such
transaction is the same as the form of consideration paid pursuant to such
Permitted Offer. Upon consummation of any transaction authorized by this
subsection (d), all Rights shall expire.
(d) "Principal Party" shall mean: in the case of any transaction
described in clause (i) or (ii) of subsection (a) of this Section 13, the
Person which is the issuer of the securities into which shares of Common Stock
of the Company are being converted or changed in such transaction or, if there
shall be more than one such issuer, the issuer having shares of Common Stock
with the greatest aggregate market value; or if no securities are being issued
in such transaction for shares of Common Stock of the Company, the Person which
is the other party to such transaction or, if there shall be more than one such
Person, the Person having shares of Common Stock with the greatest aggregate
market value; and in the case of any transaction described in clause (iii) of
such subsection (a), the Person which is the party receiving the greatest
portion of the assets or earning power sold or otherwise transferred pursuant
to such transaction or transactions; provided, however, that in any such case
(i) if the shares of
23
Common Stock of such Person shall not at the time of the consummation of such
transaction have been continuously registered under Section 12 of the Exchange
Act during the immediately preceding 12-month period, and such Person shall be
a direct or indirect Subsidiary or Affiliate of another Person the shares of
Common Stock of which shall have been so registered, "Principal Party" shall
mean such other Person; and (ii) if such Person shall be a direct or indirect
Subsidiary or Affiliate of more than one other Person, the shares of Common
Stock of two or more of which shall have been so registered, "Principal Party"
shall mean whichever of such other Persons shall have Common Stock with the
greatest aggregate market value; and (iii) if such Person shall be owned,
directly or indirectly, by a joint venture formed by two or more Persons which
are not owned, directly or indirectly, by the same Person, the rules set forth
in clauses (i) and (ii) of this proviso shall apply to each chain of ownership
of any joint venturer as though such joint venture were a "Subsidiary" of all
of such joint venturers, and the Principal Party in each such chain shall bear
the obligations and duties set forth in this Section 13 in the same proportion
as their direct or indirect ownership interest in such Person bears to the
total of such ownership interests.
(e) If, in the case of any transaction described in clause (iii) of
subsection (a) of this Section 13, the Person or Persons to whom assets or
earning power are sold or otherwise transferred are individuals, then, in lieu
of any other payment or distribution required by this Section 13, and the
Company shall require as a condition to such transaction that, such Person or
Persons shall pay to each holder of a Rights Certificate, upon its surrender to
the Rights Agent and in exchange therefor (without requiring any payment by
such holder), cash in the amount determined by multiplying the then current
Exercise Price by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable.
(f) In no event shall the Rights Agent have any obligations or duties in
respect of any Section 13 Event, except as expressly set forth in this
Agreement. The Rights Agent may rely, and shall be fully protected in relying
upon, a certificate of the Company stating that the provisions of this Section
13 have been fulfilled. The prior written consent of the Rights Agent shall be
required in connection with any supplemental agreement which alters or impairs
the rights, obligations, duties or immunities of the Rights Agent hereunder.
(g) The provisions of this Section 13 shall similarly apply to successive
consolidations, mergers, sales or other transfers. In the event that any
Section 13 Event shall occur at any time after the occurrence of any Section
11(a)(ii) Event, the Rights which have not been theretofore exercised shall
thereafter be exercisable in the manner described in this Section 13.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractional Rights or to distribute Rights
Certificates which evidence fractional Rights. If the Company shall determine
not to issued fractional Rights, the Company shall pay, in lieu of issuing
fractional Rights, to the registered holders of the Rights with respect to
which fractional Rights would otherwise be issuable an amount in cash equal to
the same fraction of the Fair Market Value (determined as provided in Section
11(d) for the Trading Day immediately prior to the date on which such
fractional Rights would otherwise have been issued) of one Right.
(b) The Company shall not be required to issue fractional Preferred
Shares (other than fractions which are multiples of one one-hundredth of a
Preferred Share) upon exercise of the Rights or to distribute stock
certificates which evidence fractional Preferred Shares (other than fractions
which are multiples of one one-hundredth of a Preferred Share). If the Company
shall determine not to issue fractional Preferred Shares that are not multiples
of one one-
24
hundredth of a Preferred Share, the Company shall pay to the registered
holders of the Rights Certificates at the time Rights represented thereby are
exercised, in lieu of such fractional Preferred Shares, an amount in cash equal
tothe same fraction of the Fair Market Value (determined as provided in Section
11(d) for the Trading Day immediately prior to the date of such exercise) of
one one-hundredth of a Preferred Share.
(c) Following the occurrence of a Triggering Event, the Company, at its
option, shall not be required to issue fractions of shares of Common Stock upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Common Stock. In lieu of fractional shares of Common Stock, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one (1) share of Common Stock.
For purposes of this Section 14(c), the current market value of one share of
Common Stock shall be the closing price of one share of Common Stock (as
determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.
(d) Each holder of a Right, by accepting the same, expressly waives such
holder's right to receive or exercise any fractional Right or to receive any
fractional Preferred Share upon the exercise of such Right (except as provided
in this Section 14).
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, other than rights of action which the Rights Agent may have under
Sections 18 and 20, are vested in the registered holders of the Rights
Certificates (or, prior to the Distribution Date, the registered holders of the
Common Stock of the Company); and the registered holder of any Rights
Certificate (or, prior to the Distribution Date, of any stock certificate for
shares of such Common Stock), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of
any other stock certificate for shares of Common Stock), may, on such
registered holder's own behalf and for such registered holder's own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, such registered
holder's right to exercise the Rights evidenced by such Rights Certificate (or,
prior to the Distribution Date, such stock certificate) in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the
generality of the foregoing or any remedies available to the holders of the
Rights, it is specifically acknowledged that the registered holders of the
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 and
duties under, and injunctive relief against any actual or threatened violations
of the obligations and duties of any Person subject to, this Agreement.
SECTION 16. AGREEMENTS OF HOLDERS OF RIGHTS. Each holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(i) prior to the Distribution Date, the Rights shall be
transferable only simultaneously and together with the transfer of
shares of Common Stock of the Company;
(ii) after the Distribution Date, the Rights Certificates
shall be transferable on the registry books of the Rights Agent
only if surrendered at the principal office of the Rights Agent,
with the Form of Assignment and Certification of Status on the
reverse side thereof duly executed, together with such signature
guarantees and other documentation as the Rights Agent may
reasonably request;
25
(iii) subject to Sections 6 and 7(d), the Company and the
Rights Agent may deem and treat the Person in whose name any
Rights Certificate (or, prior to the Distribution Date, any stock
certificate for Common Stock of the Company) is registered as the
absolute owner thereof and of the Rights represented thereby
(notwithstanding any notations of ownership or other writing on
such Rights Certificate or stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary; and
(iv) neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or to any other Person because of its
inability to perform any of its obligations or duties under this
Agreement by reason of any applicable law, 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 rule, regulation or executive order
promulgated or enacted by any such governmental authority prohibiting or
otherwise restraining performance of any such obligation or duty;
provided, however, that the Company shall use its best efforts to have
any such injunction, order, decree or ruling lifted or otherwise
overturned as soon as reasonably possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, to
receive dividends or other distributions on or to exercise any preemptive
rights with respect to, or shall be deemed for any other purpose to be the
holder of, the Preferred Shares or other shares of capital stock of any class
of the Company which may at the time be issuable upon exercise of the Rights
represented thereby; nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate,
as such, any of the rights of a stockholder of the Company, or any right to
vote for the election of directors or upon any other matter submitted to
stockholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25) or to receive dividends,
subscription rights or other distributions, until the Rights represented by
such Rights Certificate shall have been exercised, in whole or in part, in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT. (a) The Company covenants and
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time on the written request of the
Rights Agent, to reimburse it for all reasonable expenses and counsel fees
incurred in connection with the acceptance and administration of this Agreement
and the performance of its obligations and duties hereunder. The Company also
covenants and agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability or expense, incurred without negligence, bad faith
or willful misconduct on its part, for any action taken, suffered or omitted by
it in connection with the acceptance and administration of this Agreement and
the performance of its obligations and duties hereunder, including the costs
and expenses of defending against any claim of liability arising therefrom,
directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no liability for,
or in respect of, any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate, stock certificate for Preferred Shares, Common Stock or other
shares of capital stock of the Company, instrument of assignment or transfer,
power of attorney, endorsement, affidavit, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be executed and,
26
where necessary, verified or acknowledged by the proper Person or Persons.
