RIGHTS AGREEMENT
by and between
PRIMESOURCE CORPORATION
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Rights Agent
Dated as of February 1, 2001
TABLE OF CONTENTS
Section Page
1 Definitions 1
2 Appointment of Rights Agent 4
3 Issuance of Rights Certificates 5
4 Form of Rights Certificates 6
5 Countersignatures and Registration 6
6 Transfer, Split Up, Combination And Exchange Of Right Certificates, etc. 7
7 Exercise Of Rights; Exercise Price; Expiration Date Of Rights 8
8 Cancellation and Destruction of Right Certificates 9
9 Reservation and Availability of Common Shares 10
10 Common Shares Record Date 11
11 Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights 11
12 Certificate of Adjusted Exercise Price or Number of Shares 16
13 Consolidation, Merger of Sale or Transfer of Assets or Earning Power 16
14 Additional Covenants 19
15 Fractional Rights and Fractional Shares 19
16 Rights of Action 20
17 Agreement of Rights Holders 20
18 Right Certificate Holder Not Deemed a Stockholder 21
19 Concerning the Rights Agent 21
20 Merger or Consolidation or Change of Name of Rights Agent 22
21 Duties of Rights Agent 22
22 Change of Rights Agent 24
23 Issuance of New Right Certificates 24
24 Redemption 25
25 Exchange 26
26 Notice of Certain Events 26
27 Notices 27
28 Supplements and Amendments 28
29 Successors 28
30 Determinations and Actions by the Board of Directors 29
31 Benefits of this Agreement 29
32 Severability 29
33 Governing Law 30
34 Counterparts 30
35 Descriptive Headings 30
Exhibit A -- Form of Right Certificate
Exhibit B -- Summary of Rights to Purchase Common Stock
RIGHTS AGREEMENT
RIGHTS AGREEMENT dated as of February 1, 2001 (the
"Agreement"), by and between PrimeSource Corporation, a Pennsylvania corporation
(the "Company"), and American Stock Transfer & Trust Company, a New York
corporation (the "Rights Agent").
The Board of Directors of the Company has authorized and
declared a dividend of one Right (as such term is hereinafter defined) for each
share of common stock, $0.01 par value, of the Company (the "Common Shares")
outstanding at the close of business on February 2, 2001 (the "Record Date"),
and has authorized the issuance of one Right with respect to each Common Share
that shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date, the Exchange Date and the Final
Expiration Date (as such terms are hereinafter defined), each Right representing
the right to purchase one Common Share, upon the terms and subject to the
conditions hereinafter set forth (the "Rights").
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
a. "Acquiring Person" shall mean any Person (as
such term is hereinafter defined) who or which, together with all Affiliates and
Associates (as such terms are hereinafter defined) of such Person, shall be the
Beneficial Owner (as such term is hereinafter defined) of 15% or more of the
Common Shares then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company, or (iii) any
employee benefit plan of the Company or of any Subsidiary of the Company or any
Person organized, appointed or established by the Company for or pursuant to the
terms of any such plan. Notwithstanding the foregoing, (i) no Person shall
become an "Acquiring Person" solely as the result of an acquisition of Common
Shares by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 15% or more of the Common Shares then outstanding; provided, however, that if
a Person becomes the Beneficial Owner of 15% or more of the Common Shares then
outstanding by reason of share acquisitions by the Company and shall, after such
share acquisitions, become the Beneficial Owner of any additional Common Shares,
then such Person shall be deemed to be an "Acquiring Person", and (ii) no Person
shall be deemed an "Acquiring Person" if the Board of Directors determines that
such Person became such inadvertently, including but not limited to
circumstances where such Person (A) is unaware that he/she owned a percentage of
the Common Shares that would cause him/her to become an "Acquiring Person" or
(B) is aware of his/her percentage ownership but not of its consequences under
this Agreement and has no intention to control the Company and who with
reasonable promptness reduces his/her ownership below 15%.
b. "Affiliate", "Associate" and "control" shall
have the respective meanings ascribed to such terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date of this Agreement.
c. A Person shall be deemed the "Beneficial
Owner" of and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such
Person's Affiliates or Associates beneficially owns, directly or indirectly,
within the meaning of Rule 13d-3 or Rule 13d-5 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Agreement;
(ii) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding whether or not
in writing (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own", (A) securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange, (B) securities issuable upon
exercise of Rights at any time prior to the occurrence of a Triggering Event (as
such term is hereinafter defined) or (C) securities issuable 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(b) or Section 23 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;
(iii) which such Person or any of such
Person's Affiliates or Associates, directly or indirectly, has the right to vote
or dispose of pursuant to any agreement, arrangement or understanding whether or
not in writing; provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own", any security under this
subparagraph (iii) as a result of an agreement, arrangement or understanding to
vote such security if such agreement, arrangement or understanding (1) arises
solely from a revocable proxy given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act and (2) is not also then reportable by
such Person on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iv) which are beneficially owned,
directly or indirectly, by any other Person (or any Affiliate or Associate
thereof) with which such Person or any of such Person's Affiliates or Associates
has any agreement, arrangement or understanding whether or not in writing (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy as
described in the proviso to subparagraph (iii) of this paragraph (c)) or
disposing of any securities of the Company.
If a Person shall be deemed to be the Beneficial Owner of any securities which
are not outstanding, such securities shall be deemed to be outstanding for
purposes of determining the percentage of Common Shares beneficially owned by
such Person.
d. "Business Day" shall mean any day other
than a Saturday, Sunday or a day on which banking institutions in the State of
New York are authorized or obligated by law or executive order to close.
e. "Close of business" on any given date shall
mean 5:00 P.M., New York, New York time, on such date; provided, however, that
if such date is not a Business Day it shall mean 5:00 P.M., New York, New York
time, on the next succeeding Business Day.
f. "Common Shares" when used with reference to
the Company (or without express reference to another Person) shall mean the
shares of common stock, $0.01 par value, of the Company or any other shares of
capital stock of the Company into which the Common Shares are reclassified or
changed. "Common Shares" when used with reference to any Person other than the
Company shall mean the capital stock or other equity securities or equity or
other beneficial interests of such Person with the greatest aggregate voting
power.
g. "Common Stock Equivalent" shall mean a
share, or fraction of a share, of any authorized class of preferred stock of the
Company having dividend, voting, liquidation and other rights which result, in
the judgment of the Board of Directors, in such share, or fraction of a share,
being approximately equivalent in value to one Common Share as of the Event Date
(as such term is hereinafter defined); provided, however, that, if no preferred
stock has been authorized or, if authorized, in the judgment of the Board of
Directors there are not sufficient authorized but unissued shares of preferred
stock available for the creation of Common Stock Equivalents, "Common Stock
Equivalent" shall mean such cash, reduction in Exercise Price (as such term is
hereinafter defined), other equity securities, debt securities, other assets or
any combination of the foregoing, that the Board of Directors shall determine to
be approximately equivalent in value to one Common Share as of the Event Date.
As used herein, "Event Date" shall mean (i) for purposes of any determination
made pursuant to Section 11(a)(iii) hereof, the date of occurrence of a Section
11(a)(ii) Event (as such term is hereinafter defined), and (ii) for purposes of
any determination made pursuant to Section 25(c) hereof, the Exchange Date.
h. "Distribution Date" shall have the meaning
set forth in Section 3(b) hereof.
i. "Exchange" shall have the meaning set forth
in Section 25 hereof.
j. "Exchange Date" shall have the meaning set
forth in Section 7(a) hereof.
k. "Exchange Ratio" shall have the meaning set
forth in Section 25 hereof.
l. "Exercise Price" shall have the meaning set
forth in Section 4 hereof.
m. "Final Expiration Date" shall have the
meaning set forth in Section 7(a) hereof.
n. "Person" shall mean any individual, firm,
corporation, partnership or other entity and
shall include any successor by merger or
otherwise of such Person.
o. "Principal Party" shall have the meaning set
forth in Section 13(b) hereof.
p. "Record Date" shall mean February 2, 2001.
q. "Redemption Date" shall have the meaning set
forth in Section 7(a) hereof.
r. "Redemption Price" shall have the meaning
set forth in Section 24(a) hereof.
s. "Registered Common Shares" shall have the
meaning set forth in Section 13(b) hereof.
t. "Right Certificates" shall have the meaning
set forth in Section 3(b) hereof.
u. "Rights" shall have the meaning set forth in
the recital of this Agreement.
v. "Section 11(a)(ii) Event" shall mean the
event described in Section 11(a)(ii) hereof.
w. "Section 13 Event" shall mean any event
described in clauses (x), (y) or (z) of
Section 13(a)hereof.
x. "Securities Act" shall mean the Securities
Act of 1933, as amended.
y. "Share Acquisition Date" shall mean the date
of the first public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to Section 13(d) under the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has
become such.
z. "Subsidiary" shall mean, with reference to
any Person, any corporation or other Person of which a majority of the voting
power of the voting equity securities or equity or other beneficial interests is
owned, directly or indirectly, by such Person, or which is otherwise controlled
by such Person.
aa. "Summary of Rights" shall have the meaning
set forth in Section 3(a) hereof.
bb. "Trading Day" shall have the meaning set
forth in Section 11(d) hereof.
cc. "Triggering Event" shall mean any Section
11(a)(ii) Event or Section 13 Event.
