Exhibit 4.1
XXXX.XXX INC.
AND
THE BANK OF NEW YORK
SHAREHOLDERS' RIGHTS AGREEMENT
TABLE OF CONTENTS
Section Page
Certain Definitions.......................................................................................................... 1
Appointment of Rights Agent.................................................................................................. 7
Issue of Right Certificates.................................................................................................. 7
Form of Right Certificates................................................................................................... 9
Countersignature and Registration............................................................................................ 10
Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.. 10
Exercise of Rights; Exercise Price; Expiration Date of Rights................................................................ 11
Cancellation of Right Certificates........................................................................................... 13
Reservation and Availability of Preferred Stock.............................................................................. 14
Preferred Stock Record Date.................................................................................................. 15
Adjustment of Exercise Price, Number and Kind of Shares or Number of Rights.................................................. 15
Certificate of Adjusted Exercise Price or Number of Shares................................................................... 23
Consolidation, Merger or Sale or Transfer of Assets.......................................................................... 24
Fractional Rights and Fractional Shares...................................................................................... 27
Rights of Action............................................................................................................. 27
Agreement of Right Holders................................................................................................... 28
Right Certificate Holder Not Deemed a Shareholder............................................................................ 28
Concerning the Rights Agent.................................................................................................. 29
Merger or Consolidation or Change of Name of Rights.......................................................................... 29
Duties of Rights Agent....................................................................................................... 30
Change of Rights Agent....................................................................................................... 32
Issuance of New Right Certificates........................................................................................... 33
Redemption................................................................................................................... 34
Exchange..................................................................................................................... 34
Notice of Certain Events..................................................................................................... 36
Notices...................................................................................................................... 37
Supplements and Amendments................................................................................................... 38
Successors................................................................................................................... 39
Determinations and Actions by the Board of Directors......................................................................... 39
Benefits of this Agreement................................................................................................... 39
Severability................................................................................................................. 39
Governing Law................................................................................................................ 40
Counterparts................................................................................................................. 40
Descriptive Headings......................................................................................................... 40
Exhibit A -- Certificate of Designation of Series A Junior Participating
Cumulative Preferred Stock
Exhibit B -- Form of Right Certificate
XXXX.XXX INC.
SHAREHOLDER RIGHTS AGREEMENT
This Shareholder Rights Agreement is dated as of July 25, 2001,
between Xxxx.xxx Inc., a Delaware corporation (the "Company"), and The Bank of
New York, a New York banking corporation, (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company desires to provide
shareholders of the Company with the opportunity to benefit from the long-term
prospects and value of the Company and to ensure that shareholders of the
Company receive fair and equal treatment in the event of any proposed takeover
of the Company; and
WHEREAS, on July 19, 2001, the Board of Directors of the Company
authorized and declared a dividend distribution of one Right (as such term is
hereinafter defined) for each outstanding share of Common Stock, $.001 par value
per share, of the Company outstanding as of the commencement of business on July
23, 2001 (the "Record Date"), and contemplates the issuance of one Right for
each share of Common Stock of the Company issued (whether originally issued or
sold from the Company's treasury) between the Record Date and the earlier of the
Distribution Date or the Expiration Date (as such terms are hereinafter
defined), each Right initially representing the right to purchase one one-
thousandth of one share of Series A Junior Participating Cumulative Preferred
Stock of the Company having the rights, powers and preferences set forth on
Exhibit A hereto, upon the terms and subject to the conditions hereinafter set
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forth (the "Rights"); and
WHEREAS, the Company desires to appoint the Rights Agent to act as
rights agent hereunder, in accordance with the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following
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terms have the meanings indicated:
1.1 "Acquiring Person" shall mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter defined) and Associates (as such term is hereinafter defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of 20% or more of the Common Shares (as such term is hereinafter defined) then
outstanding (other than as a result of a Permitted Offer (as hereinafter
defined)) but shall not include (a) the Company, (b) any Subsidiary (as such
term is hereinafter defined) of the Company, (c) any employee benefit plan or
compensation arrangement of the Company or any Subsidiary of the Company, (d)
any Person, who or which together with all Affiliates and Associates of
such Person becomes the Beneficial Owner of 20% or more of the then outstanding
common shares as a result of the acquisition of Common Shares directly from the
Company, or (e) any Grandfathered Stockholder (the Persons described in clauses
(a) through (e) above are referred to herein as "Exempt Persons").