SECTION 19. MERGER OR CONSOLIDATION OF THE RIGHTS AGENT. (a) Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stockholder
services or 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 successor Rights Agent under Section 21. In case at the time
any successor Rights Agent shall succeed to the agency created by this
Agreement any of the Rights Certificates countersigned by its predecessor
Rights Agent shall not have been delivered, such successor Rights Agent may
adopt the countersignature of its predecessor Rights Agent and deliver the
Rights Certificates so countersigned; or in case at such time any of the Rights
Certificates shall not have been countersigned, such successor Rights Agent may
countersign such Rights Certificates either in the name of its predecessor
Rights Agent or in the name of such successor Rights Agent; and in all such
cases, such Rights Certificates shall have the full force and effect provided
therein and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver the Rights Certificates so countersigned; or in case at such
time any of the Rights Certificates shall not have been countersigned, the
Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases, such Rights Certificates shall
have the full force and effect provided therein and in this Agreement.
SECTION 20. DUTIES OF THE RIGHTS AGENT. The Rights Agent undertakes the
obligations and duties imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of the Rights
Certificates (or, prior to the Distribution Date, the stock certificates for
Common Stock of the Company), by accepting the same, shall be bound, and no
implied obligations or duties shall be read into this Agreement against the
Rights Agent:
(i) the Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the written opinion of such
legal counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken, suffered or
omitted by it in good faith and in accordance with such opinion;
(ii) whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company
prior to taking, suffering or omitting 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 executed by any one of the
Chairman of the Board, the President, any Vice President, the
Treasurer or the Secretary of the Company and delivered to the
Rights Agent; and such certificate shall be full and complete
authorization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith in reliance upon
such certificate;
(iii) the Rights Agent shall be liable hereunder to the
Company and any other Person only for its own negligence, bad
faith or willful misconduct;
27
(iv) the Rights Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Rights Certificates (except its
countersignature thereon) or be required to verify the same, but
all such statements and recitals are and shall be deemed to have
been made by the Company only;
(v) the Rights Agent shall not be responsible for the
validity of this Agreement or the execution and delivery hereof
(except for its due execution hereof) or for the validity or
execution of any Rights Certificate (except for its
countersignature thereon); nor shall the Rights Agent be
responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights
Certificate; nor shall the Rights Agent be responsible for any
change in the exercisability of the Rights (including Rights
becoming void pursuant to Section 7(d)), for any adjustment or
change (or for the manner or method of determining same) in the
terms of the Rights (including any adjustment or change in the
Exercise Price or in the number or kind of shares, securities or
other property issuable upon the exercise thereof) required by
Section 11, 13, 23 or 24 or for ascertaining the existence of
facts which would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice, in the manner provided in
Section 12, that such change or adjustment is required); nor shall
the Rights Agent by any act hereunder be deemed to have made any
representation or warranty as to the authorization or reservation
of any Preferred Shares or shares of Common Stock to be issued
pursuant to this Agreement or any Rights Certificate or as to
whether any Preferred Shares or shares of Common Stock will, when
issued, be validly authorized and issued and fully paid and
nonassessable;
(vi) the Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further 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;
(vii) the Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its
obligations and duties hereunder from any one of the Chairman of
the Board, the President, any Vice President, the Treasurer or the
Secretary of the Company, and to apply to such officers for advice
or instructions in connection with its obligations and duties; and
the Rights Agent shall not be liable for any action taken,
suffered or omitted by it in good faith and in accordance with the
written instructions of any such officer or for any delay in
acting while waiting for such instructions;
(viii) the Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal in
the Rights or in any other securities of the Company (including
the Preferred Shares and its Common Stock) or become pecuniarily
interested in any transaction in which the Company (or any of its
Subsidiaries) may be interested, or contract with or lend money to
the Company (or any of its Subsidiaries), and may otherwise act as
fully and freely as though it were not the Rights Agent under this
Agreement; and nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company, any of its
Subsidiaries or any other entity;
28
(ix) the Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any of its
obligations or duties hereunder either directly 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 attorney or agent or for any loss to the
Company resulting from any such act, default, neglect or
misconduct, provided the Rights Agent exercised reasonable care in
the selection and continued employment of such attorney or agent;
(x) if, with respect to any Rights Certificate surrendered
to the Rights Agent for exercise or transfer, the Form of
Certification of Status attached to the Form of Election to
Purchase or the Form of Assignment, as the case may be, has either
not been completed or indicates an affirmative response to
Question 1 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to the requested exercise or transfer
without first consulting with the Company; and
(xi) 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 obligations or duties or in
the exercise of its rights or powers hereunder if there shall be
reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured.
SECTION 21. RESIGNATION OR REMOVAL OF THE RIGHTS AGENT. The Rights Agent
or any successor Rights Agent may resign and be discharged from its obligations
and duties under this Agreement upon 30 days' prior notice to the Company and
to each transfer agent for the Preferred Shares and for the Common Stock of the
Company, sent by registered or certified mail, postage prepaid, and to each
registered holder of the Rights Certificates, sent by first-class mail, postage
prepaid. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' prior notice to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent for the Preferred Shares and for
the Common Stock of the Company, sent by registered or certified mail, postage
prepaid, and to each registered holder of the Rights Certificates, sent by
first-class mail, postage prepaid. If the Rights Agent or any successor Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor Rights Agent. If the Company shall fail
to make such appointment within 30 days after giving notice of such removal or
after receiving notice of such resignation or incapacity, either from the
resigning or incapacitated Rights Agent or from the registered holder of any
Rights Certificate (who shall, with such notice, submit its Rights Certificate
for inspection by the Company), then the incumbent Rights Agent or the
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a successor Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States of
America, the State of Delaware, the State of New York or the State of Illinois
(or of any other state so long as such corporation is authorized to do business
as a banking institution in the State of Delaware, the State of New York or the
State of Illinois), be in good standing under the laws of the jurisdiction of
its incorporation, have an office in the State of Delaware, the State of New
York or the State of Illinois, be authorized under such laws to exercise
corporate trust or stock transfer powers, be subject to supervision or
examination by federal or state authority and have at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After its appointment, the successor Rights Agent shall be vested
with the same rights, powers, obligations, duties and immunities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent
29
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment, the Company shall file notice thereof
in writing with the predecessor Rights Agent and each transfer agent for the
Preferred Shares and for the Common Stock of the Company, and mail notice
thereof to the registered holders of the Rights 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
Rights Agent or any successor Rights Agent or the appointment of any successor
thereto.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any
provision of this Agreement or of the Rights Certificates to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing the Rights
in such form as may be approved by the Board to reflect any adjustment or
change in the Exercise Price or in the number or kind of shares, securities or
other property issuable upon exercise of the Rights in accordance with the
provisions of this Agreement; provided, however, that (i) no such Rights
Certificates shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance could create a significant risk of
material adverse tax consequences to the Company or to the Persons to whom such
Rights Certificates would be issued and (ii) no such Rights Certificates 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. (a) The Board may, at its option, at any time
prior to the earliest of (i) the Close of Business on the 10th Business Day
after the Share Acquisition Date (or, if the Share Acquisition Date shall have
occurred prior to the Record Date, the Close of Business on the 10th Business
Day after the Record Date), or (ii) the occurrence of any Section 13 Event and
(iii) the Final Expiration Date, redeem all, but not less than all, of the then
outstanding Rights at a redemption price of $.01 per Right, adjusted as
provided in subsection (g) of this Section 23 (such redemption price being
hereinafter called the "Redemption Price"); provided, however, that if the
Board shall authorize the redemption of the Rights in the circumstances set
forth in either clause (A) or (B) below, there must be Continuing Directors
then in office and such authorization shall require the concurrence of at least
a majority of such Continuing Directors: (A) such authorization shall occur on
or after the date a Person becomes an Acquiring Person or an Adverse Person or
(B) such authorization shall occur on or after the date of a change (resulting
from a solicitation of either proxies or one or more written stockholder
consents) in a majority of the directors in office at the commencement of such
solicitation if any Person who shall be a participant in such solicitation has
stated (or, if upon the commencement of such solicitation, at least a majority
of the Continuing Directors shall have determined in good faith) that such
Person (or any of its Affiliates or Associates) intends to take, or may
consider taking, any action which would result in such Person becoming an
Acquiring Person or an Adverse Person or which would cause the occurrence of a
Triggering Event.