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. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. In the event the Company appoints one or more Co-Rights
Agent, the respective duties of the Rights Agent and any Co-Rights Agent shall
be as the Company shall determine.
Section 3. Issue of Right Certificates.
a. No separate certificates representing the
Rights will be issued to shareholders until after a Distribution Date (as
defined below). As promptly as practicable after the Record Date, the Company
will send a copy of a Summary of Rights in substantially the form attached
hereto as Exhibit B (the "Summary of Rights"), by first-class, postage prepaid
mail, to each record holder of Common Shares as of the close of business on the
Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be evidenced by such
certificates for Common Shares together and this Rights Agreement, and the
registered holders of Common Shares shall also be the registered holders of the
associated Rights. Until the Distribution Date (or the earliest of the
Redemption Date, Exchange Date or Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the Record Date
shall also constitute the transfer of the Rights associated with the Common
Shares represented by such certificate.
b. Until the earlier of (i) the close of
business on the tenth day after the Share Acquisition Date or (ii) the close of
business on the tenth business day (or such later day as may be determined by
action of the Board of Directors prior to such time as any Person becomes an
Acquiring Person) after the date that a tender or exchange offer by any Person
is first published, sent or given within the meaning of Rule 14d-2 of the
General Rules and Regulations under the Exchange Act (or any comparable or
successor rule) if, upon consummation thereof, such Person would be an Acquiring
Person (the earlier of such dates, including any such date which is after the
date of this Agreement and prior to the issuance of the Rights, being herein
referred to as the "Distribution Date"),
(x) the Rights will be evidenced (subject to
the provisions of paragraph (a) of this Section 3) by the certificates for
Common Shares registered in the names of the holders thereof (which certificates
shall also be deemed 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 Common Shares.
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 Common
Shares as of the close of business on the Distribution Date, at the address of
such holder shown on the records of the Company, one or more Right certificates,
in substantially the form of Exhibit A hereto (the "Right Certificates"),
evidencing one Right for each Common Share so held, subject to adjustment as
provided herein. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
c. Rights shall be issued in respect of all
Common Shares which become outstanding (including, without limitation,
reacquired Common Shares referred to in the penultimate sentence of this
paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date, the Exchange Date or the Final
Expiration Date. Certificates representing such Common Shares shall also be
deemed to be certificates for Rights, and shall bear the following legend:
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in the Rights Agreement between PrimeSource Corporation
(the "Company") and American Stock Transfer & Trust Company, dated as of
February 1, 2001 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. 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. As described in the
Rights Agreement, Rights beneficially owned by (i) an Acquiring Person or
any Associate or Affiliate thereof (as such terms are defined in the Rights
Agreement), (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) under certain circumstances, a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee before or concurrently with the Acquiring Person becoming such,
shall be null and void.
With respect to such certificates containing the foregoing legend, until the
earliest of the Distribution Date, the Redemption Date, the Exchange Date or the
Final Expiration Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone (subject to
the provisions of paragraph a of this Section 3) and the registered holders of
Common Shares shall also be the holders of the associated Rights, and the
surrender for transfer of any such certificates shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding. Rights shall again become outstanding with respect to
such Common Shares at such time as they may be reissued by the Company.
Section 4. Form of Right Certificates. The Right Certificates (and the forms of
election to purchase shares, certification and assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit A
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed or any securities
association on whose interdealer quotation system the Rights may from time to
time be authorized for quotation, or to conform to usage. Subject to the
provisions of Section 23 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of Common Shares as shall be set forth
therein at the price per Common Share set forth therein (the "Exercise Price"),
but the amount and type of securities purchasable upon the exercise of each
Right and the Exercise Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration.
a. The Right Certificates shall be executed on
behalf of the Company by its Chief Executive Officer, its President or any Vice
President, either manually or by facsimile signature, and shall have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Corporate Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless, may
be countersigned by the Rights Agent, and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Agreement any such person was not such an officer.
b. On the Distribution Date, if the Rights
Agent is not the sole transfer agent for the Common Shares, the Company will
furnish the Rights Agent with the name and address of, and the number of Rights
held by, each holder of Rights. Following the Distribution Date, the Rights
Agent will keep or cause to be kept, at the office of the Rights Agent
designated for such purpose, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of Rights as
evidenced on the face of each of the Right Certificates and the date and
certificate number of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
a. Subject to the provisions of Section 7(e)
and Section 15 hereof, at any time after the close of business on the
Distribution Date, and at or prior to the close of business on the earliest of
the Redemption Date, the Exchange Date or the Final Expiration Date, any Right
Certificate or Certificates (other than Right Certificates representing Rights
which have been exchanged pursuant to Section 25 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like number of
Common Shares (or other securities or other assets, as the case may be) as the
Right Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged, with the form
of assignment and certificate appropriately executed, 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 Right Certificate or Certificates until the
registered holder shall have completed and signed the certificate contained in
the form of assignment set forth on the reverse side of each such Right
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the Company shall reasonably request. Thereupon the Rights Agent
shall, subject to Section 7(e) and Section 15 hereof, countersign and deliver to
the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
b. Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and, at
the Company's request, reimbursement to the Company and the Rights Agent of all
reasonable expenses incidental thereto, and upon surrender to the Rights Agent
and cancellation of the Right Certificate if mutilated, the Company will execute
and deliver a new Right Certificate of like tenor to the Rights Agent for
countersignature and delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Exercise Price; Expiration Date of Rights.
a. The Rights shall not be exercisable prior to
the Distribution Date. Subject to Section 7(e) hereof, the registered holder of
any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein, including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a)(iii), Section 24(b) and
Section 25(b)) in whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to purchase 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 Exercise
Price for the Common Shares (or other securities, cash or other assets, as the
case may be) as to which the Rights are exercised, at or prior to the earliest
of (i) the close of business on February 1, 2011 (the "Final Expiration Date"),
(ii) the time at which the Rights are redeemed as provided in Section 24 hereof
(the "Redemption Date") or (iii) the time at which the Rights are exchanged as
provided in Section 25 hereof (the "Exchange Date"); provided, however, that if
the number of Rights exercised would entitle the holder thereof to receive any
fraction of a Common Share greater than one-half of a share, the holder thereof
shall not be entitled to exercise such Rights unless such holder concurrently
purchases from the Company (and in such event the Company shall sell to such
holder) an additional fraction of a Common Share at a price equal to the same
fraction of the current Purchase Price which, when such fraction is added to the
number of Common Shares to be received upon such exercise, will equal a whole
number of Common Shares.
b. The Exercise Price for each Common Share
pursuant to the exercise of one Right shall initially be $20. The Exercise Price
shall be subject to adjustment from time to time as provided in Sections 11 and
13 hereof and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below.
c. Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Exercise Price for the shares (or other
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax or governmental
charge required to be paid by the holder of such Right Certificate in accordance
with Section 9(e) hereof, the Rights Agent shall, subject to Section 21(j)
hereof, thereupon promptly (i) requisition from any transfer agent of the Common
Shares (or make available, if the Rights Agent is the transfer agent for such
shares) certificates for the number of Common Shares to be purchased, and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) when appropriate, requisition from the Company the amount of
cash, if any, to be paid in lieu of issuance of fractional shares in accordance
with Section 15 hereof, (iii) after receipt of such certificates, cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Right Certificate.