Notwithstanding the foregoing, no Person shall become an "Acquiring
Person" as the result of an acquisition by the Company of Common Shares which,
by reducing the number of Common Shares outstanding, increases the proportionate
number of Common Shares beneficially owned by such Person to 20% or more of the
Common Shares then outstanding; provided, however, that if a Person shall become
the Beneficial Owner of 20% or more of the Common Shares then outstanding by
reason of share purchases by the Company and shall, after such share purchases
by the Company, become the Beneficial Owner of any additional shares (other than
pursuant to a stock split, stock dividend or similar transaction) of Common
Shares and immediately thereafter be the Beneficial Owner of 20% or more of the
Common Shares then outstanding, then such Person shall be deemed to be an
"Acquiring Person."
In addition, notwithstanding the foregoing, a Person shall not be an
"Acquiring Person" if the Board of Directors of the Company determines that a
Person who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this Section 1.1, has become such inadvertently, and
such Person divests as promptly as practicable (or within such period of time as
the Board of Directors determines is reasonable) a sufficient number of shares
of Common Stock of the Company so that such person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
Section 1.1.
1.2 "Adjustment Shares" shall have the meaning set forth in Section
11.1.2 hereof.
1.3 "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the Rules under the Exchange Act (as
hereinafter defined), as in effect on the date of this Agreement.
1.4 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, directly or indirectly, beneficially
owns (as determined pursuant to Rule 13d-3 of the Rules 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:
1.4.1 the right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the satisfaction of any
conditions or both) pursuant to any 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 (other than the Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the "Beneficial Owner"
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of, or to "beneficially own," (1) 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; (2) securities issuable upon exercise of these Rights at
any time prior to the occurrence of a Triggering Event; or (3) 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 Sections
3.1, 11.9 or 22 hereof; or
1.4.2 the right to vote 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 clause (B) if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable proxy given in response to
a public proxy or consent solicitation made pursuant to, and in accordance with,
the Rules under the Exchange Act and (2) is not also then reportable by such
person on Schedule 13D under the Exchange Act (or any comparable or successor
report); or
1.4.3 the right to dispose of pursuant to any agreement,
arrangement or understanding (whether or not in writing) (other than customary
arrangements with and between underwriters and selling group members with
respect to a bona fide public offering of securities); or
1.4.4 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 clause (B) of Section
1.4.2 hereof) or disposing of any securities of the Company; provided, however,
that (a) no Person engaged in business as an underwriter of securities shall be
deemed the Beneficial Owner of any securities acquired through such Person's
participation as an underwriter in good faith in a firm commitment underwriting
until the expiration of forty (40) days after the date of such acquisition, (b)
no trustee or similar Person, organized, appointed or established by the Company
or any Subsidiary of the Company, holding shares of Common Stock of the Company
for or pursuant to the terms of any employee benefit plan or compensation
arrangement of the Company or any Subsidiary of the Company shall be deemed the
Beneficial Owner of any securities acquired or held by such Person in such
capacity, and (c) no Person shall be deemed the Beneficial Owner of any
securities acquired or received from the Company by such Person pursuant to an
employee benefit plan or compensation arrangement of the Company or any
Subsidiary of the Company. Notwithstanding anything in the foregoing provisions
of this Section 1.4 to the contrary, no party to or bound by that certain Second
Amended and Restated Stockholders' Voting Agreement, dated as of October 18,
1999, among the Company and the other persons named therein, shall solely by
reason of having entered into or performing the obligations with respect to the
voting of its shares of Common Stock under such agreement (as such agreement is
in
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effect on the date hereof) be considered the Beneficial Owner of any Common
Stock that is Beneficially Owned by the other party to such agreement.
1.5 "Business Day" shall mean any day other than a Saturday, Sunday, or
a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to close.
1.6 "Certificate" shall mean the Company's Sixth Amended and Restated
Certificate of Incorporation as in effect on the date hereof.
1.7 "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.
1.8 "Common Shares" shall mean shares of Common Stock.
1.9 "Common Stock" when used in reference to the Company shall mean the
common stock, $.001 par value per share, of the Company or any other shares of
capital stock of the Company into which such stock shall be reclassified or
changed. "Common Stock" when used with reference to any Person other than the
Company organized in corporate form shall mean (i) the capital stock or other
equity interest of such Person with the greatest voting power or (ii) the equity
securities or other equity interest having power to control or direct the
management of such Person or, if such Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person and
which have issued any such outstanding capital stock, equity securities or
equity interest. "Common Stock" when used with reference to any Person not
organized in corporate form shall mean units of beneficial interest which shall
be entitled to exercise the greatest voting power of such Person or, in the case
of a limited partnership, shall have the power to remove or otherwise replace
the general partner or partners.