(b) In addition to the right of redemption reserved in the first sentence
of subsection (a) of this Section 23, if there shall be Continuing Directors
then in office, the Board may redeem, with the concurrence of at least a
majority of the Continuing Directors, all, but not less than all, of the then
outstanding Rights at the Redemption Price after the Share Acquisition Date,
but prior to the occurrence of any Section 13 Event, if either (i) the Person
who is an Acquiring Person shall have transferred or otherwise disposed of
(either alone or together with its Affiliates and Associates) such number of
shares of Common Stock of the Company, in one or a series of related
transactions not directly or indirectly involving the Company or any of its
Subsidiaries or the occurrence of any Section 13 Event, as shall result in such
Person thereafter being a Beneficial Owner of less than 10% of the then
outstanding shares of Common Stock of
30
the Company, and after such transfer or other disposition there is no other
Acquiring Person, or (ii) in connection with any Section 13 Event which shall
not involve an Interested Stockholder and in which all holders of the Common
Stock of the Company are treated the same.
(c) Notwithstanding any other provision of this Agreement, the Rights
shall not be exercisable after the first occurrence of any Section 11(a)(ii)
Event until such time as the Company's right of redemption under this Section
23 shall have expired.
(d) In considering whether to redeem the Rights, the Board and the
Continuing Directors may consider the best long-term and short-term interests
of the Company and its stockholders, including, without limitation, the effects
of the redemption of the Rights upon employees, creditors, suppliers and
customers of the Company or of its Subsidiaries and upon the communities in
which offices or other establishments of the Company and such Subsidiaries are
located and all other pertinent factors. The redemption of the Rights by the
Board may be made effective at such time, on such basis and with such
conditions as the Board, in its sole discretion, may establish.
(e) Immediately after action by the Board directing the redemption of the
Rights pursuant to subsection (a) or (b) of this Section 23, and without any
further action and without any notice, the right to exercise the Rights shall
terminate, and thereafter each registered holder of the Rights shall only be
entitled to receive the Redemption Price therefor. The Company shall give
prompt written notice to the Rights Agent and prompt public notice to the
holders of the Rights of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the
validity of such redemption. Within 10 days after action by the Board
directing the redemption of the Rights, the Company shall mail (or cause the
Rights Agent to mail) a notice of redemption to each registered holder of the
then outstanding Rights, at its last address appearing on the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock of the Company. Any notice which is
mailed in the manner provided in this subsection (e) shall be deemed given,
whether or not received by the registered holder to whom sent. Each notice of
redemption shall state the method by which payment of the Redemption Price is
to be made. Neither the Company nor any of its Affiliates or Associates may at
any time redeem, acquire or purchase for value any Rights other than in the
manner set forth in this Section 23 and Section 24 or in connection with any
purchase of outstanding shares of its Common Stock prior to the Distribution
Date.
(f) The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock based on its Fair Market Value (determined as provided
in Section 11(d)) as of the date of redemption or any other form of
consideration deemed appropriate by the Board.
(g) In the event that the Company shall at any time after the date of this
Agreement (i) declare a dividend on its outstanding shares of Common Stock
payable in shares of Common Stock or (ii) effect a subdivision, combination or
consolidation of its outstanding shares of Common Stock (by reclassification or
otherwise than by payment of dividends in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then, in each such case,
the Redemption Price after such event shall equal the Redemption Price in
effect immediately prior to such event multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event; provided, however,
that such adjustment shall be made only if the amount of the Redemption Price
would be reduced or increased by at least $0.001 per Right.
SECTION 24. EXCHANGE. (a) The Board may, at its option, at any time on
or after
31
the occurrence of any Section 11(a)(ii) Event, exchange all or any part of the
then outstanding and exercisable Rights (which shall not include any Rights
which have become void pursuant to Section 7(d)) for shares of Common Stock of
the Company at an exchange rate of one share of Common Stock per Right,
appropriately adjusted to reflect any event specified in clauses (A) through
(D), inclusive, of the first sentence of Section 11(a)(i) or in Section 11(n)
occurring after the date hereof (such exchange rate being hereinafter called
the "Exchange Rate"); provided, however, that the Board shall not be authorized
to effect such an exchange at any time after any Person (other than an Exempt
Person), together with the Affiliates and Associates of such Person, shall have
become the Beneficial Owner of 50% or more of the then outstanding shares of
Common Stock of the Company.
(b) Immediately after action by the Board directing 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 thereafter each registered holder of such Rights shall only be
entitled to receive the number of shares of Common Stock of the Company which
shall equal the number of such Rights held by such registered holder multiplied
by the Exchange Rate then in effect. The Company shall give prompt written
notice to the Rights Agent and prompt public notice to the holders of the
Rights of any such exchange; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such exchange.
Within 10 days after action by the Board directing the exchange of any Rights,
the Company shall mail (or cause the Rights Agent to mail) a notice of exchange
to each registered holder of such Rights, at its last address appearing on the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock of the Company. Any
notice which is mailed in the manner provided in this subsection (b) shall be
deemed given, whether or not received by the registered holder to whom sent.
Each notice of exchange shall state the method by which the exchange of shares
of Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata among the registered holders of the Rights based
upon the number of Rights held (excluding Rights which shall have become void
pursuant to Section 7(d)); and, in such case, a new Rights Certificate
evidencing the Rights not being exchanged shall be prepared and executed by the
Company and countersigned and delivered by the Rights Agent to the registered
holder of such Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Shares (or Equivalent Preferred Shares) for
shares of Common Stock in effecting an exchange for Rights, at the initial rate
of one one-hundredth of a Preferred Share (or Equivalent Preferred Share) for
each share of Common Stock, appropriately adjusted to reflect any adjustments
in the voting rights of the Preferred Shares pursuant to the Certificate of
Designations attached hereto as Exhibit A, so that the fractional Preferred
Share delivered in lieu of each share of Common Stock shall have the same
voting rights as one share of Common Stock.
(d) In the event that there shall not be sufficient authorized and
unissued or treasury shares of Common Stock or Preferred Shares (or Equivalent
Preferred Shares) to permit the exchange of Rights directed by the Board, the
Company shall take all necessary action to authorize and reserve for issuance
such number of additional shares of Common Stock or Preferred Shares (or
Equivalent Preferred Shares) as may be required for issuance upon such exchange
and, if necessary, shall use its best efforts to obtain stockholder approval
thereof.
(e) The Company shall not be required to issue fractional shares of
Common Stock in exchange for Rights or to distribute stock certificates which
evidence fractional shares of Common Stock. If the Company shall determine not
to issue fractional shares of Common
32
Stock, the Company shall pay to the registered holders of the Rights with
respect to which such fractional shares would otherwise be issuable an amount
in cash equal to the same fraction of the Fair Market Value (determined as
provided in Section 11(d) for the Trading Day immediately prior to the date of
such exchange) of one share of Common Stock.
SECTION 25. NOTICE TO HOLDERS OF RIGHTS CERTIFICATES OF CERTAIN EVENTS.
(a) In the event that at any time after the Distribution Date, the Company
shall propose: (i) to pay any dividend payable in shares of capital stock of
any class of the Company to the holders of Preferred Shares or to make any
other cash distribution to the holders of Preferred Shares (other than a
regular quarterly cash dividend); (ii) to effect any reclassification of the
Preferred Shares (other than a reclassification involving only the subdivision
of the outstanding Preferred Shares); (iii) to make any distribution to the
holders of Preferred Shares described in subsection (b) or (c) of Section 11;
(iv) to effect any Section 13 Event; (v) to pay any dividend on its shares of
Common Stock payable in shares of Common Stock or to effect a subdivision,
combination or consolidation of its outstanding shares of Common Stock (by
reclassification or otherwise than by payment of dividends in shares of Common
Stock); or (vi) to effect the liquidation, dissolution or winding up of the
Company; then, in each such case, the Company shall give to the Rights Agent
and each registered holder of the Rights, in the manner provided in Section 26,
written notice of such proposed action, which shall specify the record date for
such stock dividend or distribution or the date on which such reclassification,
Section 13 Event, liquidation, dissolution or winding up is expected to occur
(and the date for participation therein by the holders of the Common Stock
and/or Preferred Shares if any such date is to be fixed). Such notice shall be
given, in the case of any action described in clause (i) or (iii) of the
preceding sentence, at least [10] days prior to the record date and, in the
case of any other such action, at least [20] days prior to the date of taking
of such proposed action or the date for participation therein by the holders of
Preferred Shares, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, the Company shall,
as soon as practicable thereafter, give to the Rights Agent and each registered
holder of the Rights, in the manner provided in Section 26, written notice of
the occurrence thereof, which notice shall describe such occurrence and its
consequences in reasonable detail.
