EXHIBIT 4
MPOWER HOLDING CORPORATION
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Rights Agent
Rights Agreement
Dated as of July 10, 2003
TABLE OF CONTENTS
Page
SECTION 1. Certain Definitions...............................................1
SECTION 2. Appointment of Rights Agent.......................................5
SECTION 3. Issue of Rights Certificates......................................5
SECTION 4. Form of Rights Certificates.......................................7
SECTION 5. Countersignature and Registration.................................8
SECTION 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost
or Stolen Rights Certificates.....................................8
SECTION 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights....................................................9
SECTION 8. Cancellation and Destruction of Rights Certificates..............11
SECTION 9. Reservation and Availability of Capital Stock....................11
SECTION 10. Preferred Stock Record Date......................................12
SECTION 11. Adjustment of Purchase Price, Number and Kind of
Shares or Number of Rights.......................................12
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares.......21
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power.................................................21
SECTION 14. Fractional Rights and Fractional Shares..........................24
SECTION 15. Rights of Action.................................................24
SECTION 16. Agreement of Rights Holders......................................25
SECTION 17. Rights Certificate Holder Not Deemed a Stockholder...............25
SECTION 18. Concerning the Rights Agent......................................26
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent........26
SECTION 20. Duties of Rights Agent...........................................27
SECTION 21. Change of Rights Agent...........................................29
SECTION 22. Issuance of New Rights Certificates..............................30
SECTION 23. Redemption and Termination.......................................30
SECTION 24. Notice of Certain Events.........................................31
SECTION 25. Notices..........................................................31
SECTION 26. Supplements and Amendments.......................................32
SECTION 27. Successors.......................................................33
SECTION 28. Determinations and Actions by the Board of Directors, Etc........33
SECTION 29. Benefits of this Agreement.......................................33
SECTION 30. Severability.....................................................33
SECTION 31. Governing Law....................................................33
SECTION 32. Counterparts.....................................................34
SECTION 33. Descriptive Headings.............................................34
SECTION 34. Exchange.........................................................34
ii
RIGHTS AGREEMENT
----------------
RIGHTS AGREEMENT, dated as of July 10, 2003 (this
"Agreement"), between Mpower Holding Corporation, a Delaware corporation (the
"Company"), and Continental Stock Transfer & Trust Company, a New York
corporation (the "Rights Agent").
WHEREAS, effective at the close of business on July 10, 2002
(the "Rights Dividend Declaration Date"), the Board of Directors of the Company
authorized and declared a distribution of one Right (each, a "Right") for each
share of Common Stock, par value $.001 per share, of the Company (the "Company
Common Stock") outstanding at the Close of Business (as defined below) on July
11, 2003 (the "Record Date"), and has authorized the issuance of one Right (as
such number may hereinafter be adjusted pursuant hereto) for each share of
Company Common Stock issued between the Record Date (whether originally issued
or delivered from the Company's treasury) and, except as otherwise provided in
Section 22, the Distribution Date, each Right initially representing the right
to purchase upon the terms and subject to the conditions hereinafter set forth
one Unit (as defined below) of Series A Preferred Stock (as defined below);
WHEREAS, the Company desires to set forth certain terms and
conditions governing the Rights; and
WHEREAS, the Company desires to appoint the Rights Agent to
act as rights agent hereunder, in accordance with the terms and conditions
hereof;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
alone or together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of 15% or more of the shares of Company
Common Stock then outstanding, but shall not include (i) the Company,
any Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary with
respect to such plan acting in such capacity, or (ii) any such Person
who has become and is such a Beneficial Owner solely because (A) of a
change in the aggregate number of shares of the Company Common Stock
since the last date on which such Person acquired Beneficial Ownership
of any shares of the Company Common Stock or (B) it acquired such
Beneficial Ownership in the good faith belief that such acquisition
would not (1) cause such Beneficial Ownership to be equal to or exceed
15% of the shares of the Company Common Stock then outstanding and such
Person relied in good faith in computing the percentage of its
Beneficial Ownership on publicly filed reports or documents of the
Company that are inaccurate or out-of-date or (2) otherwise cause a
Distribution Date or the adjustment provided for in Section 11(a)(ii)
to occur. Notwithstanding clause (ii)(B) of the prior sentence, if any
Person that is not an
Acquiring Person due to such clause (ii)(B) does not reduce its
percentage of Beneficial Ownership of the Company Common Stock to less
than 15% by the Close of Business on the fifth Business Day after
notice from the Company (the date on which such notice is first mailed
or sent being the first day) that such person's Beneficial Ownership of
the Company Common Stock is equal to or exceeds 15%, such Person shall,
at the end of such five Business Day period, become an Acquiring Person
(and such clause (ii)(B) shall no longer apply to such Person). For
purposes of this definition, the determination whether any Person acted
in "good faith" shall be conclusively determined by the Board of
Directors of the Company, acting by a vote of those directors of the
Company whose approval would be required to redeem the Rights under
Section 23.
(b) "Adjustment Shares" has the meaning set forth in Section
11(a)(ii).
(c) "Adjustment Spread" has the meaning set forth in Section
34(a)(ii).
(d) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the Exchange Act
Regulations as in effect on the date of this Agreement.
(e) A Person shall be deemed the "Beneficial Owner" of, and
shall be deemed to "beneficially own", and shall be deemed to have
"Beneficial Ownership" of, any securities:
(i) of which such Person or any of such Person's
Affiliates or Associates is considered to be a "beneficial
owner" under Rule 13d-3 of the Exchange Act Regulations as in
effect on the date of this Agreement; provided, however, that
a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own", or to have "Beneficial Ownership" of, any
securities under this subparagraph (i) as a result of an
agreement, arrangement or understanding to vote such
securities if such agreement, arrangement or understanding (A)
arises solely from a revocable proxy given in response to a
proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the Exchange Act
and the Exchange Act Regulations, and (B) is not reportable by
such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report);
(ii) that are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate of such
other Person) with which such Person (or any of such Person's
Affiliates or Associates) has any agreement, arrangement or
understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable
proxy as described in the proviso to subparagraph (i) of this
paragraph (e)) or disposing of such securities; or
(iii) that such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only
after the passage of time or upon the satisfaction of
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conditions) pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise
of conversion rights, exchange rights, rights, warrants or
options, or otherwise;
provided, however, that under this paragraph (e) a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own", or to have
"Beneficial Ownership" of, (A) securities tendered pursuant to a tender
or exchange offer made in accordance with Exchange Act Regulations by
such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange, (B)
securities that may be issued upon exercise of Rights at any time prior
to the occurrence of a Triggering Event or (C) securities that may be
issued upon exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired by such Person or any of
such Person's Affiliates or Associates prior to the Distribution Date
or pursuant to Section 3(c) or Section 22 or pursuant to Section 11(i)
in connection with an adjustment made with respect to any such Rights.
(f) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00
p.m., New York City time, on such date; provided, however, that if such
date is not a Business Day it shall mean 5:00 p.m., New York City time,
on the next succeeding Business Day.
(h) "Common Stock" of any Person other than the Company shall
mean the capital stock of such Person with the greatest voting power,
or, if such Person shall have no capital stock, the equity securities
or other equity interest having power to control or direct the
management of such Person.
(i) "Company" has the meaning set forth in the preamble to
this Agreement.
(j) "Company Common Stock" has the meaning set forth in the
recitals to this Agreement.
(k) "Current Value" has the meaning set forth in Section
11(a)(iii).
(l) "Depositary Agent" has the meaning set forth in Section
7(c).
(m) "Distribution Date" has the meaning set forth in Section
3(a).
(n) "Equivalent Preferred Stock" has the meaning set forth in
Section 11(b).
(o) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(p) "Exchange Act Regulations" shall mean the General Rules
and Regulations under the Exchange Act.
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(q) "Expiration Date" has the meaning set forth in Section
7(a).
(r) "Final Expiration Date" has the meaning set forth in
Section 7(a).
(s) "Person" shall mean any individual, partnership, limited
liability company, firm, corporation, joint venture, association,
trust, unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act.
(t) "Preferred Stock" shall mean the Series A Preferred Stock,
par value $.001 per share, of the Company having the voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions
described in the Certificate of Designation set forth as Exhibit C
hereto.
(u) "preferred stock equivalents" has the meaning specified in
Section 11(a)(iii).
(v) "Principal Party" has the meaning set forth in Section
13(b).
(w) "Purchase Price" has the meaning set forth in Section
7(b).
(x) "Record Date" has the meaning set forth in the recitals to
this Agreement.
(y) "Redemption Price" has the meaning set forth in Section
23(a).
(z) "Registered Common Stock" has the meaning set forth in
Section 13(b)(ii).
(aa) "Registration Date" has the meaning set forth in Section
9(c).
(bb) "Registration Statement" has the meaning set forth in
Section 9(c).
(cc) "Right" has the meaning set forth in the recitals to this
Agreement.
(dd) "Rights Agent" has the meaning set forth in the preamble
to this Agreement.
(ee) "Rights Certificate" has the meaning set forth in Section
3(a).
(ff) "Rights Dividend Declaration Date" has the meaning set
forth in the recitals to this Agreement.
(gg) "Section 11(a)(ii) Event" has the meaning set forth in
Section 11(a)(ii).
(hh) "Section 11(a)(iii) Trigger Date" has the meaning set
forth in Section 11(a)(iii).
(ii) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a).
4
(jj) "Section 34(a)(i) Exchange Ratio" has the meaning set
forth in Section 34(a)(i).
(kk) "Section 34(a)(ii) Exchange Ratio" has the meaning set
forth in Section 34(a)(ii).
(ll) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(mm) "Spread" has the meaning set forth in Section 11(a)(iii).
(nn) "Stock Acquisition Date" shall mean the first date of
public announcement (including, without limitation, the filing of any
report pursuant to Section 13(d) of the Exchange Act) by the Company or
an Acquiring Person that an Acquiring Person has become such.
(oo) "Subsidiary" shall mean, with reference to any Person,
any other Person of which an amount of voting securities or equity
interests sufficient to elect at least a majority of the directors or
equivalent governing body of such other Person is beneficially owned,
directly or indirectly, by such Person, or which is otherwise
controlled by such first-mentioned Person.
(pp) "Summary of Rights" has the meaning set forth in Section
3(b).
(qq) "Trading Day" has the meaning set forth in Section
11(d)(i).
(rr) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.
(ss) "Unit" has the meaning set forth in Section 7(b).
SECTION 2. Appointment of Rights Agent. The Company hereby
appoints the Rights Agent to act as agent for the Company in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment. With the consent of the Rights Agent, the Company may from time to
time appoint such Co-Rights Agents as it may deem necessary or desirable.