The payment of the Exercise Price shall be made in cash or by certified or bank
official check or money order payable to the order of the Company. In the event
that the Company is obligated to issue other securities of the Company or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such other securities or property are
available for distribution by the Rights Agent, if and when appropriate.
d. In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced thereby, a new
Right Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent and delivered to the registered
holder of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 15 hereof.
e. Notwithstanding anything in this Agreement
to the contrary, from and after the occurrence of a Section 11(a)(ii) Event, any
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) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or of any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or of any such Associate or Affiliate) or to any Person
with whom the Acquiring Person has any agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
in its discretion has determined is part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of this Section 7(e),
shall 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. No Right Certificate shall be issued
pursuant to Section 3 or Section 23 hereof that represents Rights beneficially
owned by an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof and no Right
Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of such Acquiring
Person, Associate or Affiliate. Any Right Certificate delivered to the Rights
Agent for transfer to any of the foregoing Persons, or which represents void
Rights, shall be canceled. The Company shall use reasonable efforts to effect
compliance with the provisions of this Section 7(e), but shall have no liability
to any holder of Right Certificates or other Person as a result of its failure
to make any determinations with respect to an Acquiring Person or its
Affiliates, Associates or transferees hereunder.
f. Notwithstanding anything in this Agreement
to the contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported transfer as set forth in Section 6 hereof or exercise as set forth
in this Section 7 unless such registered holder shall have (i) completed and
signed the certificate contained in the form of assignment or election to
purchase set forth on the reverse side of the Right Certificate surrendered for
such assignment or exercise and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
canceled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Common Shares.
a. Subject to the Company's rights under
Section 11(a)(iii) hereto to otherwise fulfill its obligations hereunder, the
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Common Shares and/or any authorized
and issued Common Shares held in its treasury, the number of Common Shares that
will be sufficient to permit the exercise in full of all outstanding Rights;
provided, however, that such action need not be taken with respect to Common
Shares (or other securities) issuable upon exercise of the Rights until after
such time as the Rights become exercisable.
b. So long as the Common Shares issuable upon
the exercise of Rights may be listed on any national securities exchange or
authorized for quotation on any interdealer quotation system of any securities
association, the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange or quoted on such system upon official
notice of issuance upon such exercise.
c. The Company shall use its best efforts to
(i) file, as soon as practicable following the earliest date after the
occurrence of a Section 11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined in
accordance with Section 11(a)(ii) or 11(a)(iii) hereof, or as soon as is
required by law following the Distribution Date, as the case may be (provided
the Company shall not have elected to make the exchange permitted by Section 25
hereof for all outstanding Rights (other than the Rights that shall have become
null and void pursuant to Section 7(e) hereof)), a registration statement under
the Securities Act with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the Final Expiration Date. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed ninety
(90) days after the date set forth in clause (i) of the first sentence of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company shall give notice to the Rights Agent and issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a notice to the Rights Agent and a public announcement at
such time as the suspension is no longer in effect. In addition, if the Company
shall determine that a registration statement is required following the
Distribution Date but prior to the occurrence of a Section 11(a)(ii) Event
hereof, the Company may temporarily suspend the exercisability of the Rights
until such time as a registration statement has been declared effective.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction if the requisite qualification in
such jurisdiction shall not have been obtained, the exercise thereof shall not
be permitted under applicable law or a registration statement shall not have
been declared effective.
d. The Company covenants and agrees that it
will take all such action as may be necessary to ensure that all Common Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Exercise Price), be duly
and validly authorized and issued and fully paid and nonassessable shares.
e. The Company further covenants and agrees
that it will pay when due and payable any and all federal and state transfer
taxes and governmental charges which may be payable in respect of the issuance
or delivery of the Right Certificates or of any Common Shares (or other
securities or property) upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax or other governmental charge which
may be payable in respect of any transfer or delivery of Right Certificates to a
Person other than, or the issuance or delivery of certificates for Common Shares
(or other securities or property) in a name other than that of, the registered
holder of the Right Certificates evidencing Rights surrendered for exercise or
to issue or deliver any certificates for Common Shares (or other securities or
property) in a name other than that of the registered holder upon the exercise
of any Rights until any such tax or charge shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
or charge is due.
Section 10. Common Shares Record Date. Each person in whose name any certificate
for Common Shares (or other securities) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
Common Shares (or other securities) represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly surrendered and payment of the Exercise Price (and all applicable
transfer taxes and governmental charges) was made; provided, however, that if
the date of such surrender and payment is a date upon which the Common Shares
(or other securities) transfer books of the Company are closed or a date on
which the exercisability of the Rights is suspended pursuant to Section 9(c),
such person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Common Shares (or other securities) transfer books of the Company are open
or the next succeeding Business Day on which such suspension is no longer in
effect. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate, as such, shall not be entitled to any rights of a shareholder
of the Company with respect to Common Shares (or other 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 Exercise Price, Number and Kind of Shares or Number
of Rights
The Exercise Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
a. (i) In the event the Company shall, at any time
after the date of this Agreement, (A) declare a dividend on
the Common Shares payable in Common Shares, (B) subdivide or
split the outstanding Common Shares into a greater number of
shares, (C) combine or consolidate the outstanding Common
Shares into a smaller number of shares or effect a reverse
stock split, or (D) issue any shares of its capital stock in a
reclassification of the Common Shares (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing or surviving
corporation) or division, except as otherwise provided in this
Section 11(a) and in Section 7(e) hereof, the Exercise Price
in effect at the time of the record date for such dividend or
of the effective date of such subdivision, split,
consolidation, division, combination or reclassification shall
be proportionately adjusted so that the holder of Rights
exercised after such time shall be entitled to receive, upon
payment of the Exercise Price then in effect, the aggregate
number and kind of Common Shares or shares of capital stock,
as the case may be, which, if such Rights had been exercised
immediately prior to such record or effective date and at a
time when the Common Shares (or other capital stock, as the
case may be) transfer books of the Company were open, such
holder would have acquired upon such exercise and, in
addition, would have been entitled to receive with respect to
such Common Shares or shares of capital stock, as
the case may be, by virtue of such dividend, subdivision,
split, consolidation, combination or reclassification at an
aggregate Exercise Price (i.e., the product of the number of
Common Shares or shares of capital stock purchased or
exercised, as the case may be, multiplied by the Exercise
Price) equal to the aggregate Exercise Price prior to such
dividend, subdivision, split, consolidation, combination,
division or reclassification.
(ii) Subject to Sections 11(a)(iii) and 25
hereof, in the event that any Person, alone or together with
its Affiliates and Associates, shall become an Acquiring
Person, then proper provision shall be made so that each
holder of one Right, except as provided in Section 7(e)
hereof, shall thereafter have a right to receive, upon
exercise of each Right and upon payment of the then-current
Exercise Price for one Common Share, in accordance with the
terms of this Agreement, not one Common Share, but rather
such number of Common Shares as shall equal the result
obtained by (x) multiplying the then-current Exercise Price by
the number of Common Shares for which one Right is then
exercisable and (y) dividing that product by 50% of the
current market price (determined pursuant to Section 11(d)
hereof) per Common Share on the date such Person, alone or
together with its Affiliates and Associates, became an
Acquiring Person. For example, assuming the current market
price of the Common Shares is $4.00 per share and assuming no
other adjustments are required under the terms of this
Agreement, after any Person becomes an Acquiring Person, a
holder of one Right upon exercise thereof and payment of
$20.00 to the Company shall receive ten (10) Common Shares
(($20.00 X 1)/(.5 X $4.00)).