SECTION 26. OTHER NOTICES. Except as otherwise provided herein, notices
or demands authorized by this Agreement to be given or made by the Rights Agent
or by the registered holder of any Rights, Rights Certificate or stock
certificate for shares of Common Stock of the Company to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address shall be filed in writing with the
Rights Agent) as follows:
Home Products International, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxx, XX 00000
Attention: Corporate Secretary
Except as otherwise provided herein, notices or demands authorized by this
Agreement to be given or made by the Company or by the registered holder of any
Rights, Rights Certificate or stock certificate for shares of Common Stock of
the Company to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address
shall be filed in writing with the Company) as follows:
33
_________________________________
_________________________________
_________________________________
Attention:_______________________
Except as otherwise provided herein, notices or demands authorized by this
Agreement to be given or made by the Company or the Rights Agent to the
registered holder of any Rights, Rights Certificate or stock certificate for
shares of Common Stock of the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed to such holder at its last
address appearing on the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date,
but subject to the last sentence of this Section 27, the Company and the Rights
Agent, if so directed in writing by the Company, shall supplement or amend any
term, provision or condition of this Agreement, without the approval of the
registered holders of the stock certificates representing the Common Stock and
the Rights. From and after the Distribution Date, but subject to the last
sentence of this Section 27, the Company and the Rights Agent, if so directed
in writing by the Company, shall supplement or amend this Agreement, without
the approval of the registered holders of the Rights (however represented), in
order: (i) to cure any ambiguity, (ii) to correct or supplement any term,
provision or condition of this Agreement which may be defective or inconsistent
with any other term, provision or condition hereof, (iii) to shorten or
lengthen any time period specified herein (except that after the first
occurrence of an event described in either clause (A) or (B) of the proviso in
the first sentence of Section 23(a), there must be Continuing Directors then in
office and any such shortening or lengthening shall require the concurrence of
at least a majority of such Continuing Directors) or (iv) to change or
supplement one or more of the terms, provisions or conditions hereof in any
manner which the Company may deem necessary or desirable and which shall not
adversely affect, as determined by the Board (with the concurrence of at least
a majority of the Continuing Directors), the interests of the holders (other
than any Restricted Person or the transferees therefrom specified in Section
7(d) of the Rights (however represented); provided, however, that this
Agreement may not be supplemented or amended pursuant to clause (iii) of this
sentence (A) to lengthen any time period (except as permitted by Section
3(a)(ii)) unless (I) approved by at least a majority of the Continuing
Directors and (II) such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, and/or the benefits to, the holders (other than
any Restricted Person or the transferees therefrom specified in Section 7(d))
of the Rights or (B) to lengthen any time period relating to when the Rights
may be redeemed if at such time the Rights are not then redeemable. Upon the
delivery of a certificate from an appropriate officer of the Company stating
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, however, that the Rights Agent shall not be required to execute any
supplement or amendment which affects any of the Rights Agent's rights, powers,
obligations, duties or immunities under this Agreement without its consent. On
and after the Distribution Date, no supplement or amendment shall be made which
changes the Exercise Price, the number of one one-hundredths of a Preferred
Share for which a Right is exercisable, the Redemption Price or the Final
Expiration Date. Prior to the Distribution Date, the interests of the holders
of the Rights shall be deemed coincident with the interests of the holders of
the Common Stock of the Company.
SECTION 28. SUCCESSORS. All of the terms, provisions and conditions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns.
34
SECTION 29. CERTAIN DETERMINATIONS AND ACTIONS BY THE BOARD. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time, including the determination of the
percentage of such outstanding shares of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i), as in effect on the date hereof, under the Exchange Act. The
Board (or, as and when set forth herein, the Continuing Directors) shall have
the exclusive power and authority to interpret this Agreement and to exercise
all rights and powers specifically granted to the Board or to the Company, or
as may be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to make all determinations
deemed necessary or advisable for such administration, including, without
limitation, a determination to redeem or not to redeem the Rights, to exchange
or not to exchange the Rights, to declare a Person to be an Adverse Person or
to supplement or amend this Agreement. All such calculations, determinations,
interpretations and exercises (including, for purposes of clause (ii) below,
all omissions with respect to the foregoing) which are done or made by the
Board (or the Continuing Directors) in good faith shall (i) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other Persons and (ii) not subject any director (including any
Continuing Director) to any liability to the holders of the Rights or to any
other Person.
SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the stock certificates for the
Common Stock of the Company) any legal or equitable right, remedy or claim
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered
holders of the stock certificates for the Common Stock of the Company).
SECTION 31. SEVERABILITY. If any term, provision or condition of this
Agreement shall be held by a court of competent jurisdiction or other lawful
authority to be invalid, void or unenforceable, the remaining terms,
provisions, and conditions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that if any such term, provision or condition is held by such court or
authority to be invalid, void or unenforceable and the Board (with the
concurrence of at least a majority of the Continuing Directors then in office)
shall determine in good faith that severing the same from this Agreement would
adversely affect the purposes or effect of this Agreement, the right of
redemption set forth in Section 23 shall be reinstated and shall not expire
until the Close of Business on the 10th day following the date of such
determination by the Board.
SECTION 32. GOVERNING LAW. This Agreement and each Rights Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of [Delaware] and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts made and to be
performed entirely within such State.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall for all purposes be deemed to be an
original, but all such counterparts shall together constitute 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.
35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
HOME PRODUCTS INTERNATIONAL, INC.
By:
-----------------------------------
Xxxxx X. Xxxxxxx
Chairman
Attest:
By:
---------------------------
Name:
-------------------------
Title:
------------------------
RIGHTS AGENT
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Attest:
By:
---------------------------
Name:
-------------------------
Title:
------------------------
36
EXHIBIT A
---------
FORM
OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
OF
HOME PRODUCTS INTERNATIONAL, INC.
---------------------------------
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
Home Products International, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that, pursuant to authority conferred
upon its Board of Directors by its Certificate of Incorporation, as
amended, and by the provisions of Section 151 of the General Corporation
Law of the State of Delaware, the following resolution was adopted by its
Board of Directors at a meeting duly called and held on ____________,
1997:
RESOLVED, that, pursuant to the authority conferred upon the Board of
Directors of the Corporation (the "Board") by the provisions of the
Certificate of Incorporation, as amended, of the Corporation and by the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, there is hereby created a series of Preferred Stock of the
Corporation, which series shall have the following powers, designations,
preferences and relative, participating, optional and other special rights,
and the qualifications, limitations or restrictions thereof, in addition to
those set forth in the Certificate of Incorporation, as amended, of the
Corporation:
Section 1. Designation of Series; Number of Shares. The series of
Preferred Stock established hereby shall be designated the "Series B Junior
Participating Preferred Stock" (the "Series B Preferred Stock"), par value
$.01 per share, and the authorized number of shares constituting the Series
B Preferred Stock shall be ________. Such number of authorized shares may
be increased or decreased, from time to time, by resolution of the Board;
provided, however, that no such decrease shall reduce the number of
authorized shares of the Series B Preferred Stock to a number less than the
number of shares of the Series B Preferred Stock then outstanding, plus the
number of shares of the Series B Preferred Stock then reserved for issuance
upon the exercise of any outstanding options, warrants or rights or the
exercise of any conversion or exchange privilege contained in any
A-1
37
outstanding security issued by the Corporation.
Section 2. Dividends and Distributions. (A) Subject to the rights of
the holders of shares of any other series of the Preferred Stock (or shares
of any other class of capital stock of the Corporation) ranking senior to
the Series B Preferred Stock with respect to dividends, the holders of
shares of the Series B Preferred Stock, in preference to the holders of
shares of Common Stock and of any other class of capital stock of the
Corporation ranking junior to the Series B Preferred Stock with respect to
dividends, shall be entitled to receive, when, as and if declared by the
Board out of funds legally available therefor, quarterly dividends payable
in cash on the first day of July, October, January and April in each year
(each such date being a "Dividend Payment Date"), commencing on the first
Dividend Payment Date after the initial issuance of a share or fractional
share of the Series B Preferred Stock, in an amount per share (rounded to
the nearest whole cent) equal to the greater of (a) $1.00 and (b) 100 times
the aggregate per share amount of all cash dividends, plus 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions (other than a dividend payable in shares of Common Stock
or a distribution in connection with the subdivision of the outstanding
shares of Common Stock, by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Dividend Payment Date or, with
respect to the first Dividend Payment Date, since the initial issuance of a
share or fractional share of the Series B Preferred Stock. The multiple of
100 (the "Dividend Multiple") set forth in the preceding sentence shall be
adjusted from time to time as hereinafter provided in this paragraph (A).