SECTION 3. Issue of Rights Certificates. (a) Until the earlier
of (i) the Close of Business on the tenth day after the Stock Acquisition Date
and (ii) the Close of Business on the tenth Business Day (or such later date as
may be determined by action of the Company's Board of Directors prior to such
time as any Person becomes an Acquiring Person, and of which the Company will
give the Rights Agent prompt written notice) after the date that a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting in
such capacity) is commenced within the meaning of Rule 14d-2 of the Exchange Act
Regulations or any successor rule, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Company Common
Stock then outstanding (the earlier of (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by
5
the certificates for shares of Company Common Stock registered in the names of
the holders of shares of Company Common Stock as of and subsequent to the Record
Date (which certificates for shares of Company Common Stock shall be deemed also
to be certificates for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Company Common Stock (including a transfer to the Company).
As soon as practicable after the Distribution Date, the Rights Agent will send
by first-class, insured, postage prepaid mail, to each record holder of shares
of Company Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Company Common Stock so
held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per share of Company Common Stock has been made pursuant
to Section 11(p), at the time of distribution of the Rights Certificates, the
Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a)) so that Rights Certificates evidencing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.
(b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Stock, in
a form that may be appended to certificates that evidence shares of Company
Common Stock, in substantially the form attached hereto as (the
"Summary of Rights"), by first-class, postage prepaid mail, to each record
holder of shares of Company Common Stock as of the Close of Business on the
Record Date, at the address of such holder shown on the records of the Company.
(c) Rights shall, without any further action, be issued in
respect of all shares of Company Common Stock that are issued (including any
shares of Company Common Stock held in treasury) after the Record Date but prior
to the earlier of the Distribution Date and the Expiration Date. Certificates
evidencing such shares of Company Common Stock issued after the Record Date
shall bear 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 July 10, 2003 (the "Rights Agreement"), between Mpower Holding
Corporation (the "Company") and Continental Stock Transfer & Trust
Company (the "Rights Agent"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
office of the Rights Agent designated for such purpose. 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. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of
mailing, without charge promptly after receipt of a written request
therefor. Under certain circumstances set forth in the Rights
Agreement, Rights issued to, or held by, any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether currently held
by or on behalf of such Person or by any subsequent holder, may become
null and void."
6
With respect to certificates evidencing shares of Company
Common Stock (whether or not such certificates include the foregoing legend or
have appended to them the Summary of Rights), until the earlier of the
Distribution Date and the Expiration Date, the Rights associated with the shares
of Company Common Stock evidenced by such certificates shall be evidenced by
such certificates alone and registered holders of the shares of Company Common
Stock shall also be the registered holders of the associated Rights, and the
transfer of any of such certificates shall also constitute the transfer of the
Rights associated with the shares of Company Common Stock evidenced by such
certificates.
SECTION 4. Form of Rights Certificates. (a) The Rights
Certificates (and the forms of election to purchase, assignment and certificate
to be printed on the reverse thereof) shall each be substantially in the form
set forth in Exhibit A hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or any
rule or regulation thereunder or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed or to conform to
usage. Subject to the provisions of Section 11 and Section 22, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date and on
their face shall entitle the holders thereof to purchase such number of Units of
Preferred Stock as shall be set forth therein at the price set forth therein,
but the amount and type of securities, cash or other assets that may be acquired
upon the exercise of each Right and the Purchase Price thereof shall be subject
to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that
evidences Rights beneficially owned by: (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) that becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) that becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and that receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding either the
transferred Rights, shares of Company Common Stock or the Company or (B) a
transfer that a majority of the Company's Board of Directors has determined to
be part of a plan, arrangement or understanding that has as a primary purpose or
effect the avoidance of Section 7(e), shall, upon the written direction of a
majority of the Company's Board of Directors, contain (to the extent feasible)
the following legend:
"The Rights evidenced by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights evidenced hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement."
7
SECTION 5. Countersignature and Registration. (a) Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, the President or one of its Vice Presidents, under its corporate seal
reproduced thereon attested by its Secretary or one of its Assistant
Secretaries. The signature of any one or more of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates bearing the manual
or facsimile signatures of the individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
countersignature of such Rights Certificates or did not hold such offices at the
date of such Rights Certificates. No Rights Certificate shall be entitled to any
benefit under this Agreement or be valid for any purpose unless there appears on
such Rights Certificate a countersignature duly executed by the Rights Agent by
manual signature of an authorized signatory, and such countersignature upon any
Rights Certificate shall be conclusive evidence, and the only evidence, that
such Rights Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the name and
address of each holder of the Rights Certificates, the number of Rights
evidenced on its face by each Rights Certificate and the date of each Rights
Certificate.
SECTION 6. Transfer, Split Up, Combination and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of Units
of Preferred Stock (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and executed
the certificate set forth in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
evidenced by such Rights Certificate or Affiliates or Associates thereof as the
Company shall reasonably request; whereupon the Rights Agent shall, subject to
the provisions of Sections 4(b), 7(e) and 14, countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates.
(b) If a Rights Certificate shall be mutilated, destroyed,
lost or stolen, upon request by the registered holder of the Rights evidenced
thereby and upon payment to the
8
Company and the Rights Agent of all reasonable expenses incident thereto, there
shall be issued, in exchange for and upon cancellation of the mutilated Rights
Certificate, or in substitution for the lost, stolen or destroyed Rights
Certificate, a new Rights Certificate, in substantially the form of the prior
Rights Certificate, of like tenor and evidencing the equivalent number of
Rights, but, in the case of loss, theft or destruction, only upon receipt of
evidence satisfactory to the Company and the Rights Agent of such loss, theft or
destruction of such Rights Certificate and, if requested by the Company or the
Rights Agent, indemnity also satisfactory to it.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights. (a) Prior to the earlier of (i) the Close of Business on the tenth
anniversary hereof (the "Final Expiration Date") and (ii) the time at which the
Rights are redeemed as provided in Section 23 (the earlier of (i) and (ii) being
the "Expiration Date"), the registered holder of any Rights Certificate may,
subject to the provisions of Sections 7(e) and 9(c), exercise the Rights
evidenced thereby in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the aggregate Purchase Price (as hereinafter defined) for the
number of Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) for which such surrendered
Rights are then exercisable.
(b) The purchase price for each one one-thousandth of a share
(each such one one-thousandth of a share being a "Unit") of Preferred Stock upon
exercise of Rights shall be $6.00, subject to adjustment from time to time as
provided in Sections 11 and 13(a) (such purchase price, as so adjusted, being
the "Purchase Price"), and shall be payable in accordance with paragraph (c)
below.
(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with a corporation in good standing
organized under the laws of the United States or any State of the United States,
that is authorized under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or state
authority (such institution being the "Depositary Agent"), certificates
evidencing the shares of Preferred Stock that may be acquired upon exercise of
the Rights and shall cause such Depositary Agent to enter into an agreement
pursuant to which the Depositary Agent shall issue receipts evidencing interests
in the shares of Preferred Stock so deposited. Upon receipt of a Rights
Certificate evidencing exercisable Rights, with the form of election to purchase
and the certificate duly executed, accompanied by payment, with respect to each
Right so exercised, of the Purchase Price for the Units of Preferred Stock (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) to be purchased thereby as set forth below and an amount equal to
any applicable transfer tax or evidence satisfactory to the Company of payment
of such tax, the Rights Agent shall, subject to Section 20(k), thereupon
promptly (i) requisition from the Depositary Agent certificates evidencing such
number of Units of Preferred Stock as are to be purchased and the Company will
direct the Depositary Agent to comply with such request, (ii) requisition from
the Company the amount of cash, if any, to be paid in lieu of fractional shares
in accordance with Section 14, (iii) after receipt of such certificates, cause
the same to be delivered to or upon the order of the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, and (iv) after receipt thereof, deliver such cash, if any, to or
upon the order of the registered holder of
9
such Rights Certificate. In the event that the Company is obligated to issue
Company Common Stock, other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a), the Company will make all
arrangements necessary so that such Company Common Stock, other securities, cash
and/or other property are available for distribution by the Rights Agent, if and
when appropriate. Subject to Section 34, the payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii)) may be made in cash
or by certified or bank check payable to the order of the Company, or by wire
transfer of immediately available funds to the account of the Company (provided
that notice of such wire transfer shall be given by the holder of the related
Right to the Rights Agent).
(d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to, or upon the order of, the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, subject to the provisions of Section 14.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of any Section 11(a)(ii) Event or
Section 13 Event, any Rights beneficially owned by (i) an Acquiring Person or an
Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring
Person (or of any such Associate or Affiliate) that becomes a transferee after
the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) that becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and that receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer that a
majority of the Company's Board of Directors has determined to be part of a
plan, arrangement or understanding that has as a primary purpose or effect the
avoidance of this Section 7(e), shall be null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but shall
have no liability to any holder of Rights or any other Person as a result of the
Company's failure to make any determination under this Section 7(e) or Section
4(b) with respect to an Acquiring Person or its Affiliates, Associates or
transferees.
(f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights evidenced by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
10
SECTION 8. Cancellation and Destruction of Rights
Certificates. All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled 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 retirement, and the Rights Agent shall so cancel and
retire, any Rights Certificates acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.
SECTION 9. Reservation and Availability of Capital Stock. (a)
The Company shall at all times prior to the Expiration Date cause to be reserved
and kept available, out of its authorized and unissued shares of Preferred
Stock, the number of shares of Preferred Stock that, as provided in this
Agreement, will be sufficient to permit the exercise in full of all outstanding
Rights. Upon the occurrence of any events resulting in an increase in the
aggregate number of shares of Preferred Stock (or other equity securities of the
Company) issuable upon exercise of all outstanding Rights above the number then
reserved, the Company shall make appropriate increases in the number of shares
so reserved.
(b) If the shares of Preferred Stock to be issued and
delivered upon the exercise of the Rights may be listed on any national
securities exchange, the Company shall during the period from the Distribution
Date through the Expiration Date use its best efforts to cause all securities
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.
(c) The Company shall use its best efforts (i) as soon as
practicable following the occurrence of a Section 11(a)(ii) Event and a
determination by the Company in accordance with Section 11(a)(iii) of the
consideration to be delivered by the Company upon exercise of the Rights or, if
so required by law, as soon as practicable following the Distribution Date (such
date being the "Registration Date"), to file a registration statement on an
appropriate form under the Securities Act with respect to the securities that
may be acquired upon exercise of the Rights (the "Registration Statement"), (ii)
to cause the Registration Statement to become effective as soon as practicable
after such filing, (iii) to cause the Registration Statement to continue to be
effective (and to include a prospectus complying with the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for the securities covered by the Registration Statement and
(B) the Expiration Date and (iv) to take as soon as practicable following the
Registration Date such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws. If the Registration Statement does not become
effective prior to the Close of Business on the 45th Business Day following the
occurrence of a Section 11(a)(ii) Event, the Company shall, unless otherwise
determined by a majority of the Company's Board of Directors, on the 46th
Business Day following the occurrence of such Section 11(a)(ii) Event, be
obligated to exercise the option described in Section 34.