1.10 "Current Value" shall have the meaning set forth in Section 11.1.3
hereof.
1.11 "Distribution Date" shall have the meaning set forth in Section 3.1
hereof.
1.12 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute.
1.13 "Exercise Price" shall have the meaning set forth in Section 4.1
hereof.
1.14 "Expiration Date" and "Final Expiration Date" shall have the
meanings set forth in Section 7.1 hereof.
1.15 "Fair Market Value" of any securities or other property shall be as
determined in accordance with Section 11.4 hereof.
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1.16 "Grandfathered Stockholder" shall mean at any time each of Mr.
Xxxxxxx Xxxxx, and Maxtech Enterprise Limited ("Maxtech"); provided, however,
neither of the foregoing shall be a Grandfathered Stockholder if he or it, as
the case may be, makes an acquisition of Common Shares that would increase his
or its ownership in an amount equal to more than 1% of the outstanding Common
Shares. Notwithstanding the foregoing, none of the following shall cause Xx.
Xxxxx or Maxtech, as the case may be, to cease to be a Grandfathered Stockholder
: (i) the exercise by either Xx. Xxxxx or Maxtech of any options or warrants to
purchase Common Shares, provided such options or warrants were issued to or
received by Xx. Xxxxx or Maxtech, as the case may be, with the approval of the
Company's Board of Directors, (ii) the acquisition by the Company of Common
Shares, which, by reducing the number of Common Shares outstanding, increases
the proportionate number of Common Shares beneficially owned by either Xx. Xxxxx
or Maxtech, or (iii) the acquisition by Xx. Xxxxx or Maxtech, as the case may
be, of beneficial ownership of Common Shares, which does not increase Xx.
Xxxxx'x or Maxtech's, as the case may be, to an aggregate percentage beneficial
ownership of total outstanding Common Shares as of the date of such acquisition
to a percentage that is greater than Xx. Xxxxx'x or Maxtech's respective
beneficial ownership percentage as of the date of this Agreement, plus one (1).
1.17 "Group" shall have the meaning ascribed thereto in clause (b) of
the definition of "Person."
1.18 "Permitted Offer" shall mean a tender or exchange offer which is
for all outstanding Common Shares at a price and on terms determined, prior to
the purchase of shares under such tender or exchange offer, by at least a
majority of the members of the Board of Directors who are not officers of the
Company and who are not Acquiring Persons or Affiliates, Associates, nominees or
representatives of an Acquiring Person, to be adequate (taking into account all
factors that such Directors deem relevant including, without limitation, prices
that could reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and otherwise in the best
interests of the Company and its stockholders (other than the Person or any
Affiliate or Associate thereof on whose basis the offer is being made) taking
into account all factors that such directors may deem relevant.
1.19 "Person" shall mean (a) an individual, a corporation, a
partnership, an association, a joint stock company, a trust, a business trust, a
government or political subdivision, any unincorporated organization, or any
other association or entity, and (b) a "group" as that term is used for purposes
of Section 13(d)(3) of the Exchange Act (any such group under this clause (b), a
"Group").
1.20 "Preferred Stock" shall mean shares of Series A Junior
Participating Cumulative Preferred Stock, $.001 par value per share, of the
Company having the rights, preferences and limitations set forth in the form of
Certificate of Designation attached hereto as Exhibit A.
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1.21 "Preferred Stock Equivalents" shall have the meaning set forth
in Section 11.2 hereof.
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1.22 "Principal Party" shall have the meaning set forth in Section
13.2 hereof.
1.23 "Record Date" shall have the meaning set forth in the preamble
to this Agreement.
1.24 "Redemption Price" shall have the meaning set forth in Section
23 hereof.
1.25 "Right Certificate" shall have the meaning set forth in Section
3.1.
1.26 "Related Party" shall have the meaning ascribed thereto in the
Certificate.
1.27 "Rules" when used with reference to the Exchange Act or the
Securities Act, shall mean the rules and regulations of the Securities and
Exchange Commission, or any successor federal agency under such acts.