In the event that the Corporation shall at any time after the effective date
of this Certificate of Designations (i) declare or pay any dividend on the
Common Stock payable in shares of Common Stock or (ii) effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then, in each such case, the Dividend Multiple thereafter applicable to the
determination of the amount of dividends per share which the holders of
shares of the Series B Preferred Stock shall be entitled to receive shall be
the Dividend Multiple in effect immediately prior to such event multiplied
by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which shall be the number of shares of Common Stock that were outstanding
immediately prior to such event.
(B) The Board shall declare, out of funds legally available
therefor, a dividend or distribution on the Series B Preferred Stock, as
provided in paragraph (A) of this Section 2, immediately after it has
declared a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided, however, that, in
the event that no dividend or distribution shall have been declared on
the Common Stock during the period between any Dividend Payment Date and
the next subsequent Dividend Payment Date, a dividend of $1.00 per share
on the Series B Preferred Stock less an amount equal to the dividends
already paid on the Series B Preferred Stock during such period shall
nevertheless be payable on such subsequent Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on the
outstanding shares of the Series B Preferred Stock from the Dividend
Payment Date next preceding the date of issuance of such shares, unless
such date of issuance shall be prior to the record date for the first
Dividend Payment Date, in which case dividends on such shares shall begin
to accrue and be cumulative from the date of issuance of such shares, or
unless such date of issuance shall be after the close of business on the
record date with respect to any Dividend Payment Date and on or prior to
such Dividend
A-2
38
Payment Date, in which case dividends on such shares shall begin to accrue
and be cumulative from such Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of the Series B
Preferred Stock in an amount less than the total amount of dividends then
accrued shall be allocated pro rata among such shares. The Board may fix a
record date for the determination of the holders of shares of the Series B
Preferred Stock entitled to receive payment of any dividend or distribution
declared thereon, which record date shall be not more than the number of days
prior to the date fixed for such payment permitted by applicable law.
Section 3. Voting Rights. In addition to any other voting rights
required by applicable law, the holders of shares of the Series B
Preferred Stock shall have the following voting rights:
(A) Each share of the Series B Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. The multiple of 100 (the "Voting
Multiple") set forth in the preceding sentence shall be adjusted from
time to time as hereinafter provided in this paragraph (A). In the event
that the Corporation shall at any time after the effective date of this
Certificate of Designations (i) declare or pay any dividend on the Common
Stock payable in shares of Common Stock or (ii) effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then, in each such case, the Voting Multiple thereafter applicable
to the determination of the number of votes per share to which the
holders of shares of the Series B Preferred Stock shall be entitled shall
be the Voting Multiple in effect immediately prior to such event
multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that
were outstanding immediately prior to such event.
(B) Except as otherwise provided in this Certificate of
Designations, in any other Certificate of Designations establishing
another series of the Preferred Stock (or any series of any other class
of capital stock of the Corporation) or by applicable law, the holders of
the Series B Preferred Stock, the holders of the Common Stock and the
holders of any other class of capital stock of the Corporation having
general voting rights shall vote together as a single class on all
matters submitted to a vote of the stockholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends
payable on any share or shares of Series A Preferred Stock
shall be in arrears in an amount equal to at least six full
quarterly dividends (whether or not declared and whether or
not consecutive), the holders of record of the outstanding
Preferred Stock shall have the exclusive right, voting
separately as a single class, to elect two directors of the
Corporation at a special meeting of stockholders of the
Corporation or at the Corporation's next annual meeting of
stockholders, and at each subsequent annual meeting of
stockholders, as provided below. At elections for such
directors, the holders of shares of Series A Preferred Stock
shall be entitled to case one vote for each one
one-hundredth of a share of Series A Preferred Stock held.
(ii) Upon the vesting of such right of the holders of the
A-3
39
Preferred Stock, the maximum authorized number of
members of the Board of Directors shall automatically be
increased by two and the two vacancies so created shall be
filled by vote of the holders of the outstanding Preferred
Stock as hereinafter set forth. A special meeting of the
stockholders of the Corporation then entitled to vote shall
be called by the Chairman or the President or the Secretary
of the Corporation, if requested in writing by the holders
of record of not less than 10% of the Preferred Stock then
outstanding. At such special meeting, or, if no such
special meeting shall have been called, then at the next
annual meeting of stockholders of the Corporation, the
holders of the shares of the Preferred Stock shall elect,
voting as above provided, two directors of the Corporation
to fill the aforesaid vacancies created by the automatic
increase in the number of members of the Board of Directors.
At any and all such meetings for such election, the holders
of a majority of the outstanding shares of the Preferred
Stock shall be necessary to constitute a quorum for such
election, whether present in person or by proxy, and such
two directors shall be elected by the vote of at least a
plurality of shares held by such stockholders present or
represented at the meeting. Any director elected by holders
of shares of the Preferred Stock pursuant to this Section
may be removed at any annual or special meeting, by vote of
a majority of the stockholders voting as a class who elected
such director, with or without cause. In case any vacancy
shall occur among the directors elected by the holders of
the Preferred Stock pursuant to this Section, such vacancy
may be filled by the remaining director so elected, or his
successor then in office, and the director so elected to
fill such vacancy shall serve until the next meeting of
stockholders for the election of directors. After the
holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during
the continuance of such period, the number of Directors
shall not be further increased or decreased except by vote
of the holders of Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series A Preferred Stock.
(iii) The right of the holders of the Preferred Stock,
voting separately as a class, to elect two members of the
Board of Directors of the Corporation as aforesaid shall
continue until, and only until, such time as all arrears in
dividends (whether or not declared) on the Preferred Stock
shall have been paid or declared and set apart for payment,
at which time such right shall terminate, except as herein
or by law expressly provided, subject to revesting in the
event of each and every subsequent default of the character
above-mentioned. Upon any termination of the right of the
holders of the shares of the Preferred Stock as a class to
vote for directors as herein provided, the term of office of
all directors then in office elected by the holders of
Preferred Stock pursuant to this Section shall terminate
immediately. Whenever the term of office of the directors
elected by the holders of the Preferred Stock pursuant to
this Section shall terminate and the special voting powers
vested in the holders of the Preferred Stock pursuant to
this Section shall have expired, the maximum number of
members of the Board of Directors of the Corporation shall
be such number as may be provided for in the By-laws of the
Corporation irrespective of any increase made pursuant to
the provisions of this Section.
A-4
40
(D) Except as otherwise provided in this Certificate of Designations
or by applicable law, the holders of the Series B Preferred Stock shall
have no special voting rights and their consent shall not be required
(except to the extent provided in paragraph (B) of this Section 3) for
the taking of any corporate action.
Section 4. Certain Restrictions.
(A) Whenever dividends or other distributions payable on the Series
B Preferred Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on outstanding shares of the Series B Preferred Stock shall
have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of any class of capital stock of
the Corporation ranking junior (either as to dividends or
upon liquidation, dissolution or winding up of the
Corporation) to the Series B Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of any class of capital stock of
the Corporation ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up of the
Corporation) with the Series B Preferred Stock, except
dividends paid ratably on the Series B Preferred Stock and
all such parity stock on which dividends are accrued and
unpaid in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for
consideration any shares of any class of capital stock of the
Corporation ranking junior (either as to dividends or upon
liquidation, dissolution or winding up of the Corporation) to
the Series B Preferred Stock, except that the Corporation may
at any time redeem, purchase or otherwise acquire any shares
of such junior stock in exchange for other shares of any
class of capital stock of the Corporation ranking junior
(both as to dividends and upon dissolution, liquidation or
winding up of the Corporation) to the Series B Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of the Series B Preferred Stock or any shares of any
class of capital stock of the Corporation ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up of the Corporation) with the Series B Preferred
Stock, or redeem any shares of such parity stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board) to the holders of
all such shares upon such terms and conditions as the Board,
after taking into consideration the respective annual
dividend rates and the other relative powers, preferences and
rights of the respective series and classes of such shares,
shall determine in good faith will result in fair and
equitable treatment among the respective holders of shares of
all such series and classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of any class of capital stock of the Corporation unless the Corporation
could, under paragraph (A) of this
A-5
41
Section 4, purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares. Any shares of the Series B Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after such purchase or
acquisition. All such canceled shares shall thereupon become authorized
and unissued shares of Preferred Stock and may be reissued as part of any
new series of the Preferred Stock, subject to the conditions and
restrictions on issuance set forth in the Certificate of Incorporation of
the Corporation, as amended from time to time, in any other Certificate
of Designations establishing another series of the Preferred Stock (or
any series of any other class of capital stock of the Corporation) or in
any applicable law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation
(whether voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made (a) to the holders of shares of any
class of capital stock of the Corporation ranking junior (either as to
dividends or upon liquidation, dissolution or winding up of the Corporation)
to the Series B Preferred Stock unless, prior thereto, the holder of each
outstanding share of the Series B Preferred Stock shall have received an
amount equal to the accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, plus an amount equal to
the Dividend Multiple (the "Series B Liquidation Preference"). Following
payment in full of the Series B Liquidation Preference, no additional
distributions shall be made to the holders of the Series B Preferred Stock
unless, prior thereto, the holders of the Common Stock shall have received an
amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series B Liquidation Preference by (ii) the Dividend
Multiple. Following payment in full of the Series B Liquidation Preference
and the Common Adjustment in respect of all outstanding shares of Series B
Preferred Stock and Common Stock, respectively, holders of the Series B
Preferred Stock and holders of Common Stock shall receive their relative and
proportionate share of the remaining assets to be distributed to them in the
ratio of the Dividend Multiple to one with respect to such series B Preferred
Stock and Common Stock, on a per-share basis.