11
(d) The Company shall take such action as may be necessary to
ensure that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) shall be, at the time of delivery of the certificates for such
securities, duly and validly authorized and issued and fully paid and
non-assessable.
(e) The Company shall pay any documentary, stamp or transfer
tax imposed in connection with the issuance or delivery of the Rights
Certificates or upon the exercise of Rights; provided, however, that the Company
shall not be required to pay any such tax imposed in connection with the
issuance or delivery of Units of Preferred Stock, or any certificates for such
Units of Preferred Stock (or, following the occurrence of a Triggering Event,
any other securities, cash or assets, as the case may be) to any Person other
than the registered holder of the Rights Certificates evidencing the Rights
surrendered for exercise. The Company shall not be required to issue or deliver
any certificates for Units of Preferred Stock (or, following the occurrence of a
Triggering Event, any other securities, cash or assets, as the case may be) to,
or in a name other than that of, the registered holder of the Rights Certificate
upon the exercise of any Rights evidenced thereby 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) or until it has been established to the Company's
satisfaction that no such tax is due.
SECTION 10. Preferred Stock Record Date. Each Person in whose
name any certificate for Units of Preferred Stock (or, following the occurrence
of a Triggering Event, other securities) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Units of Preferred Stock (or, following the occurrence of a Triggering Event,
other securities) evidenced thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or, following the occurrence
of a Triggering Event, other securities) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
securities on, and such certificate shall be dated, the next succeeding Business
Day on which the Preferred Stock (or, following the occurrence of a Triggering
Event, other securities) transfer books of the Company are open; and further
provided, however, that if delivery of Units of Preferred Stock is delayed as a
result of a failure to register such Units of Preferred Stock pursuant to
Section 9(c), such Persons shall be deemed to have become the record holders of
such Units of Preferred Stock only when such Units first become deliverable.
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 securities 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 Purchase Price, Number and Kind of
Shares or Number of Rights. The Purchase Price, the number and kind of
securities covered by each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.
12
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Stock
payable in shares of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares or (D) issue any shares of its capital stock
in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), except as
otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or capital stock, as the
case may be, issuable on such date upon exercise of the Rights, shall
be proportionately adjusted so that the holder of any Right exercised
after such time shall be entitled to receive, upon payment of the
Purchase Price then in effect, the aggregate number and kind of shares
of Preferred Stock or capital stock, as the case may be, which, if such
Right had been exercised immediately prior to such date, such holder
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification.
If an event occurs that would require an adjustment under both this
Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in
this Section 11(a)(i) shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event:
(A) any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, shall (1) merge into the
Company or otherwise combine with the Company and the Company
shall be the continuing or surviving corporation of such
merger or combination and Company Common Stock shall remain
outstanding and unchanged, (2) in one transaction or a series
of transactions, transfer any assets to the Company or to any
of its Subsidiaries in exchange (in whole or in part) for
shares of Company Common Stock, for other equity securities of
the Company or any such Subsidiary, or for securities
exercisable for or convertible into shares of equity
securities of the Company or any of its Subsidiaries (whether
Company Common Stock or otherwise) or otherwise obtain from
the Company or any of its Subsidiaries, with or without
consideration, any additional shares of such equity securities
or securities exercisable for or convertible into such equity
securities (other than pursuant to a pro rata distribution to
all holders of Company Common Stock), (3) sell, purchase,
lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series of
transactions, to, from or with the Company or any of its
Subsidiaries or any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary
with respect to such plan acting in such capacity, assets
(including securities) on terms and conditions less favorable
to the Company or such Subsidiary or plan than those that
could have been obtained in arm's-length negotiations with an
unaffiliated third party, other than pursuant to a transaction
set forth in Section 13(a), (4) sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or
dispose of, in one transaction or a series of transactions,
to, from or with the Company or any of the Company's
13
Subsidiaries or any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary
with respect to such plan acting in such capacity (other than
transactions, if any, consistent with those engaged in, as of
the date hereof, by the Company and such Acquiring Person or
such Associate or Affiliate), assets (including securities)
having an aggregate fair market value of more than $5,000,000,
other than pursuant to a transaction set forth in Section
13(a), (5) sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with the
Company or any of its Subsidiaries or any employee benefit
plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such plan acting in
such capacity, any material trademark or material service
xxxx, other than pursuant to a transaction set forth in
Section 13(a), (6) receive, or any designee, agent or
representative of such Acquiring Person or any Affiliate or
Associate of such Acquiring Person shall receive, any
compensation from the Company or any of its Subsidiaries other
than compensation for full-time employment as a regular
employee at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (7) receive the benefit,
directly or indirectly (except proportionately as a holder of
Company Common Stock or as required by law or governmental
regulation), of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantage provided by the Company or any of its Subsidiaries
or any employee benefit plan maintained by the Company or any
of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity; or
(B) any Person shall become an Acquiring Person, unless
the event causing such Person to become an Acquiring Person is
a transaction set forth in Section 13(a); or
(C) during such time as there is an Acquiring Person,
there shall be any reclassification of securities (including
any reverse stock split), or recapitalization of the Company,
or any merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries,
other than a transaction or transactions to which the
provisions of Section 13(a) apply (whether or not with or into
or otherwise involving an Acquiring Person), which has the
effect, directly or indirectly, of increasing by more than 1%
the proportionate share of the outstanding shares of any class
of equity securities of the Company or any of its Subsidiaries
that is directly or indirectly beneficially owned by any
Acquiring Person or any Associate or Affiliate of any
Acquiring Person;
then, immediately upon the date of the occurrence of an event described
in Section 11(a)(ii)(A), (B) or (C) (a "Section 11(a)(ii) Event"),
proper provision shall be made so that each holder of a Right (except
as provided below and in Section 7(e)) shall thereafter have the right
to receive, upon exercise thereof at the then-current Purchase Price in
accordance with the terms of this Agreement, in lieu of the number of
Units of Preferred Stock for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event, such number
of Units of Preferred Stock as shall
14
equal the result obtained by (x) multiplying the then-current Purchase
Price by the then number of Units of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event (such product thereafter being, for all purposes of
this Agreement other than Section 13, the "Purchase Price"), and (y)
dividing that product by 50% of the then-current market price
(determined pursuant to Section 11(d)) per Unit of Preferred Stock on
the date of such first occurrence (such Units of Preferred Stock being
the "Adjustment Shares").
(iii) In the event that the number of shares of Preferred
Stock that are authorized by the Company's Certificate of Incorporation
but not outstanding or reserved for issuance for purposes other than
upon exercise of the Rights is not sufficient to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii)
of this Section 11(a), the Company, by the vote of a majority of the
Company's Board of Directors, shall: (A) determine the excess of (1)
the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value") over (2) the Purchase Price (such excess
being the "Spread"), and (B) with respect to each Right, make adequate
provision to substitute for such Adjustment Shares, upon payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Company Common Stock or other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock (such other shares being "preferred stock
equivalents")), (4) debt securities of the Company, (5) other assets or
(6) any combination of the foregoing, having an aggregate value equal
to the Current Value, where such aggregate value has been determined by
a majority of the Company's Board of Directors, after receiving advice
from a nationally recognized investment banking firm; provided,
however, that if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty days following
the later of (x) the first occurrence of a Section 11(a)(ii) Event and
(y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires (the later of (x) and (y) being referred to
herein as the "Section 11(a)(iii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, Units of
Preferred Stock (to the extent available) and then, if necessary, cash,
which Units of Preferred Stock and/or cash shall have an aggregate
value equal to the Spread. To the extent that the Company determines
that some action need be taken pursuant to the first sentence of this
Section 11(a)(iii), the Company shall provide, subject to Section 7(e),
that such action shall apply uniformly to all outstanding Rights. For
purposes of this Section 11(a)(iii), the value of a Unit of Preferred
Stock shall be the current market price (as determined pursuant to
Section 11(d)) per Unit of Preferred Stock on the Section 11(a)(iii)
Trigger Date and the value of any preferred stock equivalent shall be
deemed to have the same value as the Preferred Stock on such date.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred
Stock entitling them to subscribe for or purchase (for a period
expiring within forty-five calendar days after such record date) shares
of Preferred Stock (or shares having substantially the same rights,
privileges and preferences as shares of Preferred Stock ("Equivalent
Preferred Stock")) or securities convertible into Preferred Stock or
Equivalent Preferred Stock at a price per share of
15
Preferred Stock or per share of Equivalent Preferred Stock (or having a
conversion price per share, if a security convertible into Preferred
Stock or Equivalent Preferred Stock) less than the current market price
(as determined pursuant to Section 11(d)) per share of Preferred Stock
on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the
numerator of which shall be the sum of the number of shares of
Preferred Stock outstanding on such record date plus the number of
shares of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or Equivalent Preferred
Stock so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such
current market price, and the denominator of which shall be the number
of shares of Preferred Stock outstanding on such record date plus the
number of additional shares of Preferred Stock and/or Equivalent
Preferred Stock to be offered for subscription or purchase (or into
which the convertible securities so to be offered are initially
convertible). In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form other than cash,
the value of such consideration shall be as determined in good faith by
a majority of the Company's Board of Directors, whose determination
shall be described in a statement filed with the Rights Agent and shall
be binding on the Rights Agent and the holders of the Rights. Shares of
Preferred Stock owned by or held for the account of the Company or any
Subsidiary shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase
Price that would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for a
distribution to all holders of shares of Preferred Stock (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of
the earnings or retained earnings of the Company), assets (other than a
dividend payable in shares of Preferred Stock, but including any
dividend payable in stock other than Preferred Stock) or subscription
rights or warrants (excluding those referred to in Section 11(b)), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall
be the current market price (as determined pursuant to Section 11(d))
per share of Preferred Stock on such record date less the fair market
value (as determined in good faith by a majority of the Company's Board
of Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent
and the holder of the Rights) of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or
warrants distributable in respect of a share of Preferred Stock and the
denominator of which shall be such current market price (as determined
pursuant to Section 11(d)) per share of Preferred Stock. Such
adjustments shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not so made, the
Purchase Price shall be adjusted to be the Purchase Price that would
have been in effect if such record date had not been fixed.