1.28 "Section 11.1.2 Event" shall have the meaning set forth in
Section 11.1.2 hereof.
1.29 "Section 11.1.2 Trigger Date" shall have the meaning set forth
in Section 11.1.3 hereof.
1.30 "Section 13 Event" shall mean any event described in clauses
(a), (b) or (c) of Section 13.1 hereof.
1.31 "Section 24.1.1 Exchange Ratio" shall have the meaning set forth
in Section 24.1.1 hereof.
1.32 "Section 24.1.2 Exchange Ratio" shall have the meaning set forth
in Section 24.1.2 hereof.
1.33 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor statute.
1.34 "Spread" shall have the meaning set forth in Section 11.1.3
hereof.
1.35 "Stock Acquisition Date" shall mean the date of the first public
announcement (which for purposes of this definition shall include, without
limitation, the issuance of a press release or the filing of a publicly-
available report or other document with the Securities and Exchange Commission
or any other governmental agency) by the Company or an Acquiring Person that an
Acquiring Person has become such.
1.36 "Subsidiary" shall mean, with reference to any Person, any
corporation or other entity of which securities or other ownership interests
having ordinary voting power sufficient, in the absence of contingencies, to
elect a majority of the board of directors or other persons performing similar
functions of such corporation or other entity
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are at the time directly or indirectly beneficially owned or otherwise
controlled by such Person either alone or together with one or more Affiliates
of such Person.
1.37 "Substitution Period" shall have the meaning set forth in
Section 11.1.3 hereof.
1.38 "Triggering Event" shall mean any Section 11.1.2 Event or any
Section 13 Event.
2. Appointment of Rights Agent. The Company hereby appoints the Rights
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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
Agents, the respective duties of the Rights Agent and any Co-Rights Agents shall
be as the Company shall determine. The Company shall give ten (10) days prior
written notice to the Rights Agent of the appointment of one or more Co-Rights
Agents and the respective duties of the Rights Agent and any such Co-Rights
Agents. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such Co-Rights Agent.
3. Issuance of Right Certificates.
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3.1 From the date hereof until the earlier of (a) the Close of
Business on the tenth calendar day after the Stock Acquisition Date or (b) the
Close of Business on the tenth Business Day (or such other calendar day, if any,
as the Board of Directors may determine in its sole discretion) after the date a
tender or exchange offer by any Person, other than an Exempt Person, is first
published or sent or given within the meaning of Rule 14d-4(a) of the Exchange
Act, or any successor rule, if, upon consummation thereof, such Person would be
the Beneficial Owner of 20% or more of the Common Shares then outstanding
(including any such date which is after the date of this Agreement and prior to
the issuance of the Rights) (the earlier of such dates being herein referred to
as the "Distribution Date"), (i) the Rights will be evidenced (subject to the
provisions of Section 3.2 hereof) by the certificates for the Common Stock of
the Company registered in the names of the holders of the Common Stock of the
Company (which certificates for Common Stock of the Company shall be deemed also
to be certificates for Rights) and not by separate certificates, and (ii) the
Rights will be transferable only in connection with the transfer of the
underlying shares of Common Stock of the Company. The Company shall give the
Rights Agent prompt written notice of the Distribution Date. As soon as
practicable after the Distribution Date, and receipt of written notice of the
Distribution Date from the Company, the Rights Agent will, at the Company's
expense, send, by first-class, insured, postage prepaid mail, to each record
holder of the Common Stock of the Company 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 certificates, in substantially the form of Exhibit B hereto
(the "Right Certificates"), evidencing one Right for each share of Common Stock
of the Company so held, subject to adjustment as provided herein. In the event
that an adjustment in the
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number of Rights per share of Common Stock of the Company has been made pursuant
to Section 11.15 hereof, the Company may make the necessary and appropriate
rounding adjustments (in accordance with Section 14.1 hereof) at the time of
distribution of the Right Certificates, so that Right Certificates representing
only whole numbers of Rights are distributed and cash is paid in lieu of any
fractional Rights. As of and after the Close of Business on the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
3.2 With respect to certificates for the Common Stock of the Company
issued prior to the Close of Business on the Record Date, the Rights will be
evidenced by such certificates for the Common Stock of the Company on or until
the Distribution Date (or the earlier redemption, expiration or termination of
the Rights), and the registered holders of the Common Stock of the Company also
shall be the registered holders of the associated Rights. Until the Distribution
Date (or the earlier redemption, expiration or termination of the Rights), the
transfer of any of the certificates for the Common Stock of the Company
outstanding prior to the date of this Agreement shall also constitute the
transfer of the Rights associated with the Common Stock of the Company
represented by such certificate.