Section 7. Consolidation, Merger, etc. In the event that the
Corporation shall be a party to any consolidation, merger, combination or
other transaction in which the outstanding shares of Common Stock are
converted or changed into or exchanged for other capital stock, securities,
cash or other property, or any combination thereof, then, in each such case,
each share of the Series B Preferred Stock shall at the same time be similarly
converted or changed into or exchanged for an aggregate amount, subject to
adjustment as hereinafter provided in this Section 7, equal to 100 times the
aggregate amount of capital stock, securities, cash and/or other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is being converted or changed or exchanged. In the event that
the Corporation shall at any time after the effective date of this Certificate
of Designations (a) declare or pay any dividend on the Common Stock payable in
shares of Common Stock or (ii) effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then, in each such case,
the aggregate amount per share which the holders of shares of the Series B
Preferred Stock shall thereafter be entitled to receive pursuant to the
preceding sentence shall be the aggregate amount per share in effect pursuant
to such sentence immediately prior to such event multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after such event and the denominator of which shall be the number
of shares of Common Stock that were outstanding immediately prior to such
event.
A-6
42
Section 8. No Redemption. The shares of the Series B Preferred Stock
shall not be redeemable at any time.
Section 9. Rank. Unless otherwise provided in the Certificate of
Designations establishing another series of the Preferred Stock after the
effective date of this Certificate of Designations, the Series B Preferred
Stock shall rank, as to the payment of dividends and the making of any other
distribution of assets of the Corporation, senior to the Common Stock, but
junior to all other series of the Preferred Stock.
Section 10. Amendments. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences and rights of the Series B Preferred Stock so
as to adversely affect any thereof without the affirmative vote of the holders
of a majority of the outstanding shares of the Series B Preferred Stock,
voting separately as a single class.
Section 11. Fractional Shares. Fractional shares of the Series B
Preferred Stock may be issued, but, unless the Board shall otherwise
determine, only in multiples of one one-hundredth of a share. The holder of
any fractional share of the Series B Preferred Stock shall be entitled to
receive dividends, participate in distributions, exercise voting rights and
have the benefit of all other powers, preferences and rights relating to the
Series B Preferred Stock in the same proportion as such fractional share bears
to a whole share.
IN WITNESS WHEREOF, Home Products International, Inc. has caused this
Certificate of Designations to be executed and attested by its duly authorized
officers this __day of ____________, 1997.
HOME PRODUCTS INTERNATIONAL, INC.
By:_____________________________
Xxxxx X. Xxxxxxx
Chairman
Attest:
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
A-7
43
EXHIBIT B
---------
FORM
OF
RIGHTS CERTIFICATE
CERTIFICATE NO. R- ____RIGHTS
_______ Aggregate Number of
Shares of Series B Junior
Participated Preferred Stock
Initially
Purchasable
NOT EXERCISABLE AFTER _______________, 2007 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF HOME PRODUCTS INTERNATIONAL, INC.,
AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
STOCKHOLDERS RIGHTS AGREEMENT HEREINAFTER MENTIONED. UNDER
CERTAIN CIRCUMSTANCES DESCRIBED IN SUCH AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY A RESTRICTED PERSON (AS SUCH TERM IS
DEFINED IN SUCH AGREEMENT), OR BY SPECIFIED TRANSFEREES FROM A
RESTRICTED PERSON, SHALL BE OR BECOME VOID.
B-1
44
RIGHTS CERTIFICATE
HOME PRODUCTS INTERNATIONAL, INC.
This certifies that _________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner, subject to the terms, provisions and conditions of the
Stockholders Rights Agreement dated as of March ___, 1997 (the "Rights
Agreement") between Home Products International, Inc., a Delaware corporation
(the "Company"), and [Rights Agent], a national banking association (the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date and prior to the Close of Business on March ___, 2007, at the
principal office of the Rights Agent or its successor as Rights Agent, one
one-hundredth of a fully paid and nonassessable share of Series B Junior
Participating Preferred Stock, $.01 par value (the "Preferred Shares"), of the
Company at a price (the "Exercise Price") of $40,000 per one one-hundredth of a
Preferred Share, upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and the related Form of Certification of
Status duly executed, together with such signature guarantees and other
documentation as the Rights Agent may reasonably request. The number of Rights
evidenced by this Rights Certificate (as well as the number of one
one-hundredths of a Preferred Share which may be purchased upon the exercise of
each Right) set forth above, and the Exercise Price set forth above, are the
numbers and the Exercise Price as of March, 1997, based on the Preferred Shares
as constituted on such date. As provided in the Rights Agreement, such number
of Rights (and/or such number of one one-hundredths of a Preferred Share) and
such Exercise Price are subject to change and adjustment upon the happening of
certain events specified in the Rights Agreement. Capitalized terms not
defined herein have the respective meanings specified in the Rights Agreement.
From and after the first occurrence of any Section 11(a)(ii) Event, if the
Rights evidenced by this Rights Certificate are Beneficially Owned by (i) a
Restricted Person, (ii) a transferee from a Restricted Person who becomes a
transferee after the Acquiring Person or Adverse Person becomes such or (iii)
under certain circumstances specified in the Rights Agreement, a transferee
from a Restricted Person who becomes a transferee prior to or concurrently with
the Acquiring Person or Adverse Person becoming such, such Rights shall be or
become void, and no holder hereof shall have any rights whatsoever with respect
to such Rights.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof, to which Rights
Agreement reference is hereby made for a full description of the rights,
powers, obligations, duties and immunities hereunder of the Company, the Rights
Agent and the holders of the Rights Certificates. Under the circumstances set
forth in the Rights Agreement, the exercisability of the Rights represented
hereby may be temporarily suspended. The Rights Agreement is on file at the
principal office of the Company and at the principal office of the Rights
Agent, and a copy will be provided upon written request to the Secretary of the
Company.
Upon surrender at the principal office of the Rights Agent, this Rights
Certificate, with or without other Rights Certificates, may be exchanged for
one or more Rights Certificates of like tenor and date evidencing Rights
entitling the holder to purchase the same aggregate number of one
one-hundredths of a Preferred Share as the Rights evidenced by the Rights
Certificates so surrendered. If this Rights Certificate shall be exercised in
part, the holder hereof shall be entitled to receive, upon surrender hereof,
one or more Rights Certificates for the
B-2
45
number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Rights Certificate (i) may be redeemed, at the direction of the Board, at
a redemption price (subject to adjustment) of $.01 per Right (payable in cash,
shares of Common Stock of the Company or any other form of consideration deemed
appropriate by the Board) or (ii) under certain circumstances, may be
exchanged, in whole or in part, at the direction of the Board, for shares of
Common Stock of the Company or Preferred Shares at an exchange rate (subject to
adjustment) of one share of Common Stock or one one-hundredth of a Preferred
Share per Right.
No fractional Preferred Share will be issued upon the exercise of any
Rights represented hereby (other than fractions which are a multiple of one
one-hundredth of a Preferred Share), but in lieu thereof a cash payment will be
made as provided in the Rights Agreement.