16
(d) (i) For the purpose of any computation hereunder, the
"current market price" per share of Company Common Stock or Common
Stock on any date shall be deemed to be the average of the daily
closing prices per share of such shares for the ten consecutive Trading
Days immediately prior to such date; provided, however, that if prior
to the expiration of such requisite ten Trading Day period the issuer
announces either (A) a dividend or distribution on such shares payable
in such shares or securities convertible into such shares (other than
the Rights) or (B) any subdivision, combination or reclassification of
such shares, then, following the ex-dividend date for such dividend or
the record date for such subdivision, as the case may be, the "current
market price" shall be properly adjusted to take into account such
event. The closing price for each day shall be, if the shares are
listed and admitted to trading on a national securities exchange, as
reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities
exchange on which such shares are listed or admitted to trading or, if
such shares are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by The Nasdaq Stock Market Consolidated Quotations
Service or such other system then in use, or, if on any such date such
shares are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market
maker making a market in such shares selected by a majority of the
Company's Board of Directors. If, on any such date no market maker is
making a market in such shares, the fair value of such shares on such
date as determined in good faith by a majority of the Company's Board
of Directors shall be used. If such shares are not publicly held or not
so listed or traded, "current market price" per share shall mean the
fair value per share as determined in good faith by a majority of the
Company's Board of Directors, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for all
purposes. The term "Trading Day" shall mean, if such shares are listed
or admitted to trading on any national securities exchange, a day on
which the principal national securities exchange on which such shares
are listed or admitted to trading is open for the transaction of
business or, if such shares are not so listed or admitted, a Business
Day.
(ii) For the purpose of any computation hereunder, the
"current market price" per share of Preferred Stock shall be determined
in the same manner as set forth above for Company Common Stock in
clause (i) of this Section 11(d) (other than the fourth sentence
thereof). If the current market price per share of Preferred Stock
cannot be determined in the manner provided above or if the Preferred
Stock is not publicly held or listed or traded in a manner described in
clause (i) of this Section 11(d), the "current market price" per share
of Preferred Stock shall be conclusively deemed to be an amount equal
to 1,000 (as such amount may be appropriately adjusted for such events
as stock splits, stock dividends and recapitalizations with respect to
Company Common Stock occurring after the Rights Dividend Declaration
Date) multiplied by the current market price per share of Company
Common Stock. If neither Company Common Stock nor Preferred Stock is
publicly held or so listed or traded, "current market price" per share
of the Preferred Stock shall mean the fair value per share as
determined in good faith by a majority of the Company's Board of
Directors, whose determination shall be described in a statement filed
with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. For all purposes of this Agreement, the "current
market price" of a
17
Unit of Preferred Stock shall be equal to the "current market price" of
one share of Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the
Purchase Price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest cent or
to the nearest one-hundredth of a share of Company Common Stock or
Common Stock or other share or hundred-thousandth of a share of
Preferred Stock, as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the date of
the transaction that mandates such adjustment and (ii) the Expiration
Date.
(f) If, as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a), the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof
shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Stock contained in Sections 11(a), (b), (c),
(d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall
apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the
right to purchase, at the adjusted Purchase Price, the number of Units
of Preferred Stock (or other securities or amount of cash or
combination thereof) that may be acquired from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as
provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price
as a result of the calculations made in Sections 11(b) and (c), each
Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of Units of Preferred Stock (calculated to
the nearest one hundred-thousandth of a Unit) obtained by (i)
multiplying (x) the number of Units of Preferred Stock covered by a
Right immediately prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
lieu of any adjustment in the number of Units of Preferred Stock that
may be acquired upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be
exercisable for the number of Units of Preferred Stock for which a
Right was exercisable immediately
18
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest hundred-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase Price in effect immediately after
adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the
amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if
the Rights Certificates have been issued, shall be at least ten days
later than the date of such public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant
to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on
such record date Rights Certificates evidencing, subject to Section 14,
the additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to
the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment. Rights
Certificates to be so distributed shall be issued, executed and
countersigned in the manner provided for herein (and may bear, at the
option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of Units of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and
thereafter issued may continue to express the Purchase Price per Unit
and the number of Units of Preferred Stock that were expressed in the
Initial Rights Certificates issued hereunder without prejudice to any
such adjustment or change.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then-par value of the number of
Units of Preferred Stock issuable upon exercise of the Rights, the
Company shall take any corporate action that may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally
issue such fully paid and non-assessable number of Units of Preferred
Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date of that number of Units of Preferred
Stock and shares of other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of Units
of Preferred Stock and shares of other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due xxxx or --------
other appropriate instrument evidencing such holder's right to receive
such additional shares (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
19
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions
in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that in their good
faith judgment a majority of the Company's Board of Directors shall
determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Stock, (ii) issuance wholly for cash of
any shares of Preferred Stock at less than the current market price,
(iii) issuance wholly for cash of shares of Preferred Stock or
securities that by their terms are convertible into or exchangeable for
shares of Preferred Stock, (iv) stock dividends or (v) issuance of
rights, options or warrants referred to in this Section 11, hereafter
made by the Company to holders of its Preferred Stock, shall not be
taxable to such holders or shall reduce the taxes payable by such
holders.
(n) The Company shall not, at any time after the Distribution
Date, (i) consolidate with any other Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(o)), (ii)
merge with or into any other Person (other than a Subsidiary of the
Company in a transaction that complies with Section 11(o)), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company
and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), if (x) at the
time of or immediately after such consolidation, merger or sale there
are any rights, warrants or other instruments or securities outstanding
or agreements in effect that would substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation,
merger or sale, the Person that constitutes, or would constitute, the
"Principal Party" for purposes of Section 13(a) shall have distributed
or otherwise transferred to its stockholders or other Persons holding
an equity interest in such Person Rights previously owned by such
Person or any of its Affiliates and Associates; provided, --------
however, that this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to consolidate with, merge ------- with or
into, or sell or transfer assets or earning power to, any other
Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not, except
as permitted by Section 23 or Section 26, take (or permit any
Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the
Rights.
(p) Anything in this Agreement to the contrary
notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Company Common
Stock payable in shares of Company Common Stock, (ii) subdivide the
outstanding shares of Company Common Stock, (iii) combine the
outstanding shares of Company Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock in a
reclassification of Company Common Stock (including any such
reclassification in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation), the number of
Rights associated with each share of
20
Company Common Stock then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately
adjusted so that the number of Rights thereafter associated with each
share of Company Common Stock following any such event shall equal the
result obtained by multiplying the number of Rights associated with
each share of Company Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of
Company Common Stock outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of
shares of Company Common Stock outstanding immediately following the
occurrence of such event.
SECTION 12. Certificate of Adjusted Purchase Price or Number
of Shares. Whenever an adjustment is made as provided in Section 11 or Section
13, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Company Common Stock, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate evidencing
shares of Company Common Stock) in accordance with Section 25. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of 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, following the Stock Acquisition
Date, directly or indirectly, either (x) the Company shall consolidate with, or
merge with and into, any other Person (other than a Subsidiary of the Company in
a transaction that complies with Section 11(o)), and the Company shall not be
the continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction that complies
with Section 11(o)) shall consolidate with, or merge with or into, the Company,
and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Company Common Stock shall be converted
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer) to any Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), in one or more
transactions, assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries, taken as a whole (any such
event described in clause (x), (y) or (z) being a "Section 13 Event"), then, and
in each such case, proper provision shall be made so that: (i) each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof at the then current Purchase Price, such
number of validly authorized and issued, fully paid and non-assessable shares of
Common Stock of the Principal Party, which shares shall not be subject to any
liens, encumbrances, rights of first refusal, transfer restrictions or other
adverse claims, as shall be equal to the result obtained by (1) multiplying the
then current Purchase Price by the number of Units of Preferred Stock for which
a Right is exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11(a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of such Units for which
a Right would be exercisable hereunder but for the occurrence of such Section
11(a)(ii) Event by the Purchase
21
Price that would be in effect hereunder but for such first occurrence) and (2)
dividing that product (which, following the first occurrence of a Section 13
Event, shall be the "Purchase Price" for all purposes of this Agreement) by 50%
of the current market price (determined pursuant to Section 11(d)) per share of
the Common Stock of such Principal Party on the date of consummation of such
Section 13 Event; (ii) such Principal Party shall thereafter be liable for, and
shall assume, by virtue of such Section 13 Event, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company" shall, for
all purposes of this Agreement, thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 shall
apply only to such Principal Party following the first occurrence of a Section
13 Event; (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common
Stock) in connection with the consummation of any such transaction as may be
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) shall be of
no further effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or
(y) of the first sentence of Section 13(a), (A) the Person that is the
issuer of any securities into which shares of Company Common Stock are
converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer of Common Stock that has the highest
aggregate current market price (determined pursuant to Section 11(d))
and (B) if no securities are so issued, the Person that is the other
party to such merger or consolidation, or, if there is more than one
such Person, the Person the Common Stock of which has the highest
aggregate current market price (determined pursuant to Section 11(d));
and
(ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a), the Person that is the party
receiving the largest portion of the assets or earning power
transferred pursuant to such transaction or transactions, or, if each
Person that is a party to such transaction or transactions receives the
same portion of the assets or earning power transferred pursuant to
such transaction or transactions or if the Person receiving the largest
portion of the assets or earning power cannot be determined, whichever
Person the Common Stock of which has the highest aggregate current
market price (determined pursuant to Section 11(d)); provided, however,
that in any such case, (1) if the Common Stock of such Person is not at
such time and has not been continuously over the preceding twelve-month
period registered under Section 12 of the Exchange Act ("Registered
Common Stock"), or such Person is not a corporation, and such Person is
a direct or indirect Subsidiary of another Person that has Registered
Common Stock outstanding, "Principal Party" shall refer to such other
Person; (2) if the Common Stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person is a direct
or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to the ultimate parent
entity of such first-mentioned Person; (3) if the Common Stock of such
Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by
more than one Person, and one or more of such other Persons has
22
Registered Common Stock outstanding, "Principal Party" shall refer to
whichever of such other Persons is the issuer of the Registered Common
Stock having the highest aggregate current market price (determined
pursuant to Section 11(d)); and (4) if the Common Stock of such Person
is not Registered Common Stock or such Person is not a corporation, and
such Person is directly or indirectly controlled by more than one
Person, and none of such other Persons have Registered Common Stock
outstanding, "Principal Party" shall refer to whichever ultimate parent
entity is the corporation having the greatest stockholders' equity or,
if no such ultimate parent entity is a corporation, shall refer to
whichever ultimate parent entity is the entity having the greatest net
assets.