3.3 Certificates for the Common Stock of the Company issued after the
Record Date, but prior to the earlier of the Distribution Date or the
redemption, expiration or termination of the Rights, shall be deemed also to be
certificates for Rights, and shall bear a legend, substantially in the form set
forth below:
"This certificate evidences and entitles the holder to Rights set
forth in a Shareholders' Rights Agreement between the Company and The Bank of
New York as Rights Agent (the "Rights Agent"), dated as of July 25, 2001, as
amended from time to time (the "Rights Agreement"), the terms of which are
incorporated herein by reference and a copy of which is on file at the principal
offices of the Company. The Company will mail to the registered holder of this
certificate a copy of the Rights Agreement without charge upon written request.
Under certain circumstances set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced by this
certificate. Under certain circumstances set forth in the Rights Agreement,
Rights issued to, or held by any Person who is, was or becomes, or acquires
shares from, an Acquiring Person or any Affiliate of an Acquiring Person (as
each such term is defined in the Rights Agreement, and generally relating to the
ownership or purchase of large shareholdings), whether currently held by or on
behalf of such Person or Affiliate or by certain subsequent holders, may become
null and void."
With respect to such certificates containing the foregoing legend, the
Rights associated with the Common Stock of the Company represented by such
certificates shall be evidenced by such certificates alone until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), and the transfer of any of such certificates shall also constitute the
transfer of the Rights associated with the Common Stock of the Company
represented by such certificates. In the event that the Company purchases or
acquires any shares of Common Stock of the Company after the Record Date but
prior to the Distribution Date, any Rights associated with such Common Stock
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of the Company shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the shares of Common
Stock of the Company which are no longer outstanding. The failure to print the
foregoing legend on any such certificate representing Common Stock of the
Company or any defect therein shall not affect in any manner whatsoever the
application or interpretation of the provisions of Section 7.5 hereof.
4. Form of Right Certificates.
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4.1 The Right Certificates (and the forms of election to purchase
shares and of assignment and certificate to be printed on the reverse thereof)
shall each be substantially in the form of Exhibit B hereto and may have such
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marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law, rule or regulation or with any rule or
regulation of any stock exchange on which the Rights may from time to time be
listed, or to conform to customary usage. The Right Certificates shall be in a
machine printable format and in a form reasonably satisfactory to the Rights
Agent. Subject to the provisions of Section 11 and Section 22 hereof, the Right
Certificates, whenever distributed, shall be dated as of the Record Date, shall
show the date of countersignature, and on their face shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price set forth therein (the
"Exercise Price"), but the number of such shares and the Exercise Price shall be
subject to adjustment as provided herein.
4.2 Any Right Certificate issued pursuant to Section 3.1 or Section
22 hereof that represents Rights beneficially owned by (a) an Acquiring Person
or any Associate or Affiliate of an Acquiring Person, (b) a transferee of an
Acquiring Person (or of any Associate or Affiliate of an Acquiring Person) who
becomes a transferee after the Acquiring Person becomes such, or (c) 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 (i) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not in writing)
regarding the transferred Rights, the shares of Common Stock of the Company
associated with such Rights or the Company or (ii) a transfer which the Board of
Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of Section
7.5 hereof, and any Right Certificate issued pursuant to Section 6, Section 11
or Section 22 upon transfer, exchange, replacement or adjustment of any other
Right Certificate referred to in this sentence, shall have deleted therefrom the
second sentence of the existing legend on such Right Certificate and in
substitution therefor shall contain the following legend:
"The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement). This Right
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Certificate and the Rights represented hereby may become null and void under
certain circumstances as specified in Section 7.5 of the Rights Agreement."
The Company shall give notice to the Rights Agent promptly after it
becomes aware of the existence and identity of any Acquiring Person or any
Associate or Affiliate thereof. The Company shall instruct the Rights Agent in
writing of the Rights which should be so legended and shall supply the Rights
Agent with such legended Right Certificates. The failure to print the foregoing
legend on any such Right Certificate or any defect therein shall not affect in
any manner whatsoever the application or interpretation of the provisions of
Section 7.5 hereof.