No holder, as such, of this Rights Certificate shall be entitled to vote,
to receive dividends or other distributions on or to exercise any preemptive
rights with respect to, or shall be deemed for any other purpose to be the
holder of, the Preferred Shares or other shares of capital stock of any class
of the Company which may at any time be issuable upon exercise hereof; nor
shall anything contained herein or in the Rights Agreement be construed to
confer upon the holder hereof, as such, any of the rights of a stockholder of
the Company, or any right to vote for the election of directors or upon any
other matter submitted to stockholders at any meeting thereof, to give or
withhold consent to any corporate action, to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement) or to receive dividends, subscription rights or other distributions,
until the Rights evidenced by this Rights Certificate shall have been
exercised, in whole or in part, in accordance with the provisions of the Rights
Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
B-3
46
IN WITNESS WHEREOF, this Rights Certificate has been executed by the
Company by the duly authorized facsimile signature of a proper officer of the
Company and a facsimile of its corporate seal has been imprinted hereon and
duly attested by the duly authorized facsimile signature of a proper officer of
the Company.
Dated as of _______________, ____.
HOME PRODUCTS INTERNATIONAL, INC.
By:______________________________
Xxxxx X. Xxxxxxx
Chairman
Attest:
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Countersigned:
[Rights Agent], as Rights Agent:
By:___________________________________
Authorized Signature
B-4
47
[REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder
if such holder desires to exercise Rights
represented by this Rights Certificate)
To HOME PRODUCTS INTERNATIONAL, INC.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the Preferred Shares (or
other securities, cash or property) issuable upon the exercise of such Rights
and requests that certificates for such Preferred Shares be issued in the name
of:
Please insert social security
or other identifying number: ____________________
________________________________________________________________
(Please print name and address)
________________________________________________________________
If such number of Rights shall not be all the Rights represented by this Rights
Certificate, a new Rights Certificate for the remaining unexercised 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: _______________, 19__
___________________________________
Signature
Signature Guaranteed: ________________________________
Signatures must be guaranteed by a participant in a recognized Signature
Guaranty Medallion Program.
CERTIFICATION OF STATUS
B-5
48
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate
[ ] is
[ ] is not
being exercised by or on behalf of a Person who is or was a Restricted
Person (as such term is defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did
[ ] did not
acquire, directly or indirectly, the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became a
Restricted Person.
___________________________________
Signature
Date: _______________, 19__
NOTICE
------
The signature(s) on the foregoing Form of Election to Purchase and
Certification of Status must correspond to the name written upon the face of
this Rights Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the Certification of Status set forth above is not completed,
the Company will deem the Beneficial Owner of the Rights represented by this
Rights Certificate to be a Restricted Person (as such term is defined in the
Rights Agreement), will not honor the Election to Purchase and will affix a
legend to such effect on this Rights Certificate and on any Rights Certificates
issued in exchange for this Rights Certificate.
B-6
49
[Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer this Rights Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto ______________________________
________________________________________________________________
(Please print name and address of transferee)
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated: _______________, 19__
___________________________________
Signature
Signature Guaranteed: ________________________________
Signatures must be guaranteed by a participant in a recognized Signature
Guaranty Medallion Program.
CERTIFICATION OF STATUS
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate
[ ] is
[ ] is not
being sold, assigned or transferred by or on behalf of a Person who is
or was a Restricted Person (as such term is defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did
[ ] did not
acquire, directly or indirectly the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became a
Restricted Person.
___________________________________
Signature
Date: _______________, 19__
B-7
50
NOTICE
------
The signature(s) on the foregoing Form of Assignment and Certification of
Status must correspond to the name written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the Certification of Status set forth above is not completed,
the Company will deem the Beneficial Owner of the Rights represented by this
Rights Certificate to be a Restricted Person (as such term is defined in the
Rights Agreement), will not honor the Assignment and will affix a legend to
such effect on this Rights Certificate and any Rights Certificates issued in
exchange for this Rights Certificate.
B-8
51
EXHIBIT C
---------
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
On March ___, 1997, the Board of Directors (the "Board") of Company, a
Delaware corporation (the "Company"), declared a dividend of one preferred
stock purchase right (a "Right") for each outstanding share of Common Stock,
$___ par value (the "Common Stock"), of the Company. The dividend is payable
on _______________, 1997 (the "Record Date") to the holders of record of the
Common Stock at the Close of Business on such date. Each Right entitles the
holder thereof (except as described below) to purchase from the Company one
one-hundredth of a share of the Series B Junior Participating Preferred Stock,
$.01 par value (the "Preferred Shares"), of the Company at a price (the
"Exercise Price") of $40,000 per one one-hundredth of a Preferred Share,
subject to adjustment. The terms of the Rights are set forth in the
Stockholders Rights Agreement dated as of March, 1997 (the "Rights Agreement")
between the Company and [Rights Agent], as Rights Agent (the "Rights Agent").
Capitalized terms not defined herein have the respective meanings specified in
the Rights Agreement.
Distribution Date; Transfer of Rights.
------------------ -------------------
Initially, the Rights associated with the Common Stock outstanding as of
the Record Date will be evidenced solely by the stock certificates for such
Common Stock, with a copy of this Summary of Rights attached thereto. The
Rights will separate from the Common Stock upon the earliest to occur of (i) 10
Business Days after the first public announcement that any Person (other than
an Exempt Person (as hereinafter defined)) has become an Acquiring Person (as
hereinafter defined), and (ii) 10 Business Days (or such other Business Day as
may be determined by action of the Board prior to the time that any Person
shall become an Acquiring Person after the commencement by any Person (other
than an Exempt Person) of, or the first public announcement of its intention to
commence, a tender or exchange offer if, upon the consummation thereof, such
Person would be the Beneficial Owner of 15% or more of the outstanding shares
of Common Stock (the earliest of the dates specified in clauses (i) and (ii)
being hereinafter called the "Distribution Date"). After the Distribution Date,
the Rights will be evidenced solely by separate certificates and will trade
independently from the Common Stock.
An "Acquiring Person" is any Person who or which, together with its
Affiliates and Associates, has acquired 15% or more of the shares of Common
Stock then outstanding, but does not include (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan or other
compensation program or arrangement of the Company or of any such Subsidiary or
(iv) any Person holding shares of Common Stock for or pursuant to the terms of
any such plan, program or arrangement (the Persons specified in clauses (i)
through (iv) being herein collectively called "Exempt Persons"). A "Continuing
Director" is (i) any member of the Board who is not a Restricted Person (as
hereinafter defined), or a representative or nominee of a Restricted Person,
and was a member of the Board prior to the date of the Rights Agreement and
(ii) any individual who subsequently becomes a member of the Board and is not a
Restricted Person, or a representative or nominee of a Restricted Person, and
whose nomination for election to the Board is recommended or approved by a
majority of the Continuing Directors then in office. A "Restricted Person" is
an Acquiring Person, an Adverse Person or any Affiliate or Associate thereof.
C-1
52
The Rights Agreement provides that, until the Distribution Date (or the
earlier redemption or expiration of the Rights), the Rights may be transferred
only with the associated shares of Common Stock. Until the Distribution Date
(or the earlier redemption or expiration of the Rights), stock certificates for
Common Stock issued after the Record Date, either upon transfer of outstanding
shares or original issuance of additional shares of Common Stock, will contain
a legend incorporating the Rights Agreement by reference. Until the
Distribution Date (or the earlier redemption or expiration of the Rights), the
surrender for transfer of any stock certificate for shares of Common Stock,
with or without such legend and whether or not a copy of this Summary of Rights
is attached thereto, will also constitute the transfer of the Rights associated
with the shares of Common Stock represented by such stock certificate.
As soon as practicable after the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to the holders of
record of the Common Stock as of the Close of Business on the Distribution
Date, which thereafter will constitute the sole evidence of the Rights. Each
share of Common Stock issued by the Company after the Record Date and prior to
the earlier redemption or expiration of the Rights, including any shares of
Common Stock issued by reason of the exercise of any option, warrant, right
(other than the Rights) or conversion or exchange privilege (however evidenced)
issued by the Company prior to the Distribution Date, will be accompanied by a
Right (unless the Board expressly provides to the contrary at the time of
issuance of any such option, warrant, right or privilege), and Rights
Certificates evidencing such Rights will be issued at the same time as the
stock certificates for the associated shares of Common Stock.
The Rights are not exercisable until the Distribution Date. Moreover, the
time when the Rights may be exercised is restricted as described in the next
paragraph. The Rights will expire on March ___, 2007 (the "Final Expiration
Date"), unless the Final Expiration Date is extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described below.
Exercise of Rights Under Certain Circumstances.