(c) The Company shall not consummate any such consolidation,
merger, sale or transfer unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock that have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13, and unless prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement providing for the terms set forth in paragraphs (a) and (b) of this
Section 13 and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement
under the Securities Act with respect to the Common Stock that may be
acquired upon exercise of the Rights, (B) cause such registration
statement to remain effective (and to include a prospectus complying
with the requirements of the Securities Act) until the Expiration Date,
and (C) as soon as practicable following the execution of such
agreement take such action as may be required to ensure that any
acquisition of such Common Stock upon the exercise of the Rights
complies with any applicable state securities or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
(d) In case the Principal Party that is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then current
market price per share (determined pursuant to Section 11(d)) or securities
exercisable for, or convertible into, Common Stock of such Principal Party at
less than such then current market price (other than to holders of Rights
pursuant to this Section 13) or (ii) providing for any special payment, tax or
similar provisions in connection with the issuance of the Common Stock of such
Principal Party pursuant to the provisions of this Section 13, then, in such
event, the Company shall not consummate any such transaction unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing that the provision in
question of such Principal Party shall have been cancelled, waived or amended,
or that the authorized securities shall be redeemed, so that the applicable
provision will have no effect in connection with, or as a consequence of, the
consummation of the proposed transaction.
23
(e) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers. In the event
that a Section 13 Event shall occur at any time after the occurrence of a
Section 11(a)(ii) Event, the Rights that have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).
SECTION 14. Fractional Rights and Fractional Shares. (a) The
Company shall not be required to issue fractions of Rights or to distribute
Rights Certificates that evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the Persons to which such fractional Rights would
otherwise be issuable, an amount in cash equal to such fraction of the market
value of a whole Right. For purposes of this Section 14(a), the market value of
a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be, if the
Rights are listed or admitted to trading on a national securities exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market Consolidated
Quotations Service or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Rights selected by a majority of the Company's Board of Directors. If on any
such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by a majority of the
Company's Board of Directors shall be used and such determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes.
(b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions that are integral multiples of
one one-thousandth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates that evidence such fractional shares of Preferred
Stock (other than fractions that are integral multiples of one one-thousandth of
a share of Preferred Stock). In lieu of such fractional shares of Preferred
Stock that are not integral multiples of one one-thousandth of a share, 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 then current market price of a share of Preferred Stock on the
day of exercise, determined in accordance with Section 11(d).
(c) The holder of a Right by the acceptance of such Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
SECTION 15. Rights of Action. All rights of action in respect
of this Agreement, other than rights of action vested in the Rights Agent
pursuant to Section 18, are vested in the respective registered holders of the
Rights Certificates (and, prior to the Distribution Date, the registered holders
of certificates evidencing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
24
certificate evidencing shares of Company 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 a certificate evidencing shares of Company 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 or any other Person to enforce, or otherwise
act in respect of, such registered holder's right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
SECTION 16. Agreement of Rights Holders. Every holder of a
Right by accepting the same consents and agrees with the Company and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of Company
Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of
transfer and with the appropriate forms and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f), the Company and
the Rights Agent may deem and treat the Person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Company
Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights Certificates or the associated
Company Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, subject to the last sentence of Section
7(e), shall be affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or any other Person as a result of
its inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree, judgment or ruling issued by a court of competent jurisdiction
or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided,
however, that the Company must use its best efforts to have any such
order, decree, judgment or ruling lifted or otherwise overturned as
promptly as practicable.
SECTION 17. Rights Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends or be deemed for
25
any purpose the holder of the number of shares of Preferred Stock or any other
securities of the Company that may at any time be issuable on the exercise of
the Rights evidenced 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 matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, except as provided in Section 24, to receive notice of
meetings or other actions affecting stockholders, or to receive dividends or
subscription rights, or otherwise.
SECTION 18. Concerning the Rights Agent. (a) The Company
agrees to pay to the Rights Agent reasonable compensation for all services
rendered by it hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses, including reasonable fees and disbursements of its
counsel, incurred in connection with the execution and administration of this
Agreement and the exercise and performance of its duties hereunder. The Company
shall indemnify the Rights Agent for, and hold it harmless against, any loss,
liability, or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability hereunder.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Preferred Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to have been signed, executed
and, where necessary, verified or acknowledged by the proper Person or Persons.
SECTION 19. Merger or Consolidation or Change of Name of
Rights Agent. (a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or shareholder services 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 document or any further act on
the part of any of the parties hereto; provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
26
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
SECTION 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that
any fact or matter (including, without limitation, the identity of any
Acquiring Person and the determination of "current market price") be
proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be specified herein) may be deemed to be conclusively proved
and established by a certificate signed by the Chairman of the Board,
the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and
delivered to the Rights Agent and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in
good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement
or in the Rights Certificates or be required to verify the same (except
as to its countersignature on such Rights Certificates), but all such
statements and recitals are and shall be deemed to have been made by
the Company only.
(e) The Rights Agent shall not have any responsibility for the
validity of this Agreement or the execution and delivery hereof (except
the due execution and delivery hereof by the Rights Agent) or for the
validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach
by the Company of any covenant or failure by the Company to satisfy
conditions contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any adjustment required under the
provisions of Section 11 or Section 13 or for the manner, method or
amount of any such adjustment or the ascertaining of the existence of
facts that would
27
require any such adjustment (except with respect to the exercise of
Rights evidenced by Rights Certificates after receipt by the Rights
Agent of the certificate describing any such adjustment contemplated by
Section 12); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any shares of Preferred Stock or any other securities to be issued
pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Preferred Stock or any other securities will, when so
issued, be validly authorized and issued, fully paid and
non-assessable.
(f) The Company shall 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 performance by the Rights Agent of
its duties under this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman of the Board, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not
be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer. Any
application by the Rights Agent for written instructions from the
Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under
this Rights Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights
Agent in accordance with a proposal included in any such application on
or after the date specified in such application (which date shall not
be less than five Business Days after the date any such officer of the
Company actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to
taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or
omitted.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights
or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract
with or lend money to the Company or otherwise act as fully and freely
as though it were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other Person.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties or in the exercise of
its rights hereunder if the Rights Agent shall have
28
reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to
the form of assignment or form of election to purchase, as the case may
be, has either not been completed, not signed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested
exercise or transfer without first consulting with the Company. If such
certificate has been completed and signed and shows a negative response
to clauses 1 and 2 of such certificate, unless previously instructed
otherwise in writing by the Company (which instructions may impose on
the Rights Agent additional ministerial responsibilities, but no
discretionary responsibilities), the Rights Agent may assume without
further inquiry that the Rights Certificate is not owned by a person
described in Section 4(b) or Section 7(e) and shall not be charged with
any knowledge to the contrary.
SECTION 21. Change of Rights Agent. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty days' prior notice in writing mailed to the Company, and
to each transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates (or
certificates for the Company Common Stock prior to the Distribution Date) by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty days' prior notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Preferred Stock and the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates (or certificates for the
Company Common Stock prior to the Distribution Date) by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate or, prior to the Distribution Date, the
holder of a certificate for the Company Common Stock (who shall, with such
notice, submit such holder's Rights Certificate or certificate for Company
Common Stock, as the case may be, for inspection by the Company), then any
registered holder of any Rights Certificate or, prior to the Distribution Date,
the holder of a certificate for the Company Common Stock may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or any state of the United States in good standing, shall be
authorized to do business as a banking institution in the State of New York,
shall be authorized under such laws to exercise corporate trust or stock
transfer powers, shall be subject to supervision or examination by federal or
state authorities and shall have at the time of its appointment as Rights Agent
a combined capital and surplus of at least $100,000,000 or (b) an Affiliate of a
corporation described in clause (a). After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or
29
deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Preferred Stock and the
Company Common Stock, and mail a notice thereof in writing to the registered
holders of the Rights Certificates (or certificates for the Company Common Stock
prior to the Distribution Date). 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 the appointment of
the successor Rights Agent.
SECTION 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or the Rights to the
contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by a majority of the Company's
Board of Directors to reflect any adjustment or change made in accordance with
the provisions of this Agreement in the Purchase Price or the number or kind or
class of shares or other securities or property that may be acquired upon
exercise of the Rights. In addition, in connection with the issuance or sale of
shares of Company Common Stock following the Distribution Date and prior to the
Expiration Date, the Company (a) shall, with respect to shares of Company Common
Stock so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by a majority of the Company's Board of
Directors, issue Rights Certificates evidencing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 23. Redemption and Termination. (a) Subject to Section
28, the Company may, at its option, by action of a majority of the Company's
Board of Directors, at any time prior to the earlier of (i) the Close of
Business on the tenth Day following the Stock Acquisition Date or (ii) the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.0001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the Rights Dividend Declaration Date (such redemption price
being the "Redemption Price"), and the Company may, at its option, by action of
a majority of the Company's Board of Directors, pay the Redemption Price either
in shares of Company Common Stock (based on the current market price, determined
in accordance with Section 11(d), of the shares of Company Common Stock at the
time of redemption) or cash. Subject to the foregoing, the redemption of the
Rights may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of a majority of the Company's
Board of Directors ordering the redemption of the Rights, evidence of which
shall be filed with the Rights Agent, and without any further action and without
any notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of a majority of the Company's
Board of Directors ordering the redemption of the Rights, the Company shall give
notice of such
30
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for Company
Common Stock. Any notice that is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
SECTION 24. Notice of Certain Events. (a) In case the Company
shall propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company),
(ii) to offer to the holders of Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or shares of stock
of any class or any other securities, rights or options, (iii) to effect any
reclassification of the Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), (iv) to effect
any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)), or
to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)) or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Rights Certificate (or, prior to the Distribution Date, to each
holder of certificates for Company Common Stock), to the extent feasible and in
accordance with Section 25, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock, whichever
shall be the earlier; provided, however, that no such notice shall be required
pursuant to this Section 24 if any Subsidiary of the Company effects a
consolidation or merger with or into, or effects a sale or other transfer of
assets or earning power to, any other Subsidiary of the Company.
(b) In case any of the events set forth in Section 11(a)(ii)
shall occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section 11(a)(ii).
SECTION 25. Notices. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing and
mailed or sent or delivered (including by facsimile transmission), if to the
Company, at its address at:
31
000 Xxxxx'x Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
and if to the Rights Agent, at its address at:
00 Xxxxxxx Xxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Compliance Department
Telecopy No.: (000) 000-0000
Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Rights Certificate (or,
if prior to the Distribution Date, to the holder of certificates evidencing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Company
Common Stock.