5. Countersignature and Registration.
---------------------------------
5.1 The Right Certificates shall be executed on behalf of the Company
by its Chairman of the Board of Directors, or its President or any Vice
President and by its Treasurer or any Assistant Treasurer, or by its Secretary
or any Assistant Secretary, either manually or by facsimile signature, and shall
have affixed thereto the Company's seal or a facsimile thereof which shall be
attested to by the Secretary or any Assistant Secretary of the Company, either
manually or by facsimile signature. The Right Certificates shall be manually
countersigned by an authorized signatory of the Rights Agent and shall not be
valid for any purpose unless so countersigned, and such countersignature upon
any Right Certificate shall be conclusive evidence, and the only evidence, that
such Right Certificate has been duly countersigned as required hereunder. 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 an authorized
signatory of 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 Certificates 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
Rights Agreement any such person was not such an officer.
5.2 Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at one of its offices designated as the appropriate place for
surrender of Right Certificates upon exercise or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
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Mutilated, Destroyed, Lost or Stolen Right Certificates.
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6.1 Subject to the provisions of Section 4.2, Section 7.5 and Section
14 hereof, at any time after the Close of Business on the Distribution Date, and
at or prior to the Close of Business on the Expiration Date, any Right
Certificate or Certificates may be
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transferred, split up, combined or exchanged for another Right Certificate or
Certificates, entitling the registered holder to purchase a like number of one
one-thousandth of a share of Preferred Stock (or following a Triggering Event,
preferred stock, cash, property, debt securities, Common Stock of the Company or
any combination thereof) as the Right Certificate or Certificates surrendered
then entitled such holder to purchase and at the same Exercise Price. 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 Certificates to be transferred,
split up, combined or exchanged, with the form of assignment and certificate
duly executed, at the office or offices 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 until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4.2, Section 7.5 and Section 14 hereof,
countersign and deliver to the Person entitled thereto a Right Certificate or
Certificates, as the case may be, as so requested. The Company may require
payment by the registered holder of a Right Certificate, 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.
6.2 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 satisfactory to them, and 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.
7. Exercise of Rights; Exercise Price; Expiration Date of Rights.
-------------------------------------------------------------
7.1 Subject to Section 7.5 hereof, the registered holder of any Right
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Exercise Price for the total number of
one one-thousandth of a share of Preferred Stock (or other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then
exercised, at or prior to the earlier of (a) the Close of Business on the tenth
anniversary of the date of this Agreement (the "Final Expiration Date"), (b) the
time at which the Rights are redeemed as provided in Section 23 hereof or (c)
the time at which such Rights are exchanged as provided in Section 24 hereof
(the earliest of (a), (b) or (c) being herein referred to as the "Expiration
Date"). Except as set forth in Section 7.5
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hereof and notwithstanding any other provision of this Agreement, any Person who
prior to the Distribution Date becomes a record holder of shares of Common Stock
of the Company may exercise all of the rights of a registered holder of a Right
Certificate with respect to the Rights associated with such shares of Common
Stock of the Company in accordance with the provisions of this Agreement, as of
the date such Person becomes a record holder of shares of Common Stock of the
Company.
7.2 The Exercise Price for each one one-thousandth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be one
hundred dollars ($100), shall be subject to adjustment from time to time as
provided in Section 11 and Section 13 hereof and shall be payable in lawful
money of the United States of America in accordance with Section 7.3 below.
7.3 As promptly as practicable following the Distribution Date, the
Company shall deposit with a corporation, trust, bank or similar institution in
good standing organized under the laws of the United States or any State of the
United States, which is authorized under such laws to exercise corporate trust
or stock transfer powers and is subject to supervision or examination by a
federal or state authority (such institution is hereinafter referred to as the
"Depositary Agent"), certificates representing the shares of Preferred Stock
that may be acquired upon exercise of the Rights and the Company shall cause
such Depositary Agent to enter into an agreement pursuant to which the
Depositary Agent shall issue receipts representing interests in the shares of
Preferred Stock so deposited. Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate on
the reverse side thereof duly executed, accompanied by payment of the Exercise
Price for the shares to be purchased and an amount equal to any applicable
transfer tax (as determined by the Rights Agent) in cash, or by certified check
or bank draft payable to the order of the Company, the Rights Agent shall,
subject to Section 20.11 hereof, thereupon promptly (a) requisition from the
Depositary Agent (or make available, if the Rights Agent is the Depository
Agent) depository receipts or certificates for the number of one one-thousandth
of a share of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes the Depositary Agent to comply with all such requests, (b) 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 14 hereof,
(c) promptly after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of such
Right Certificate, registered in such name or names as may be designated by such
holder and (d) when appropriate, after receipt promptly deliver such cash to or
upon the order of the registered holder of such Right Certificate. In the event
that the Company is obligated to issue other securities (including Common Stock)
of the Company, pay cash or distribute other property pursuant to Section 11.1
hereof, the Company will make all arrangements necessary so that such other
securities, cash or other property are available for distribution by the Rights
Agent, if and when appropriate. The payment of the Exercise Price may be made in
cash or by certified or bank check payable to the order of the Company, or by
wire transfer of immediately available funds to the account of the Company
(provided that notice of such wire transfer shall be given by the holder of the
related Right to the Rights Agent).