(iii) Subject to Section 25 hereof, in the
event that the number of Common Shares which are authorized by
the Company's articles of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph
(ii), the Rights shall not be exercisable for Common Shares,
but proper provision shall be made so that each holder of one
Right, except as provided in section 7(e) hereof, shall
thereafter have a right to receive, upon exercise of each
Right and upon payment of the price for one Common Share
determined pursuant to subparagraph (ii), not one Common
Share, but rather such number of Common Stock Equivalents
(or, in the judgment of the Board of Directors, such
combination of Common Stock Equivalents and Common Shares)
as shall equal the number of Common Shares determined
pursuant to subparagraph (ii).
b. In case the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of Common Shares
entitling them to subscribe for or purchase (for a period expiring within 45
calendar days after such record date) Common Shares or securities convertible
into Common Shares at a price per Common Share (or having a conversion price per
share, if a security convertible into Common Shares) less than the current
market price (as determined pursuant to Section 11(d) hereof) per Common Share
on such record date, the Exercise Price to be in effect after such record date
shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Common Shares outstanding on such record date, plus the number of
Common Shares which the aggregate offering price of the total number of Common
Shares 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 Common Shares
outstanding on such record date, plus the number of additional Common Shares to
be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding and conclusive for all purposes. Common Shares owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and in the event that such rights, options or
warrants are not so issued, the Exercise Price shall be adjusted to be the
Exercise Price which 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 Common Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend), assets, stock
(other than a dividend payable in Common Shares) or subscription rights, options
or warrants (excluding those referred to in or excluded pursuant to Section
11(b) hereof), the Exercise Price to be in effect after such record date shall
be determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current
market price (as determined pursuant to Section 11(d) hereof) per one Common
Share on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding and
conclusive for all purposes) of the portion of the cash, assets, stock or
evidences of indebtedness so to be distributed or of such subscription rights,
options or warrants applicable to one Common Share and the denominator of which
shall be such current market price (as determined pursuant to Section 11(d)
hereof) per one Common Share. 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 Exercise Price shall again be adjusted to be the Exercise Price
which would then be in effect if such record date had not been fixed.
d. For the Purposes of any computation
hereunder, the "current market price" per Common Share on any date shall be
deemed to be the average of the daily closing prices per Common Share for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that the current market price
per Common Share is determined during a period following the announcement by the
issuer of such Common Shares of (i) a dividend or distribution on such Common
Shares payable in such Common Shares or securities convertible into such Common
Shares (other than the Rights) or (ii) any subdivision, split, consolidation,
combination or reclassification of such Common Shares and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, split, consolidation,
division, combination or reclassification, then, and in each such case, the
"current market price" shall be appropriately adjusted at the discretion of the
Board of Directors of the Company to take into account ex-dividend trading. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common Shares are listed
or admitted to trading or, if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use, or, if
on any such date the Common Shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Shares selected by the Board of
Directors of the Company. If on any such date no market maker is making a market
in the Common Shares, the fair value of such shares on such date as determined
in good faith by the Board of Directors of the Company shall be used and shall
be binding and conclusive for all purposes. The term "Trading Day" shall mean a
day on which the principal national securities exchange on which the Common
Shares are listed or admitted to trading is open for the transaction of business
or, if the Common Shares are not listed or admitted to trading on any national
securities exchange, a Business Day. If the Common 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 the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding and conclusive for all purposes.
e. Anything herein to the contrary
notwithstanding, no adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a Common
Share or other share, 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 which
requires such adjustment or (ii) the Final Expiration Date.
f. If as a result of an adjustment made
pursuant to Section 11(a) or Section 13(a) hereof, the holder of any Right to be
thereafter exercised shall become entitled to receive any shares of capital
stock of the Company other than Common Shares, thereafter the number of such
other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Shares contained in
this Section 11 and the provisions of Sections 6, 7, 9, 10, 13 and 15 with
respect to the Common Shares shall apply on like terms to any such other shares.
g. All Rights issued by the Company subsequent
to any adjustment made to the Exercise Price hereunder shall evidence the right
to purchase, at the adjusted Exercise Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.
h. Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of the Exercise
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 Exercise Price, that number of
Common Shares (calculated to the nearest ten-thousandth) obtained by (i)
multiplying (x) the number of Common Shares covered by each Right immediately
prior to this adjustment, by (y) the Exercise Price in effect immediately prior
to such adjustment of the Exercise Price, and (ii) dividing the product so
obtained by the Exercise Price in effect immediately after such adjustment of
the Exercise Price.
i. The Company may elect on or after the date
of any adjustment of the Exercise Price to adjust the number of Rights, in
substitution for any adjustment in the number of Common Shares purchasable upon
the exercise of a Right. Each of the Rights outstanding after such adjustment in
the number of Rights shall be exercisable for the number of Common Shares for
which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest one ten-thousandth) obtained by
dividing the Exercise Price in effect immediately prior to adjustment of the
Exercise Price by the Exercise Price in effect immediately after adjustment of
the Exercise 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 Exercise Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least
10 days later than the date of the public announcement. If Right Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 15 hereof, 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 Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holder
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of the Company, the adjusted Exercise Price) and
shall be registered in the names of the holders of record of Right Certificates
on the record date specified in the public announcement.
j. Irrespective of any adjustment or change in
the Exercise Price or the number of Common Shares issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Exercise Price and the number of Common Shares which
were expressed in the initial Right Certificates issued hereunder.
k. Before taking any action that would cause an
adjustment reducing the Exercise Price below the then par value, if any, of the
Common Shares issuable upon exercise of the Rights, the Company shall take any
corporate action which may, upon the advice of its counsel, be necessary in
order that the Company may validly and legally issue fully paid and
nonassessable Common Shares at such adjusted Exercise Price.
l. In any case in which this Section 11 shall
require that an adjustment in the Exercise 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 the Common Shares and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the Common
Shares and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Exercise 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 upon the occurrence of the event requiring such
adjustment.
m. Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that in their good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Common Shares, (ii) issuance wholly for cash
of any of the Common Shares at less than the current market price, (iii)
issuance wholly for cash of Common Shares or securities which by their terms are
convertible into or exchangeable for Common Shares, (iv) stock dividends, or (v)
issuance of rights, options or warrants referred to hereinabove in this Section
11, hereafter made by the Company to holders of its Common Shares shall not be
taxable to such stockholders.
n. In the event that the Rights become
exercisable following a Section 11(a)(ii) Event, the Company, by action of the
Board of Directors, may permit the Rights, subject to Section 7(e), to be
exercised for 50% of the Common Shares (or cash, other securities or property)
that would otherwise be purchasable under Section 11(a), in consideration of the
surrender to the Company of the Rights so exercised and without other payment of
the Exercise Price. Rights exercised under this Section 11(n) shall be deemed to
have been exercised in full and shall be canceled.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, 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 Common Shares a
copy of such certificate and (c) mail a brief summary thereof to each holder of
a Right Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing Common Shares) in accordance with Section 27 hereof.
The Rights Agent shall be fully authorized to rely and be protected in relying
on any such certificate and on any adjustment therein contained.
Section 13.Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
a. In the event that, following the earlier of
the Distribution Date or the Share Acquisition Date, (x) the Company, directly
or indirectly, shall consolidate with, or merge with and into, any other Person
(other than a Subsidiary of the Company in a transaction which complies with
Section 14(b) hereof) 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 which complies with Section 14(b)
hereof), directly or indirectly, shall consolidate with, or merge with and into,
the Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding Common Shares shall be changed into or
exchanged for stock or other securities of any other Person (or of the Company)
or cash or any other property, or (z) the Company, directly or indirectly, shall
sell or otherwise transfer (or one or more of its Subsidiaries, directly or
indirectly, shall sell or otherwise transfer), 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) to any Person or Persons
(other than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 14(b)), then, and in each such
case, proper provision shall be made so that
(i) each holder of one Right (except as
provided in Section 7(e) hereof) shall thereafter have the right to receive,
upon the exercise of each Right and upon payment of the then-current Exercise
Price for one Common Share in accordance with the terms of this Agreement, not
one Common Share, but rather such number of validly authorized and issued, fully
paid, nonassessable and freely tradable Common Shares of the Principal Party
(as hereinafter defined), free and clear of any liens, encumbrances and
other adverse claims and not subject to any rights of call or first refusal,
as shall be equal to the result obtained by (1) multiplying the then-current
Exercise Price by the number of Common Shares for which one Right is then
exercisable (without taking into account any adjustment previously made
pursuant to Section 11(a)(ii) or 11(a)(iii) hereof) and (2) dividing that
product by 50% of the current market price (determined pursuant to Section
11(d) hereof) per Common Share of the Principal Party on the date of
consummation of such consolidation, merger, sale or transfer;
(ii) such Principal Party shall thereafter
be liable for, and shall assume, pay and perform in all respects, by virtue of
such consolidation, merger, sale or transfer, all the obligations and duties of
the Company pursuant to this Agreement, regardless of any provision to the
contrary in any agreement between the Company and such Principal Party;
(iii) except for purposes of Section 1(g)
hereof, the term "Company" shall thereafter be deemed to refer to such
Principal Party;
(iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its Common Shares) in connection with the consummation of any such transaction
as may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights; provided, however, that,