SECTION 26. Supplements and Amendments. Prior to the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement without the approval of any holders of
certificates evidencing shares of Company Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights Certificates
in order (a) to cure any ambiguity, (b) to correct or supplement any provision
contained herein that may be defective or inconsistent with any other provisions
herein, (c) to shorten or lengthen any time period hereunder or (d) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person); provided, however, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (c) of this
sentence, (i) subject to Section 30, a time period relating to when the Rights
may be redeemed at such time as the Rights are not then redeemable or (ii) any
other time period unless such lengthening is for the purpose of protecting,
enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights. Upon the delivery of a certificate from an appropriate officer of the
Company or, so long as any Person is an Acquiring Person hereunder, from the
majority of the Company's Board of Directors, that states that the proposed
supplement or amendment is in compliance with the terms of this Section 26, the
Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Company Common Stock.
32
SECTION 27. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 28. Determinations and Actions by the Board of
Directors, Etc. For all purposes of this Agreement, any calculation of the
number of shares of Company Common Stock outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding shares of Company Common Stock of which any Person is the Beneficial
Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i)
of the Exchange Act Regulations as in effect on the date hereof. Except as
otherwise specifically provided herein, the Board of Directors of the Company
shall have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors of
the Company or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power (i) to interpret the provisions of this Agreement and (ii) to make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) that are done or made by the Board of Directors of the Company in
good faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the
Board of Directors of the Company or any member thereof to any liability to the
holders of the Rights.
SECTION 29. 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, registered holders of shares of Company Common Stock)
any legal or equitable right, remedy or claim under this Agreement. This
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock).
SECTION 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and a majority of the
Company's Board of Directors determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, the right
of redemption set forth in Section 23 shall be reinstated and shall not expire
until the Close of Business on the tenth Business Day following the date of such
determination by a majority of the Company's Board of Directors.
SECTION 31. Governing Law. This Agreement, each Right and each
Rights Certificate issued hereunder shall be governed by, and construed in
accordance with, the laws of the State of Delaware; provided, however, that
Sections 18, 19, 20 and 21 shall be governed by, and construed in accordance
with, the laws of the State of New York.
33
SECTION 32. Counterparts. This Agreement may be executed
(including by facsimile) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original, but all of which taken together shall constitute one
and the same instrument.
SECTION 33. Descriptive Headings. The headings contained in
this Agreement are for descriptive purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
SECTION 34. Exchange. (a) (i) The Company may, at its option,
at any time after any person becomes an Acquiring Person, upon resolution
adopted by a majority of the Company's Board of Directors, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to Section 7(e)) for Units of Preferred
Stock at an exchange ratio of one Unit of Preferred Stock per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the Rights Dividend Declaration Date (such exchange
ratio being hereinafter referred to as the "Section 34(a)(i) Exchange Ratio").
Notwithstanding the foregoing, the Company may not effect the exchange described
in this Section 34(a)(i) at any time after any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan maintained by the
Company or any of its Subsidiaries, or any trustee or fiduciary with respect to
such plan acting in such capacity), together with all Affiliates and Associates
of such Person, becomes the Beneficial Owner of 50% or more of the shares of
Company Common Stock then outstanding.
(ii) The Company may, at its option, at any time after any
person becomes an Acquiring Person, upon resolution adopted by a majority of the
Company's Board of Directors, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become null and
void pursuant to Section 7(e)) for Units of Preferred Stock at an exchange ratio
specified in the following sentence, as appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the Rights
Dividend Declaration Date. Subject to such adjustment, each Right may be
exchanged for that number of Units of Preferred Stock obtained by dividing the
Adjustment Spread (as defined below) by the then-current market price
(determined pursuant to Section 11(d)) per Unit of Preferred Stock on the
earlier of (i) the date on which any Person becomes an Acquiring Person and (ii)
the date on which a tender or exchange offer by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such plan acting in such capacity) is commenced within the meaning of Rule
14d-2 of the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the shares of Company Common Stock then outstanding (such exchange ratio being
the "Section 34(a)(ii) Exchange Ratio"). The "Adjustment Spread" shall equal (x)
the aggregate market price on the date of such event of the number of Adjustment
Shares determined pursuant to Section 11(a)(ii), minus (y) the Purchase Price.
Notwithstanding the foregoing, the Company may not effect such exchange at any
time after any person (other than the Company, any Subsidiary of the Company,
any employee benefit plan maintained by the Company or any of it Subsidiaries,
or any trustee or fiduciary with respect to such plan acting in such capacity),
together with all Affiliates and associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of the Company Common Stock then
outstanding.
34
(b) Immediately upon the action of a majority of the Company's
Board of Directors ordering the exchange of any Rights pursuant to Section 34(a)
and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Units of Preferred Stock equal to the
number of such Rights held by such holder multiplied by the Section 34(a)(i)
Exchange Ratio or Section 34(a)(ii) Exchange Ratio, as the case may be. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
that is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange shall state the
method by which the exchange of Units of Preferred Stock for Rights will be
effected and, in the event of any partial exchange, the number of Rights that
will be exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights that have become null and void pursuant to
Section 7(e)) held by each holder of Rights.
(c) In the event that the number of shares of Preferred Stock
that are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit any exchange of Rights as contemplated
in accordance with this Section 34, the Company shall take all such action as
may be necessary to authorize additional shares of Preferred Stock for issuance
upon exchange of the Rights or make adequate provision to substitute (1) cash,
(2) Company Common Stock or other equity securities of the Company, (3) debt
securities of the Company, (4) other assets or (5) any combination of the
foregoing, having an aggregate value equal to the Adjustment Spread, where such
aggregate value has been determined by a majority of the Company's Board of
Directors.
(d) The Company shall not be required to issue fractions of
Units of Preferred Stock or to distribute certificates that evidence fractional
Units. In lieu of fractional Units, the Company may pay to the registered
holders of Rights Certificates at the time such Rights are exchanged as herein
provided an amount in cash equal to the same fraction of the current market
price (determined pursuant to Section 11(d)) of one Unit of Preferred Stock.
35
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their behalf as of the date first above
written.
MPOWER HOLDING CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Vice President,
General Counsel and Secretary
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: /s/ Xxxxx Xxxxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Vice Pres.
EXHIBIT A
---------
FORM OF RIGHTS CERTIFICATE
Certificate No. Rights
------- ------
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS MAY BECOME NULL AND VOID.
RIGHTS CERTIFICATE
------------------
MPOWER HOLDING CORPORATION
This certifies that , or registered assigns, is the
-----------
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated as of July 10, 2003 (the "Rights Agreement"; terms
defined therein are used herein with the same meaning unless otherwise defined
herein) between Mpower Holding Corporation, a Delaware corporation (the
"Company"), and Continental Stock Transfer & Trust Company, as Rights Agent
(which term shall include any successor Rights Agent under the Rights
Agreement), to purchase from the Company at any time after the Distribution Date
and prior to the Expiration Date at the office of the Rights Agent, one
one-thousandth of a fully paid and non-assessable share of Series A Preferred
Stock, par value $.001 per share (the "Preferred Stock"), of the Company at the
Purchase Price initially of $6.00 per one one-thousandth share (each such one
one-thousandth of a share being a "Unit") of Preferred Stock, upon presentation
and surrender of this Rights Certificate with the Election to Purchase and
related certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of Units that may be purchased upon exercise
thereof) set forth above, and the Purchase Price per Unit set forth above shall
be subject to adjustment in certain events as provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event or Section 13
Event, if the Rights evidenced by this Rights Certificate are beneficially owned
by an Acquiring Person or an Affiliate or Associate of any such Acquiring Person
or, under certain circumstances described in the Rights Agreement, a transferee
of any such Acquiring Person, Associate or Affiliate, such Rights shall become
null and void and no holder hereof shall have any right with respect to such
Rights from and after the occurrence of such Section 11(a)(ii) Event.
In certain circumstances described in the Rights Agreement,
the Rights evidenced hereby may entitle the registered holder thereof to
purchase capital stock of an entity other than the Company or to receive common
stock, cash or other assets, all as provided in the Rights Agreement.
This Rights Certificate is subject to all of the terms and
conditions of the Rights Agreement, which terms and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available from the Company upon written request.
This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing an aggregate number of Rights
equal to the aggregate number of Rights evidenced by the Rights Certificate or
Rights Certificates surrendered. If this Rights Certificate shall be exercised
in part, the registered holder shall be entitled to receive, upon surrender
hereof, another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company under certain
circumstances at its option at a redemption price of $.0001 per Right, payable
at the Company's option in cash or in common stock of the Company, subject to
adjustment in certain events as provided in the Rights Agreement.
No fractional shares of Preferred Stock will be issued upon
the exercise of any Right or Rights evidenced hereby (other than fractions that
are integral multiples of one one-thousandth of a share of Preferred Stock), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder of
Preferred Stock or of any other securities that may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to
2
any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
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.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal. Dated as of July 10, 2003.
ATTEST: MPOWER HOLDING CORPORATION
By: By:
--------------------------- ------------------------
Name: Name:
Title: Title:
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Rights Agent
By:
---------------------------
Name:
Title:
3
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
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: , 200
------------ -- --
---------------------------
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold,
assigned and transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such terms
are defined pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: , 200
------------- -- -- ---------------------------
Signature
Signature Guaranteed:
--------------------------------------------------------------
NOTICE
The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
In the event the certification set forth above is not
completed, the Company will deem the beneficial owner of the Rights evidenced by
this Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and, in the case of an Assignment,
will affix a legend to that effect on any Rights Certificates issued in exchange
for this Rights Certificate.
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate.)
To: Mpower Holding Corporation
The undersigned hereby irrevocably elects to exercise
--------
Rights represented by this Rights Certificate to purchase the Units of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property that may be issuable upon the
exercise of the Rights) and requests that certificates for such Units be issued
in the name of and delivered to:
----------------------------------------------------
(Please print name and address)
----------------------------------------------------
----------------------------------------------------
Please insert social security
or other identifying number:
-----------------------
If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
----------------------------------------------------
(Please print name and address)
----------------------------------------------------
----------------------------------------------------
Please insert social security
or other identifying number:
-----------------------
Dated: , 200
--------- -- --
----------------------------
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [
] are not beneficially owned by an Acquiring Person or an Affiliate or an
Associate thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the
undersigned, the undersigned [ ] did [ ] did not acquire the Rights evidenced by
this Rights Certificate from any person who is, was or subsequently became an
Acquiring Person or an Affiliate or Associate thereof.