-----------------------------------------------
In the event that any Person becomes an Acquiring Person or is declared to
be an Adverse Person, proper provision will be made so that the registered
holder of each Right (other than Rights Beneficially Owned as described in the
next sentence) will thereafter have the right to receive, upon exercise
thereof, the number of shares of Common Stock which, at the time of the
occurrence of such event, will have a market value equal to two times the then
current Exercise Price. After the first occurrence of either of the events
described in the preceding sentence, all Rights which are, or (under certain
circumstances specified in the Rights Agreement) were, Beneficially Owned by a
Restricted Person or specified transferees therefrom will be or become void.
Under no circumstances may a Right be exercised after the occurrence of either
such event unless the Company's right to redeem the Rights (as described below)
has expired.
If, on or after the date on which any Person has become an Acquiring
Person or been declared to be an Adverse Person, any of the following
transactions occur: (i) the Company merges into or consolidates with an
Interested Stockholder (as hereinafter defined) or, unless all holders of the
Company's outstanding shares of Common Stock are treated the same, another
Person (with limited designated exceptions); (ii) an Interested Stockholder or,
unless all holders of the Company's outstanding shares of Common Stock are
treated the same, another Person (with limited designated exceptions) merges
into the Company and either (A) all or part of the outstanding shares of Common
Stock of the Company are converted into capital stock or other securities of
any other Person (or the Company), cash and/or other property or (B) such
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shares remain outstanding, unconverted and unchanged; or (iii) the Company
sells or transfers 50% or more of its consolidated assets or earning power to
an Interested Stockholder (as hereinafter defined) or, unless all holders of
the Company's outstanding shares of Common Stock are treated the same, another
Person (with limited designated exceptions); proper provision will be made so
that the registered holder of each Right (other than Rights which have become
void) will thereafter have the right (the "Flip-Over Right") to receive, upon
exercise thereof, the number of common shares of the acquiror (or of another
Person affiliated therewith) which, at the time of consummation of such
transaction, will have a market value equal to two times the then current
Exercise Price. An "Interested Stockholder" is any Restricted Person or any
Affiliate or Associate of any other Person in which such Restricted Person has
an interest, or any Person acting, directly or indirectly, on behalf of or in
concert with any such Restricted Person.
Adjustments to Exercise Price and Stock Purchasable Upon Exercise.
------------------------------------------------------------------
The Exercise Price payable, the number and kind of shares of capital stock
issuable upon exercise of the Rights and the number of Rights outstanding are
subject to adjustment from time to time to prevent dilution (i) in the event of
a dividend payable in Preferred Shares on, or a subdivision, combination or
reclassification of, the Preferred Shares, (ii) upon the grant to the holders
of the Preferred Shares of certain options, warrants or rights to subscribe for
or purchase Preferred Shares at a price, or securities convertible into or
exchangeable for Preferred Shares with a conversion or exchange price, less
than the then Fair Market Value of the Preferred Shares or (iii) upon the
distribution to the holders of the Preferred Shares of cash, securities,
evidences of indebtedness or other property (other than a regular quarterly
cash dividend or a dividend payable in Preferred Shares) or options, warrants
or rights (other than those referred to in clause (ii) above).
The number of outstanding Rights and the number of one one-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a dividend on the Common Stock payable in shares of
Common Stock or a subdivision, combination or reclassification of the Common
Stock occurring, in any such case, prior to the Distribution Date.
With certain specified exceptions, no adjustment in the Exercise Price
will be made until the cumulative adjustments required equal at least 1% of the
Exercise Price. The Company is not required to issue fractional Preferred
Shares (other than fractions which are multiples of one one-hundredth of a
Preferred Share), but in lieu thereof the Company would be required to make a
cash payment based on the Fair Market Value of the Preferred Shares on the
trading day immediately preceding the date of exercise.
Terms of Preferred Shares.
--------------------------
The Preferred Shares receivable upon exercise of the Rights will not be
redeemable. Each Preferred Share will entitle the holder thereof to receive a
preferential quarterly dividend equal to the greater of (i) $1.00 and (ii) 100
times the aggregate per share amount of all cash dividends, plus 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends and
other distributions (other than in shares of Common Stock), declared on the
Common Stock during such quarter, adjusted to give effect to any dividend on
the Common Stock payable in shares of Common Stock or any subdivision,
combination or reclassification of the Common Stock (a "Dilution Event"). Each
Preferred Share will entitle the holder thereof to 100 votes on all matters
submitted to a vote of the stockholders of the Company, voting together as a
single class with the holders of the Common Stock and the
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54
holders of any other class of capital stock having general voting rights,
adjusted to give effect to any Dilution Event. In the event of liquidation of
the Company, the holder of each Preferred Share will be entitled to receive a
preferential liquidation payment equal to the greater of (i) [$______] and (ii)
100 times the aggregate per share amount to be distributed to the holders of
the Common Stock, adjusted to give effect to any Dilution Event, plus an amount
equal to accrued and unpaid dividends and distributions on such Preferred
Share, whether or not declared, to the date of such payment. In the event of
any merger, consolidation or other transaction in which the outstanding shares
of Common Stock of the Company are exchanged for or converted into other
capital stock, securities, cash and/or other property, each Preferred Share
will be similarly exchanged or converted into 100 times the per share amount
applicable to the Common Stock, adjusted to give effect to any Dilution Event.
Because of the nature of the dividend, voting, liquidation and other
rights accorded to each Preferred Share, the value of the one one-hundredth of
a Preferred Share receivable upon the exercise of each Right should approximate
the value of one share of Common Stock.
Redemption of Rights.
---------------------
At any time prior to the earliest of (i) 10 Business Days after the first
public announcement that any Person (other than an Exempt Person) has become an
Acquiring Person, (ii) 10 Business Days after any Person has been declared to
be an Adverse Person, (iii) the occurrence of any transaction which permits the
exercise of the Flip-Over Right and (iv) the Final Expiration Date, the Board
may redeem the Rights in whole, but not in part, at the redemption price of
[$.01] per Right, adjusted to give effect to any Dilution Event (the
"Redemption Price"); provided, however, that, under certain circumstances
specified in the Rights Agreement, the Rights may not be redeemed unless there
are Continuing Directors in office and such redemption is approved by at least
a majority of such Continuing Directors. The redemption of the Rights may be
made effective at such time, on such basis and with such conditions as the
Board, in its sole discretion, may establish. After the redemption period has
expired, the Company's right of redemption may be reinstated, under the
circumstances specified in the Rights Agreement, which include the concurrence
of at least a majority of the Continuing Directors, if either (i) the Person
who became an Acquiring Person or an Adverse Person shall reduce, in one or a
series of related transactions not involving the Company or any Subsidiary or
the occurrence of any transaction which permits the exercise of the Flip-Over
Right, its Beneficial Ownership of the outstanding shares of Common Stock to
less than [10%] of such outstanding shares or (ii) in connection with any
transaction which permits the exercise of the Flip-Over Right, which does not
involve an Interested Stockholder and in which all holders of the Common Stock
are treated the same. Immediately after action by the Board directing the
redemption of the Rights, the option to exercise the Rights will terminate, and
thereafter each registered holder of the Rights will only be entitled to
receive the Redemption Price therefor.
Exchange of Rights.
-------------------
At any time after any Person has become an Acquiring Person or been
declared to be an Adverse Person and prior to the time that any Person (other
than an Exempt Person), together with its Affiliates and Associates, has become
the Beneficial Owner of [50%] or more of the outstanding shares of Common
Stock, the Board may direct that all or any part of the outstanding Rights
(other than Rights which have become void) be exchanged for shares of Common
Stock at the exchange rate of one share of Common Stock (or one one-hundredth
of a Preferred Share or of another share of capital stock of the Company having
equivalent rights, preferences and privileges) per Right, adjusted to give
effect to any Dilution Event.
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55
Amendment of the Rights and the Rights Agreement.
-------------------------------------------------
Prior to the Distribution Date, the terms of the Rights and the Rights
Agreement may be supplemented or amended by the Board in any manner. From and
after the Distribution Date, the Rights may be supplemented or amended by the
Board, without the approval of the holders of the Rights, in certain respects
which do not adversely affect, as determined by the Board (with the concurrence
of at least a majority of the Continuing Directors), the interests of such
holders; provided, however, that the Rights Agreement cannot be amended to
lengthen (i) any time period unless (A) such lengthening is approved by at
least a majority of the Continuing Directors and (B) such lengthening is for
the benefit of the holders of the Rights or (ii) any time period relating to
when the Rights may be redeemed if at such time the Rights are not then
redeemable.
Miscellaneous.
--------------
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
________________, 1997. A copy of the Rights Agreement is available free of
charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the
Rights Agreement, which is hereby incorporated herein by reference.
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