upon the subsequent occurrence of any merger, consolidation, sale of all or
substantially all of the assets, recapitalization, reclassification of shares,
reorganization or other extraordinary transaction in respect of such Principal
Party, each holder of one Right (except as otherwise provided herein) shall
thereupon be entitled to receive, upon exercise of such Right and payment of the
Exercise Price, such cash, shares, rights, warrants and other property which
such holder would have been entitled to receive had he, at the time of such
transaction, owned the Common Shares of the Principal Party purchasable upon the
exercise of such Rights (after giving effect to the foregoing provisions of this
Section 13(a)), and such Principal Party shall take such steps (including, but
not limited to, reservation of shares of stock) as may be necessary to permit
the subsequent exercise of the Rights in accordance with the terms hereof for
such cash, shares, rights, warrants and other property; and
(v) the provisions of Sections 11(a)(ii) and
11(a)(iii) hereof shall be of no effect following the occurrence of any Section
13 Event.
b. "Principal Party" shall mean
(i) in the case of any merger described
in clause (x) or (y) of Section 13(a), any Person that is the issuer of any
securities into which Common Shares of the Company are converted in such
merger, and if no securities are so issued, any Person that is a party to
such merger that survives the merger;
(ii) in the case of any consolidation
described in clause (x) or (y) of Section 13(a), any Person that directly
controls, alone or with other Persons, a corporation that is consolidating
with the Company; and
(iii) in the case of any transaction or
transactions described in clause (z) of Section 13(a), any Person that
receives any assets or earning power transferred pursuant to such
transaction or transactions;
provided, however, that with respect to such Person (or, if there is more than
one such Person, with respect to each such Person), (1) if the Common Shares of
such Person are not at such time and have not been continuously over the
preceding twelve (12) month period registered under Section 12 of the Exchange
Act ("Registered Common Shares"), or such Person is not a corporation, and such
Person is a direct or indirect Subsidiary of another Person which has Registered
Common Shares outstanding, "Principal Party" shall refer to such other Person;
(2) if the Common Shares of such Person are not Registered Common Shares 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
which has Registered Common Shares outstanding, "Principal Party" shall refer to
the ultimate parent entity of such first mentioned Person; (3) if the Common
Shares of such Person are not Registered Common Shares 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 latter Persons have Registered Common Shares
outstanding, "Principal Party" shall refer to whichever of such latter Persons
is the issuer of outstanding Registered Common shares having the greatest
aggregate current market value (determined pursuant to Section 11(d)(i) hereof);
or (4) if the Common Shares of such Person are not Registered Common Shares or
such Person is not a corporation, and such Person is directly or indirectly
controlled by more than one Person, and none of such latter Persons have
Registered Common Shares outstanding, "Principal Party" shall refer to whichever
ultimate parent entity is the entity having the greatest net assets; provided,
further, however, that if under the foregoing provisions of this Section 13(b)
there shall for any reason be more than one Principal Party, "Principal Party"
shall refer to whichever of such Persons is the issuer of outstanding Registered
Common Shares having the greatest aggregate current market value (determined
pursuant to Section 11(d) hereof) or, if none of such Persons has Registered
Common Shares outstanding, whichever of such Persons is the entity having the
greatest net assets.
c. Notwithstanding anything herein to the contrary,
if the Principal Party as determined pursuant to paragraph (b) above is not a
corporation, proper provision shall be made so that such Principal Party shall
create or otherwise make available for purposes of the exercise of the Rights in
accordance with the terms of this Agreement, a type or types of securities
having a fair market value (as determined by a nationally recognized investment
banking firm selected by the Board of Directors of the Company) equal to at
least the value of the Common Shares which each holder of a Right would have
been entitled to receive if such Principal Party had been a corporation.
d. The Company shall not consummate any Section
13 Event, unless (1) at the time of and after such consummation the Principal
Party shall have a sufficient number of authorized Common Shares which have not
been issued or reserved for issuance to permit the exercise in full of the
Rights in accordance with this Section 13 and (2) prior to such consummation 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 this Section
13 and further providing that, as soon as practicable after the date of any such
Section 13 Event, the Principal Party will
(i) prepare and file a registration
statement under the Securities Act with respect to the Rights and the
securities purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration statement to (A)
become effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Final Expiration Date, and similarly comply with
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 which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive share exchanges, mergers or consolidations or sales or other
transfers. In the event that a Section 13 Event shall occur at any time after
the first occurrence of a Section 11(a)(ii) Event, the Rights which have not
theretofore been exercised shall thereafter become exercisable in the manner
described in Section 13(a).
e. Notwithstanding anything herein to the contrary,
Section 13 shall not be applicable to a transaction described in Section
13(a)(x) or (y) if such transaction has received the prior approval of the Board
of Directors of the Company.
Section 14. Additional Covenants.
a. Except as expressly provided herein, no
adjustment to the Exercise Price, the number of Common Shares or other
securities for which a Right is exercisable or the number of Rights outstanding
(except as permitted by Section 24 or Section 25 hereof) or any similar
adjustment shall be made or be effective if such adjustment would have the
effect of substantially reducing or limiting the benefits the holders of the
Rights would have had absent such adjustment, including, without limitation, the
benefits under Section 11(a)(ii) and Section 13 hereof, unless the terms of this
Agreement are amended so as to preserve such benefits.
b. The Company covenants and agrees that,
following the earlier of the Share Acquisition Date and the Distribution Date,
except as permitted by Sections 24, 25 and 28 hereof, it shall not, directly or
indirectly, take any action the purpose or effect of which is to eliminate or
otherwise diminish in any material respect the benefits intended to be afforded
by the Rights.
c. The Company covenants and agrees that it
shall not consummate any of the transactions described in clauses (x), (y) and
(z) of Section 13(a) hereof if (i) at the time of or after such consummation
there are or would be any charter or by-law provisions or any rights, warrants
or other instruments or securities outstanding or agreements in effect (whether
of the Company or any other Person) or any other action taken (whether by the
Company or any other Person) the purpose or effect of which is to eliminate or
otherwise diminish in any material respect the benefits intended to be afforded
by the Rights or (ii) the stockholders of the Principal Party shall have
received, either prior to, simultaneously with, or after the consummation of
such transaction, a distribution of Rights previously owned by the Principal
Party or any of its Affiliates and Associates.
d. The Company further covenants and agrees
that it shall not consummate any of the transactions described in clauses (x),
(y) and (z) of Section 13(a) hereof unless prior thereto the Company and the
Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement evidencing compliance with paragraph (c) above and
further providing that the Principal Party covenants and agrees that it shall
not, directly or indirectly, take any action the purpose or effect of which is
to eliminate or otherwise diminish in any material respect the benefits intended
to be afforded by the Rights. The provisions of this paragraph (d) and paragraph
(c) above shall similarly apply to successive mergers, consolidations, sales or
other transfers.
Section 15. Fractional Rights and Fractional Shares.
a. The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 15(a), the current market value of a whole Right shall be the
closing price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable. The closing
price of the Rights for any day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use or, if on any such date
the Rights are not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company. If on any such
date no such market maker is making a market in the Rights the fair value of the
Rights on such date as determined in good faith by the Board of Directors of the
Company shall be used and shall be conclusive for all purposes.
b. The Company shall not be required to issue
fractions of Common Shares upon exercise of the Rights or to distribute
certificates which evidence fractional Common Shares. In lieu of fractional
Common Shares equal to one-half of a share or less, the Company may pay to the
registered holders of Right Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of one Common Share. Any exercise of Rights that would entitle the
holder thereof to receive any fraction of a Common Share greater than one-half
of a share shall be governed by Section 7(a) hereof. In the event that an
additional fraction of a Common Share is not purchased by such holder (or sold
by the Company) pursuant to such Section 7(a), the Company shall pay such holder
an amount in cash equal to the same fraction of the current market value of one
Common Share. For purposes of this Section 15(b), the current market value of
one Common Share shall be the closing price of a Common Share (as determined
pursuant to Section 11(d) hereof) for the Trading Day immediately prior to the
date of such exercise.