Dated: , 200
--------- -- -- ----------------------------
Signature
Signature Guaranteed:
--------------------------------------------------------------
NOTICE
The signature in the foregoing Election to Purchase and
Certificate must conform to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above is not
completed, the Company will deem the beneficial owner of the Rights evidenced by
this Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and, in the case of an Assignment,
will affix a legend to that effect on any Rights Certificates issued in exchange
for this Rights Certificate.
EXHIBIT B
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On July 10, 2003, the Board of Directors of Mpower Holding
Corporation (the "Company") declared a distribution of one Right for each
outstanding share of Common Stock, par value $.001 per share (the "Company
Common Stock"), to stockholders of record at the close of business on July 11,
2003 (the "Record Date") and for each share of Company Common Stock issued
(including shares distributed from Treasury) by the Company thereafter and prior
to the Distribution Date. Each Right entitles the registered holder, subject to
the terms of the Rights Agreement (as defined below), to purchase from the
Company one one-thousandth of a share (a "Unit") of Series A Preferred Stock,
par value $.001 per share (the "Preferred Stock"), at a Purchase Price of $6.00
per Unit, subject to adjustment. The Purchase Price is payable in cash or by
certified or bank check payable to the order of the Company or by wire transfer
to the account of the Company (provided a notice of such wire transfer is given
by the holder of the related Right to the Rights Agent). The description and
terms of the Rights are set forth in a Rights Agreement between the Company and
Continental Stock Transfer & Trust Company as Rights Agent (the "Rights
Agreement").
Copies of the Rights Agreement and the Certificate of
Designation for the Preferred Stock will be filed with the Securities and
Exchange Commission as exhibits to a Registration Statement on Form 8-A dated
July 16, 2003 (the "Form 8-A"). Copies of the Rights Agreement and the
Certificate of Designation are available free of charge from the Company. This
summary description of the Rights and the Preferred Stock does not purport to be
complete and is qualified in its entirety by reference to all the provisions of
the Rights Agreement and the Certificate of Designation, including the
definitions therein of certain terms, which Rights Agreement and Certificate of
Designation are incorporated herein by reference.
The Rights Agreement
--------------------
Initially, the Rights will attach to all certificates
representing shares of outstanding Company Common Stock, and no separate Rights
Certificates will be distributed. The Rights will separate from the Company
Common Stock and the "Distribution Date" will occur upon the earlier of (i) 10
days following a public announcement (the date of such announcement being the
"Stock Acquisition Date") that a person or group of affiliated or associated
persons (other than the Company, any subsidiary of the Company or any employee
benefit plan of the Company or such subsidiary) (an "Acquiring Person") has
acquired, obtained the right to acquire, or otherwise obtained beneficial
ownership of 15% or more of the then outstanding shares of Company Common Stock,
and (ii) 10 business days (or such later date as may be determined by action of
the Board of Directors prior to such time as any person becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 15% or more of the then
outstanding shares of Company Common Stock. Until the Distribution Date, (i) the
Rights will be evidenced by Company Common Stock certificates and will be
transferred with and only with such Company Common Stock certificates, (ii) new
Company Common Stock certificates issued after the Record Date (also including
shares distributed from Treasury) will contain a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any
certificates representing outstanding Company Common Stock will also constitute
the transfer of the Rights associated with the Company Common Stock represented
by such certificates.
The Rights are not exercisable until the Distribution Date and
will expire at the close of business on the tenth anniversary of the Rights
Agreement unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights
Certificates will be mailed to holders of record of Company Common Stock as of
the close of business on the Distribution Date and, thereafter, the separate
Rights Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation
in a merger with an Acquiring Person and shares of Company Common Stock shall
remain outstanding, (ii) a Person becomes an Acquiring Person, (iii) an
Acquiring Person engages in one or more "self-dealing" transactions as set forth
in the Rights Agreement, or (iv) during such time as there is an Acquiring
Person, an event occurs that results in such Acquiring Person's ownership
interest being increased by more than 1% (e.g., by means of a recapitalization)
(each such event being a "Section 11(a)(ii) Event"), then, in each such case,
each holder of a Right will thereafter have the right to receive, upon exercise,
Units of Preferred Stock (or, in certain circumstances, Company Common Stock,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right. The exercise price is the Purchase Price
multiplied by the number of Units of Preferred Stock issuable upon exercise of a
Right prior to the events described in this paragraph. Notwithstanding any of
the foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.
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In the event that, at any time following the Stock Acquisition
Date, (i) the Company is acquired in a merger (other than a merger described in
the preceding paragraph) or other business combination transaction and the
Company is not the surviving corporation, (ii) any Person consolidates or merges
with the Company and all or part of the Company Common Stock is converted or
exchanged for securities, cash or property of any other Person or (iii) 50% or
more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as described
above) shall thereafter have the right to receive, upon exercise, common stock
of the ultimate parent of the Acquiring Person having a value equal to two times
the exercise price of the Right.
The Purchase Price payable, and the number of Units of
Preferred Stock issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Preferred Stock, (ii)
if holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. The Company is not required to issue fractional Units. In lieu
thereof, an adjustment in cash may be made based on the market price of the
Preferred Stock prior to the date of exercise.
At any time prior to the earlier of (i) ten business days
following the Stock Acquisition Date or (ii) the Final Expiration Date, a
majority of the Company's Board of Directors may redeem the Rights in whole, but
not in part, at a price of $.0001 per Right (subject to adjustment in certain
events) (the "Redemption Price"), payable, at the election of such majority of
the Company's Board of Directors, in cash or shares of Company Common Stock.
Immediately upon the action of a majority of the Company's Board of Directors
ordering the redemption of the Rights, the Rights will terminate and the only
remaining right of the holders of Rights will be to receive the Redemption
Price.
The Board of Directors, at its option, may exchange each Right
for (i) one Unit of Preferred Stock or (ii) such number of Units of Preferred
Stock as will equal (x) the difference between the aggregate market price of the
number of Units of Preferred Stock to be received upon a Section 11(a)(ii) Event
and the purchase price set forth in the Rights Agreement, divided by (y) the
market price per Unit of Preferred Stock upon a Section 11(a)(ii) Event.
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. While the distribution of the Rights
will not be taxable to stockholders or to the Company, stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Units of Preferred Stock (or other consideration).
Any of the provisions of the Rights Agreement may be amended
without the approval of the holders of Company Common Stock at any time prior to
the Distribution Date.
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After the Distribution Date, the provisions of the Rights Agreement may be
amended in order to cure any ambiguity, defect or inconsistency, to make changes
that do not adversely affect the interests of holders of Rights (excluding the
interests of any Acquiring Person), or to shorten or lengthen any time period
under the Rights Agreement; provided, however, that no amendment to adjust the
time period governing redemption shall be made at such time as the Rights are
not redeemable.
Description of Preferred Stock
------------------------------
The Units of Preferred Stock that may be acquired upon
exercise of the Rights will be nonredeemable and subordinate to any other shares
of preferred stock that may be issued by the Company.
Each Unit of Preferred Stock will have a minimum preferential
quarterly dividend of $.01 per Unit or any higher per share dividend declared on
the Company Common Stock.
In the event of liquidation, the holder of a Unit of Preferred
Stock will receive a preferred liquidation payment equal to the greater of $.01
per Unit and the per share amount paid in respect of a share of Company Common
Stock.
Each Unit of Preferred Stock will have one vote, voting
together with the Company Common Stock. The holders of Units of Preferred Stock,
voting as a separate class, shall be entitled to elect two directors if
dividends on the Preferred Stock are in arrears for six fiscal quarters.
In the event of any merger, consolidation or other transaction
in which shares of Company Common Stock are exchanged, each Unit of Preferred
Stock will be entitled to receive the per share amount paid in respect of each
share of Company Common Stock.
The rights of holders of the Preferred Stock to dividends,
liquidation and voting, and in the event of mergers and consolidations, are
protected by customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the economic value of one Unit of Preferred Stock
that may be acquired upon the exercise of each Right is expected to approximate
the economic value of one share of Company Common Stock.
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EXHIBIT C
---------
CERTIFICATE OF DESIGNATION
OF THE VOTING POWERS, DESIGNATION,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF THE
SERIES A PREFERRED STOCK
--------------
Pursuant to Section 151 of the
General Corporation Law of
the State of Delaware
--------------
I, Xxxxx X. Xxxx, Chairman and Chief Executive Officer of
Mpower Holding Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), DO HEREBY
CERTIFY:
that, pursuant to authority conferred upon the Board of
Directors of the Corporation by its Certificate of Incorporation (the
"Certificate"), and, pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors, at a duly
called meeting held on July 10, 2003, at which a quorum was present and acted
throughout, adopted the following resolutions, which resolutions remain in full
force and effect on the date hereof, creating a series of 100,000 shares of
Preferred Stock having a par value of $.001 per share, designated as Series A
Preferred Stock (the "Series A Preferred Stock") out of the class of 50,000,000
shares of preferred stock, par value of $.001 per share (the "Preferred Stock"):
RESOLVED, that pursuant to the authority vested in the Board
of Directors in accordance with the provisions of the Certificate, the Board of
Directors does hereby create, authorize and provide for the issuance of the
Series A Preferred Stock having the voting powers, designation, relative,
participating, optional and other special rights, preferences, and
qualifications, limitations and restrictions thereof that are set forth as
follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Preferred Stock" and the number of shares
constituting such series shall be 100,000.