Section 16. Rights of Action. All rights of action in respect of this Agreement
are vested in the respective registered holders of the Right Certificates (and,
prior to the Distribution Date, the registered holders of the Common Shares);
and any registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 17. 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 the Common Shares;
b. after the Distribution Date, the Right
Certificates will be 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 fully completed and duly executed;
c. subject to Sections 6(a) and 7(f) hereof,
the Company and the Rights Agent may deem and treat the Person in whose name the
Right Certificate (or, prior to the Distribution Date, the associated Common
Shares certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on the Right Certificate or the associated Common Shares certificate made by
anyone other than the 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) hereof, 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 other Person as a result of its inability
to perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued by a
court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining performance of such obligation; provided,
however, the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 18. Right Certificate Holder Not Deemed a Stockholder. No holder, as
such, of any Right Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the Common Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 26 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 19. 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 and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, or expense, incurred without negligence, bad faith or
willful misconduct on 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. Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage and regardless of the form of the action.
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 Right Certificate or certificate for the Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, instruction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons, or otherwise upon the advice of
counsel as set forth in Section 21.
Section 20. 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 with 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 business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such corporation would
be eligible for appointment as a successor Rights Agent under the provisions of
Section 22 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and in case at such time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Agreement.
b. In case at any time the name of the Rights
Agent shall be changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so
countersigned; and in case at such time any of the Right Certificates shall not
have been countersigned, the Rights Agent may countersign such Right
Certificates either in its prior name or in its changed name; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 21. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Right Certificates, by their
acceptance thereof, 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 be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chief Executive Officer, the President, a Vice President, the Treasurer or the
Corporate 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 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 Right Certificates or be required to verify the same (except
as to its countersignature thereof), but all such statements and recitals are
and shall be deemed to have been made by the Company only.
e. The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Sections 11 or 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Common Shares to be issued
pursuant to this Agreement or any Right Certificate or as to whether any Common
Shares will, when so issued, be validly authorized and issued, fully paid and
nonassessable.
f. The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
g. The Rights Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from any one of the Chief Executive Officer, the President, a Vice
President, the Corporate Secretary or the 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.
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 legal entity.
i. The Rights Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents for any loss to the Company resulting
from any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
j. If, with respect to any Right 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 or indicates an affirmative response to
any item therein, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer until it has received
instructions with respect thereto from the Company.
Section 22. Change of Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days' notice in writing mailed to the Company and, if instructed by the Company,
to each transfer agent of the Common Shares by registered or certified mail,
and, at the expense of the Company, to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days, notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States which is authorized under such laws to exercise corporate trust powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus adequate in the judgment of at least a majority of the Board of
Directors to assure the performance of its duties hereunder and the protection
of the interests of the Company and the holders of the Rights. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares, and mail
a notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 22, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 23. Issuance of New Right Certificates. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Exercise Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Shares following the Distribution Date and prior to the earliest
of the Redemption Date, the Exchange Date and the Final Expiration Date, the
Company (a) shall, with respect to Common Shares so issued or sold pursuant to
the exercise of employee or director stock options or under any employee or
director plan or arrangement outstanding, granted or awarded as of the
Distribution Date, or upon the exercise, conversion or exchange of securities
issued by the Company prior to such date, and (b) may, in any other case, if
deemed necessary or appropriate by the Board of Directors, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right 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 Right Certificates
would be issued and (ii) no such Right Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.
Section 24. Redemption.
a. The Board of Directors of the Company may,
at its option, at any time prior to such time as any Person becomes an Acquiring
Person, redeem all but not less than all the then outstanding Rights at a
redemption price of $.005 per Right, appropriately adjusted to reflect any stock
split, stock dividend, reclassification or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"). 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. Without limiting the generality of the foregoing,
the Company may, at its option, pay the Redemption Price in cash, Common Shares
(based on the "current market price" as defined in Section 11(d) hereof, of the
Common Shares at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
b. Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights (or at such later
time as the Board of Directors may establish for the effectiveness of such
redemption), 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. The Company shall promptly
give public notice of any such redemption; provided, however, that the failure
to give or any defect in such notice shall not affect the validity of such
redemption. Within 10 days after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the Rights Agent and the holders of the then outstanding Rights by mailing
such notice to the Rights Agent and to all such holders at their 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 the Common
Shares. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.
c. Neither the Company nor any of its
Subsidiaries may redeem, acquire, or purchase for value any Rights at any time
in any manner except (i) pursuant to a redemption in accordance with this
Section 24 or an exchange pursuant to Section 25 hereof or (ii) in connection
with the purchase or other acquisition of Common Shares prior to the
Distribution Date.
d. After aggregating all the Common Shares to
which a holder of Rights is entitled upon the Exchange, the Company shall not be
required to issue a fraction of a Common Share to such holder. In lieu of
issuing fractional shares, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional shares would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of one Common Share. For the purposes of this paragraph (d), the current
market value of one Common Share shall be the closing price of a Common Share
(as determined pursuant to Section 11(d) hereof) for the Trading Day immediately
prior to the Exchange Date.
Section 25. Exchange.
a. Subject to paragraph (c) of this Section 25,
the Board of Directors of the Company may, at its option, at any time after the
occurrence of a Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 7(e) hereof) for Common Shares
at an exchange ratio of one Common Share for every one Right, appropriately
adjusted to reflect any stock split, stock dividend, reclassification or similar
transaction occurring after the date hereof (such exchange being hereinafter
referred to as the "Exchange" and such exchange ratio being hereinafter referred
to as the "Exchange Ratio").
b. Immediately upon the action of the Board of
Directors of the Company authorizing the Exchange and without any further action
and without any notice, the right to exercise the Rights shall terminate and the
only right thereafter of a holder of Rights included in the Exchange shall be to
receive that number of Common Shares equal to the number of Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of the Exchange; provided, however, that the failure to give or any
defect in such notice shall not affect the validity of the Exchange. Within 10
days after such action of the Board of Directors ordering the Exchange, the
Company shall mail a notice of Exchange to the Rights Agent and the holders of
such Rights at their last addresses as they appear upon the registry books of
the Rights Agent. Any notice which is mailed in the manner herein provided shall
be deemed given whether or not the holder receives the notice. Each such notice
of Exchange will state the method by which the Exchange will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
c. In the event that the number of Common
Shares which are authorized by the Company's articles of incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit the Exchange in full, the Exchange Ratio
shall equal one Common Stock Equivalent (in lieu of one Common Share) for every
one Right. Alternatively, the Board of Directors of the Company may, at its
option, determine that the Company shall (i) issue Common Shares in the Exchange
to the extent Common Shares are available and (ii) utilize Common Stock
Equivalents in the Exchange as provided above to the extent Common Shares are
not available, in which case such Common Shares shall be allocated on such basis
as the Board of Directors determines pursuant to Section 30 hereof.
Section 26. 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 Common Shares or to make any other distribution to
the holders of Common Shares (other than a regular quarterly cash dividend),
(ii) to offer to all of the holders of Common Shares rights, options or warrants
to subscribe for or to purchase any additional Common Shares at less than the
current market price of the Common Shares, or shares of stock of any class or
any other securities, rights or options, (iii) to effect any reclassification of
its Common Shares (other than a reclassification involving only the subdivision
of outstanding Common Shares), (iv) to effect any consolidation or merger into
or with, 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, 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 Right Certificate, in
accordance with Section 27 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights, options or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 10
Business Days prior to the record date for determining holders of the Common
Shares for purposes of such action, and in the case of any such other action, at
least 10 Business Days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares,
whichever shall be the earlier.
b. In case a Section 11(a)(ii) Event shall
occur, then (i) the Company shall as soon as practicable thereafter give to the
Rights Agent and to each holder of a Right Certificate, in accordance with
Section 27 hereof, 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) hereof and (ii) all references in the preceding paragraph to Common
Shares shall thereafter be deemed to refer to, if appropriate, Common Share
Equivalents.
c. The failure to give notice required by this
Section 26 or any defect therein shall not affect the legality or validity of
the action taken by the Company or the vote on any such action.
Section 27. Notices. Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Right Certificate to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
Chief Financial Officer
PrimeSource Corporation
Fairway Corporation Center
Suite 222
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
With a copy to:
General Counsel
PrimeSource Corporation
000 Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Subject to the provisions of Section 22 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to the holder of any Right Certificate
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 Company.
Section 28. Supplements and Amendments. Prior to the Distribution Date the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of this Agreement, whether or not adverse to the holders of
Rights, without any approval of the holders of Rights. From and after the
Distribution Date the Company and the Rights Agent may from time to time
supplement or amend this Agreement without any approval of the holders of Rights
in order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to extend the period during which the Rights may be
redeemed; provided however, that such period may not be extended if at the time
of such supplement or amendment the Rights are not then redeemable, or (iv) to
change or supplement the provisions herein to effectuate the purposes of this
Agreement, including but not limited to changes in the Exercise Price or
Redemption Price, or to make any other provisions with respect to the Rights,
which, in either such case, shall not materially adversely affect the interests
of the holders of Rights (other than Acquiring Persons and Affiliates or
Associates thereof). Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is
in compliance with the terms of this Section 28, the Rights Agent shall execute
such supplement or amendment; provided, however, that the Rights Agent may, but
shall not be obligated to, enter into any such supplement or amendment which
affects the Rights Agent's own rights, duties or immunities under this
Agreement.
Section 29. 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 30. Determinations and Actions by the Board of Directors.a.
Notwithstanding any provision to the contrary in any amendment to the Company's
Articles of Incorporation or By-Laws which may hereafter be adopted, 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 or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all calculations and determinations deemed necessary or
advisable for the administration of this Agreement (including a determination to
redeem or not to redeem the Rights pursuant to Section 24 hereof, to exchange or
not to exchange the Rights pursuant to Section 25 hereof or to supplement or
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) shall be presumed to have been done or made by the
Board of Directors of the Company in good faith and 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 to any
liability to the holders of the Rights.
b. Notwithstanding any provision to the
contrary in any amendment to the Company's Articles of Incorporation or By-Laws
which may hereafter be adopted, action by the Board of Directors of the Company
shall require approval both by a majority of the members of the Board present
and voting at a duly constituted meeting of the Board of Directors at which
meeting such matter is properly before the Board for vote and by a majority of
the Continuing Directors then in office. "Continuing Directors" shall mean (i)
any member of the Board, while such Person is a member of the Board, who is not
an Acquiring Person, or an Affiliate or Associate of such Person, or a
representative or designee of an Acquiring Person or of any such Affiliate or
Associate, and was a member of the Board prior to the date of this Agreement, or
(ii) any Person who subsequently becomes a member of the Board, while such
Person is a member of the Board, who is not an Acquiring Person or an Affiliate
or Associate of such Person, or a representative or designee of an Acquiring
Person or of any such Affiliate or Associate, if such Person's nomination for
election or election to the Board is recommended or approved by a majority of
the Continuing Directors then in office.
Section 31. 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 Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).
Section 32. 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 the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 24 hereof shall be reinstated and
shall not expire until the close of business on the tenth day following the date
of such determination by the Board of Directors.
Section 33. Governing Law. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the
Commonwealth of Pennsylvania and for all purposes shall be governed by and
construed in accordance with the laws of such Commonwealth applicable to
contracts to be made and performed entirely within such Commonwealth.
Section 34. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 35. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date and year first
above written.
Attest: PRIMESOURCE CORPORATION
______________________________ By:__________________________________
Name: Xxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxx
Title: Corporate Secretary Title: Chairman, President & Chief
Executive Officer
Attest: AMERICAN STOCK TRANSFER & TRUST COMPANY
_________________________________ By:____________________________________
Name: Name:
Title: Assistant Secretary Title: Vice President
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- ___________ Rights
NOT EXERCISABLE AFTER FEBRUARY 1, 2011 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION OF THE COMPANY AT
$.005 PER RIGHT, AND TO EXCHANGE AT THE OPTION OF THE COMPANY, ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT. AS DESCRIBED IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY (1) AN ACQUIRING PERSON OR ANY ASSOCIATE OR AFFILIATE
THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), (2) A TRANSFEREE OF
AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR AFFILIATE) WHO BECOMES A
TRANSFEREE AFTER THE ACQUIRING PERSON BECOMES SUCH OR (3) UNDER CERTAIN
CIRCUMSTANCES, A TRANSFEREE OF AN ACQUIRING PERSON (OR OF ANY SUCH ASSOCIATE OR
AFFILIATE) WHO BECOMES A TRANSFEREE, BEFORE OR CONCURRENTLY WITH THE ACQUIRING
PERSON BECOMING SUCH, SHALL BE NULL AND VOID.
RIGHT CERTIFICATE
PRIMESOURCE CORPORATION
This certifies that , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of February 1, 2001 (the "Rights Agreement"), between
PrimeSource Corporation, a Pennsylvania corporation (the "Company"), and
American Stock Transfer & Trust Company (the "Rights Agent"). Each Right
entitles the registered holder to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 P.M. (New York, New York time) on February 1, 2011 at the office
of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one fully paid, non-assessable share of Common Stock (the "Common
Shares") of the Company. No less than one Right, and only whole multiples of one
Right, may be exercised at any time at a Exercise Price of $20 per Common Share
(the "Exercise Price"), subject to adjustment, upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the number of
shares which may be purchased upon exercise thereof) set forth above, and the
Exercise Price per share set forth above, are the number and Exercise Price as
of February 2, 2001, based on the Common Shares as constituted at such date.
From and after the occurrence of the event described in
section 11(a)(ii) of the Rights Agreement, if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate thereof (as such terms are defined in the Rights Agreement), (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes such or (iii) under
certain circumstances, a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee before or concurrently with the
Acquiring Person becoming such, such Rights shall be null and void and no holder
hereof shall have any rights with respect to such Rights.
As provided in the Rights Agreement, the Exercise Price and
the number and kind of Common Shares or other securities which may be purchased
upon the exercise of the Rights evidenced by this Right Certificate are subject
to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive office of
the Company and are also available upon written request to the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of Common Shares as the Rights evidenced by the
Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate (i) may be redeemed by the Company at its option
at a redemption price of $.005 per Right or (ii) may be exchanged by the Company
at its option for shares of the Company's Common Stock, $0.01 par value per
share (or, in certain circumstances, Common Stock Equivalents, as such term is
defined in the Rights Agreement).
No fractional Common Shares will be issued upon the exercise
of any Right or Rights evidenced hereby. In lieu of fractions of a share equal
to one-half of a share or less, a cash payment will be made, as provided in the
Rights Agreement. No Rights may be exercised that would entitle the holder to
any fraction of a Common Share greater than one-half of a share unless
concurrently therewith such holder purchases an additional fraction of a Common
Share which, when added to the number of Common Shares to be received upon such
exercise, equals a whole number of Common Shares, as provided in the Rights
Agreement. If such holder does not purchase such additional fraction of a Common
Share, a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Common Shares or
of any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of _____________, 200__
ATTEST: PRIMESOURCE CORPORATION
_______________________________ By:________________________________
Corporate Secretary President
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:____________________________________
Authorized Signature
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED hereby sells,
-----------------------------------------------
assigns and transfers unto
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _________________, 200__
----------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible financial
institution or broker who is a member participant in a Medallion Program
approved by the Securities Transfer Association, Inc.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(i) the Rights evidenced by this Right
Certificate [ ] are [ ] are 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 an Acquiring Person (as such terms are defined in the Rights
Agreement);
(ii) after due inquiry and to the best
knowledge of the undersigned, it [ ] did [ ] did not acquire the Rights
evidenced by this Right Certificate from any Person who is, was or subsequently
became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated: _________________, 200__
--------------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible financial
institution or broker who is a member participant in a Medallion Program
approved by the Securities Transfer Association, Inc.