Section 2. Dividends and Distributions. (A) Subject to the
prior and superior rights of the holders of any shares of any other series of
Preferred Stock or any other shares of preferred stock of the Corporation
ranking prior and superior to the shares of Series A Preferred Stock with
respect to dividends, each holder of one one-thousandth (1/1,000) of a share (a
1
"Unit") of Series A Preferred Stock shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available for that
purpose, (i) quarterly dividends payable in cash on the last day of March, June,
September and December in each year (each such date being a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of such Unit of Series A Preferred Stock, in an amount per
Unit (rounded to the nearest cent) equal to the greater of (a) $.01 or (b)
subject to the provision for adjustment hereinafter set forth, the aggregate per
share amount of all cash dividends declared on shares of the Common Stock since
the immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of a Unit of
Series A Preferred Stock, and (ii) subject to the provision for adjustment
hereinafter set forth, quarterly distributions (payable in kind) on each
Quarterly Dividend Payment Date in an amount per Unit equal to the aggregate per
share amount of all non-cash dividends or other distributions (other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock, by reclassification or otherwise) declared on shares of
Common Stock since the immediately preceding Quarterly Dividend Payment Date, or
with respect to the first Quarterly Dividend Payment Date, since the first
issuance of a Unit of Series A Preferred Stock. In the event that the
Corporation shall at any time after July 10, 2003 (the "Rights Declaration
Date") (i) declare any dividend on outstanding shares of Common Stock payable in
shares of Common Stock, (ii) subdivide outstanding shares of Common Stock or
(iii) combine outstanding shares of Common Stock into a smaller number of
shares, then in each such case the amount to which the holder of a Unit of
Series A Preferred Stock was entitled immediately prior to such event pursuant
to the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which shall be the number of shares of Common Stock
that are 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 Corporation shall declare a dividend or distribution
on Units of Series A Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the shares of Common
Stock (other than a dividend payable in shares of Common Stock); provided,
however, that, in the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $.01
per Unit on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on
each outstanding Unit of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issuance of such Unit of Series A
Preferred Stock, unless the date of issuance of such Unit is prior to the record
date for the first Quarterly Dividend Payment Date, in which case, dividends on
such Unit shall begin to accrue from the date of issuance of such Unit, or
unless the date of issuance is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of Units of Series A
Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on Units of
Series A Preferred Stock in an amount less than the aggregate amount of all such
dividends at the time
2
accrued and payable on such Units shall be allocated pro rata on a Unit-by-Unit
basis among all Units of Series A Preferred Stock at the time outstanding. The
Board of Directors may fix a record date for the determination of holders of
Units of Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of Units of Series A
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each Unit of Series A Preferred Stock shall entitle the holder thereof to
one vote on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock or (iii) combine the outstanding shares of Common Stock into a smaller
number of shares, then in each such case the number of votes per Unit to which
holders of Units of Series A Preferred Stock were entitled immediately prior to
such event shall be adjusted by multiplying such number 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 herein or by law, the holders
of Units of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If, at any time, dividends on any Units of Series A
Preferred Stock shall be in arrears in an amount equal to six quarterly
dividends thereon, then during the period (a "default period") from the
occurrence of such event until such time as all accrued and unpaid dividends for
all previous quarterly dividend periods and for the current quarterly dividend
period on all Units of Series A Preferred Stock then outstanding shall have been
declared and paid or set apart for payment, all holders of Units of Series A
Preferred Stock, voting separately as a class, shall have the right to elect two
Directors.
(ii) During any default period, such voting rights of the
holders of Units of Series A Preferred Stock may be exercised initially at a
special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at
any annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting rights nor any right of the
holders of Units of Series A Preferred Stock to increase, in certain cases, the
authorized number of Directors may be exercised at any meeting unless one-third
of the outstanding Units of Preferred Stock shall be present at such meeting in
person or by proxy. The absence of a quorum of the holders of Common Stock shall
not affect the exercise by the holders of Units of Series A Preferred Stock of
such rights. At any meeting at which the holders of Units of Series A Preferred
Stock shall exercise such voting rights initially during an existing default
period, they shall have the right, voting separately as a class, to elect
Directors to fill up to two vacancies in the Board of Directors, if any such
vacancies may then exist, or, if such right is exercised at an annual meeting,
to elect two Directors. If the number which may be so elected at any special
meeting does not amount to the required number, the holders of the Series A
Preferred Stock
3
shall have the right to make such increase in the number of Directors as shall
be necessary to permit the election by them of the required number. After the
holders of Units of Series A Preferred Stock shall have exercised their right to
elect Directors during any default period, the number of Directors shall not be
increased or decreased except as approved by a vote of the holders of Units of
Series A Preferred Stock as herein provided or pursuant to the rights of any
equity securities ranking senior to the Series A Preferred Stock.
(iii) Unless the holders of Series A Preferred Stock shall,
during an existing default period, have previously exercised their right to
elect Directors, the Board of Directors may order, or any stockholder or
stockholders owning in the aggregate not less than 25% of the total number of
the Units of Series A Preferred Stock outstanding may request, the calling of a
special meeting of the holders of Units of Series A Preferred Stock, which
meeting shall thereupon be called by the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of Units of Series A
Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall
be given to each holder of record of Units of Series A Preferred Stock by
mailing a copy of such notice to him at his last address as the same appears on
the books of the Corporation. Such meeting shall be called for a time not
earlier than 20 days and not later than 60 days after such order or request, or,
in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than 25% of the total number of
outstanding Units of Series A Preferred Stock. Notwithstanding the provisions of
this paragraph (C)(iii), no such special meeting shall be called during the 60
days immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) During any default period, the holders of shares of
Common Stock and Units of Series A Preferred Stock, and other classes or series
of stock of the Corporation, if applicable, shall continue to be entitled to
elect all the Directors until holders of the Units of Series A Preferred Stock
shall have exercised their right to elect two Directors voting as a separate
class, after the exercise of which right (x) the Directors so elected by the
holders of Units of Series A Preferred Stock shall continue in office until
their successors shall have been elected by such holders or until the expiration
of the default period, and (y) any vacancy in the Board of Directors may (except
as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a
majority of the remaining Directors theretofore elected by the holders of the
class of capital stock that elected the Director whose office shall have become
vacant. References in this paragraph (C) to Directors elected by the holders of
a particular class of capital stock shall include Directors elected by such
Directors to fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Units of Series A Preferred Stock as a separate
class to elect Directors shall cease, (y) the term of any Directors elected by
the holders of Units of Series A Preferred Stock as a separate class shall
terminate, and (z) the number of Directors shall be such number as may be
provided for in the Certificate or by-laws irrespective of any increase made
pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number
being subject, however, to change thereafter in any manner provided by law or in
the Certificate or by-laws). Any vacancies in the Board of Directors effected by
the provisions of clauses (y) and (z) in the preceding sentence may be filled by
a majority of the remaining Directors.
4
(vi) The provisions of this paragraph (C) shall govern the
election of Directors by holders of Units of Preferred Stock during any default
period notwithstanding any provisions of the Certificate to the contrary,
including, without limitation, the provisions of Article V of the Certificate.
(D) Except as set forth herein, holders of Units of Series A
Preferred Stock shall have no special voting rights and their consents shall not
be required (except to the extent they are entitled to vote with holders of
shares of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions. (A) Whenever quarterly
dividends or other dividends or distributions payable on Units of Series A
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 Units of Series A Preferred Stock shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of junior stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of parity stock, except dividends paid
ratably on Units of Series A Preferred Stock and shares of all such
parity stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of such Units and all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any parity stock; provided, however, that the
Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any junior
stock; or
(iv) purchase or otherwise acquire for consideration any Units
of Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of
Directors) to all holders of such Units.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any Units of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such Units shall, upon their cancellation, become authorized but
unissued Units of Preferred Stock and may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon
any voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, no distribution shall be
5
made (i) to the holders of shares of junior stock unless the holders of Units of
Series A Preferred Stock shall have received, subject to adjustment as
hereinafter provided in paragraph (B), the greater of either (a) $.01 per Unit
plus an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not earned or declared, to the date of such payment, or (b) the
amount equal to the aggregate per share amount to be distributed to holders of
shares of Common Stock, or (ii) to the holders of shares of parity stock, unless
simultaneously therewith distributions are made ratably on Units of Series A
Preferred Stock and all other shares of such parity stock in proportion to the
total amounts to which the holders of Units of Series A Preferred Stock are
entitled under clause (i)(a) of this sentence and to which the holders of shares
of such parity stock are entitled, in each case upon such liquidation,
dissolution or winding up.
(B) In the event the Corporation shall, at any time after the
Rights Declaration Date, (i) declare any dividend on outstanding shares of
Common Stock payable in shares of Common Stock, (ii) subdivide outstanding
shares of Common Stock, or (iii) combine outstanding shares of Common Stock into
a smaller number of shares, then in each such case the aggregate amount to which
holders of Units of Series A Preferred Stock were entitled immediately prior to
such event pursuant to clause (i)(b) of paragraph (A) of this Section 6 shall be
adjusted by multiplying such amount by a fraction the numerator of which shall
be the number of shares of Common Stock that are 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.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of common stock are exchanged for or converted into other stock
or securities, cash and/or any other property, then in any such case Units of
Series A Preferred Stock shall at the same time be similarly exchanged for or
converted into an amount per Unit (subject to the provision for adjustment
hereinafter set forth) equal to the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is converted or exchanged. In the event the
Corporation shall at any time after the Rights Declaration Date (i) declare any
dividend on outstanding shares of Common Stock payable in shares of Common
Stock, (ii) subdivide outstanding shares of Common Stock, or (iii) combine
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the immediately preceding sentence with respect to the
exchange or conversion of Units of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which shall be the number
of shares of Common Stock that are 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.
Section 8. Redemption. The Units of Series A Preferred Stock
shall not be redeemable.
Section 9. Ranking. The Units of Series A Preferred Stock
shall rank junior to all other series of the Preferred Stock and to any other
class of preferred stock that hereafter may be issued by the Corporation as to
the payment of dividends and the distribution of assets, unless the terms of any
such series or class shall provide otherwise.
6
Section 10. Amendment. The Certificate, including, without
limitation, this resolution, shall not hereafter be amended, either directly or
indirectly, or through merger or consolidation with any other corporation or
corporations in any manner that would alter or change the powers, preferences or
special rights of the Series A Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding Units of Series A Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. The Series A Preferred Stock
may be issued in Units or other fractions of a share, which Units or fractions
shall entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of Series A Preferred Stock.
Section 12. Certain Definitions. As used herein with respect
to the Series A Preferred Stock, the following terms shall have the following
meanings:
(A) The term "Common Stock" shall mean the class of stock
designated as the common stock, par value $0.001 per share, of the Corporation
at the date hereof or any other class of stock resulting from successive changes
or reclassification of such common stock.
(B) The term "junior stock" (i) as used in Section 4, shall
mean the Common Stock and any other class or series of capital stock of the
Corporation hereafter authorized or issued over which the Series A Preferred
Stock has preference or priority as to the payment of dividends and (ii) as used
in Section 6, shall mean the Common Stock and any other class or series of
capital stock of the Corporation over which the Series A Preferred Stock has
preference or priority in the distribution of assets upon any liquidation,
dissolution or winding up of the Corporation.
(C) The term "parity stock" (i) as used in Section 4, shall
mean any class or series of stock of the Corporation hereafter authorized or
issued ranking pari passu with the Series A Preferred Stock as to the payment of
dividends and (ii) as used in Section 6, shall mean any class or series of
capital stock ranking pari passu with the Series A Preferred Stock in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation.
7
IN WITNESS WHEREOF, Mpower Holding Corporation has caused this
Certificate to be signed by its Chairman and Chief Executive Officer and
attested by its Secretary this 10th day of July, 2003.
MPOWER HOLDING CORPORATION
By:
--------------------------------
Name: Xxxxx X. Xxxx
Title: Chairman and Chief
Executive Officer
Attest:
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Vice President,
General Counsel and
Secretary