NOTICE
The signatures to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Right Certificate
in every particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
To: PRIMESOURCE CORPORATION
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the Common Shares issuable
upon the exercise of the Rights (or such other securities of the Company or of
any other person which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name of:
Please insert social security or other identifying
number ___________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the balance of such
Rights shall be registered in the name of and delivered to:
Please insert social security or other
identifying number
----------------------------------------------------------
(Please print name and address)
Dated: _________________, 200__
Signature
Signature Guaranteed:
Signatures must be guaranteed by an eligible financial
institution or broker who is a member participant in a Medallion Program
approved by the Securities Transfer Association, Inc.
CERTIFICATE
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Right Certificate
[ ] are [ ]are not being exercised by or on behalf of a Person who is
or was an Acquiring Person or an Affiliate or Associate of an Acquiring person
(as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the
undersigned, it [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
Dated: _________________, 200__
--------------------------------------
Signature
NOTICE
The signatures to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
amb - 5956
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
Common Stock Purchase Right Dividend
On February 2, 2001, the Board of Directors of PrimeSource Corporation
(the "Company"), declared a dividend distribution of one common stock purchase
right (a "Right") for each outstanding share of the Company's common stock (the
"Common Shares") to stockholders of record at the close of business on February
2, 2001. Each Right entitles the registered holder, upon the occurrence of
certain events, to purchase from the Company that number of Common Shares having
a then market value equal to two times the exercise price of the Rights ($20.00
per Right, subject to adjustment (the "Exercise Price")), upon payment of the
Exercise Price. The description and terms of the Rights are set forth in a
Rights Agreement dated as of February 1, 2001 (the "Rights Agreement") between
the Company and American Stock Transfer & Trust Company, as Rights Agent.
This Summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement. A copy of
the Rights Agreement may be obtained from the Company without charge.
Certificates; Separation of Rights from Common Stock
Initially, the Rights will be attached to all Common Shares then
outstanding, and no separate Right certificates will be distributed. The Rights
will separate from the Common Shares and trade separately after the Distribution
Date. The "Distribution Date" is the earlier of (i) 10 days following the date
of the first public announcement that a person or group of affiliated or
associated persons, has acquired or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Shares (an "Acquiring
Person") or (ii) 10 business days (or such later day as may be determined by
action of the Board of Directors before the time any person or group becomes an
Acquiring Person) following the commencement of a tender offer or exchange offer
if, upon consummation thereof, any person or group would be an Acquiring Person.
The date of announcement of the existence of an Acquiring Person referred to in
clause (i) above is referred to as the "Share Acquisition Date."
Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), (i) the Rights will be evidenced only by the Rights
Agreement and the Common Share certificates, and will be automatically
transferred with, and only with, the Common Shares, (ii) new Common Share
certificates issued after February 2, 2001, upon transfer or new issuance of
Common Shares, will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any Common Share certificate,
even without such notation or a copy of this Summary of Rights attached thereto,
will also constitute the transfer of the Rights associated with the Common
Shares represented by such stock certificate.
As promptly as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Distribution Date, and thereafter, such separate Right Certificates alone will
evidence the Rights. The Rights are not exercisable until the Distribution Date
and will expire at the close of business on February 1, 2011, unless earlier
redeemed or exchanged by the Company as described below.
Flip In Trigger
In the event that any person or group of associated or affiliated
persons becomes an Acquiring Person, then after the Distribution Date, except as
provided in the next paragraph, each Right shall entitle the holder thereof to
receive, upon exercise and payment, Common Shares (or Common Stock Equivalents
(as such term is defined in the Rights Agreement)) having a then market value
equal to two (2) times the Exercise Price of the Rights.
Certain Rights to Become Void
Upon the occurrence of the event described in the preceding paragraph, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate (as such terms are defined in the Rights Agreement) of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
from the Acquiring Person (or any such Associate or Affiliate) to holders of
equity interests in such Acquiring Person or to any person with whom the
Acquiring Person (or any such Associate or Affiliate) has any agreement or other
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company in its discretion has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of the Rights Agreement, shall become null and void without any
further action, and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of the Rights Agreement
or otherwise.
Flip Over Trigger
In the event that, following the earlier of the Distribution Date or
Share Acquisition Date, (i) the Company engages in a merger or other business
combination transaction in which the Company is not the surviving corporation,
(ii) the Company engages in a merger or other business combination transaction
with another person in which the Company is the surviving corporation, but in
which its Common Shares are changed or exchanged, or (iii) more than 50% of the
Company's assets or earning power is sold or transferred, the Rights Agreement
provides that proper provision shall be made so that each Right (except Rights
which previously have been voided as described above in the preceding paragraph)
shall entitle the holder thereof to receive, upon exercise and payment, common
stock of the acquiring company having a then market value equal to two (2) times
the Exercise Price of the Rights.
Optional Exchange of Rights for Common Stock
At any time after any person or group becomes an Acquiring Person, the
Board of Directors of the Company may exchange the Rights (except Rights which
previously have been voided as described above), in whole or in part, at an
exchange ratio of one Common Share (or, in certain circumstances, one Common
Stock Equivalent) for each Right.
Adjustments to Exercise Price and Number of Rights/Common Shares
The Exercise Price payable, the number of Common Shares or other
securities issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Common Shares, (ii) upon
the grant to all holders of the Common Shares of certain rights, options or
warrants to subscribe for Common Shares or convertible securities at less than
the current market price of the Common Shares, or (iii) upon the distribution to
all holders of the Common Shares of evidences of indebtedness, stock (other than
a dividend payable in Common Shares), assets or cash (excluding regular
quarterly cash dividends) or of subscription rights, options or warrants (other
than those referred to above).
The number of outstanding Rights and the number of Common Shares
issuable upon exercise of each Right are also subject to adjustment in the event
of a stock split of the Common Shares or a stock dividend on the Common Shares
payable in Common Shares or in the event of subdivisions, consolidations or
combinations of the Common Shares occurring, in any such case, prior to the
Distribution Date.
With certain exceptions, no adjustment in the Exercise Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Exercise Price. No fractional Common Shares will be issued upon the
exercise of any Right or Rights. In lieu of fractions of a share equal to
one-half of a share or less, a cash payment will be made, as provided in the
Rights Agreement. No Rights may be exercised that would entitle the holders to
any fraction of a Common Share greater than one-half of a share unless
concurrently therewith the holder purchases an additional fraction of a Common
Share which, when added to the number of Common Shares to be received upon such
exercise, equal a whole number of Common Shares, as provided in the Rights
Agreement. If the holder does not purchase an additional fraction of a Common
Share, a cash payment will be made, as provided in the Rights Agreement.
Redemption of Rights
At any time prior to such time as any Person becomes an Acquiring
Person, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.005 per Right, subject to adjustment (the
"Redemption Price"). Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption), the
Rights will terminate and the only right of the holders of the Rights will be to
receive the Redemption Price.
Shareholder Rights
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends by reason of ownership of the Rights.
Tax Implications
While the distribution of the Rights will not be taxable to a
shareholder or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable or exchangeable for shares of Common Stock.
Amendment
The terms of the Rights may be amended by the Company and the Rights
Agent at any time for any purpose, provided that following the Distribution Date
the amendment may not materially adversely affect the interests of holders of
Rights (other than the interests of an Acquiring Person).
Continuing Directors
The Board of Directors of the Company has the exclusive power and
authority to administer the Rights Agreement and to exercise all decisions on
behalf of the Company provided in the Agreement. Actions by the Board of
Directors shall require the affirmative vote of a majority of the Continuing
Directors then in office. "Continuing Directors" means (i) any member of the
Board who is not an Acquiring Person or an associate or affiliate of such
person, or a representative or designee of an Acquiring Person or any such
associate or affiliate, and was a member of the Board prior to February 1, 2001,
or (ii) any person who subsequently becomes a member of the Board, who is not an
Acquiring Person or an associate or affiliate of such person, or a
representative or designee of any such person, if such person's nomination for
election or election to the Board is recommended or approved by a majority of
the Continuing Directors then in office.
Anti-takeover Effects
The Rights may have certain anti-takeover effects. The Rights will
cause a dilution to a person or group that attempts to acquire the Company on
terms not approved by the Board of Directors. The Rights will not interfere with
any merger or other business combination approved by the Board of Directors
prior to the time the other party to the transaction becomes an Acquiring