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7.4 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 14 hereof.
7.5 Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11.1.2 Event or Section 13 Event,
any Rights beneficially owned by (a) an Acquiring Person or any Associate or
Affiliate of an Acquiring Person, (b) a transferee of an Acquiring Person (or of
any Associate or Affiliate of an Acquiring Person) who becomes a transferee
after the Acquiring Person becomes such or (c) a transferee of an Acquiring
Person (or of any Associate or Affiliate of an Acquiring Person) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (i) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, the shares of Common Stock of the Company associated with such Rights or
the Company, or (ii) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 7.5, shall be null and
void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of
this Agreement or otherwise. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 7.5 and Section 4.2 hereof are
complied with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or any Affiliates or Associates of an Acquiring
Person or any transferee of any of them hereunder. The Rights Agent will
endeavor to comply with the provisions hereof to the extent it has received
instructions from the Company concerning such matters.
7.6 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 of Rights upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered holder
shall have (a) completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise and (b) 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.
8. Cancellation 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 any of its agents, be delivered
to the Rights Agent for cancellation or in cancelled form, or, if surrendered to
the Rights Agent, shall be cancelled by it, and no 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
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Right Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Right
Certificates to the Company.
9. Reservation and Availability of Preferred Stock.
-----------------------------------------------
9.1 The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock or any authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding and exercisable Rights. Upon the
occurrence of any events resulting in an increase in the aggregate number of
shares of Preferred Stock issuable upon exercise of all outstanding Rights in
excess of the number then reserved, the Company shall make appropriate increases
in the number of shares so reserved.
9.2 The Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all shares of Preferred Stock issued
or reserved for issuance to be listed, upon official notice of issuance, upon
the principal national securities exchange, if any, upon which the Common Stock
of the Company is listed or, if the principal market for the Common Stock of the
Company is not on any national securities exchange, to be eligible for quotation
on the Nasdaq Stock Market ("Nasdaq") or any successor thereto or other
comparable quotation system.
9.3 The Company shall use its best efforts to (a) file, as soon as
practicable following the earliest date after the occurrence of a Section 11.1.2
Event on which the consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with Section 11.1.3 hereof, or as
soon as required by law following the Distribution Date, as the case may be, a
registration statement under the Securities Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (b) cause such
registration statement to become effective as soon as practicable after such
filing and (c) cause such registration statement to remain effective (with a
prospectus that at all times meets the requirements of the Securities Act) until
the earlier of (i) the date as of which the Rights are no longer exercisable for
such securities or (ii) the Expiration Date. The Company will also take such
action as may be appropriate under, and which will 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 determined in accordance
with the provisions of the first sentence of this Section 9.3, the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect, in each case with prompt written notice
to the Rights Agent. Notwithstanding any such provision of this Agreement to the
contrary, the Rights shall not be exercisable in any jurisdiction unless the
requisite qualification in such jurisdiction shall have been obtained. The
Rights Agent may assume that any Right exercised is permitted to be exercised
under applicable law and shall have no liability for acting in reliance upon
such assumption.
-14-
9.4 The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Preferred Stock
delivered upon the exercise of the Rights shall, at the time of delivery of the
certificates or depositary receipts for such shares (subject to payment of the
Exercise Price), be duly and validly authorized and issued and fully paid and
nonassessable.
9.5 The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any certificates for shares of Preferred Stock upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax
which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or in respect of the issuance or delivery
of securities 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 securities in a name other than that of the registered
holder upon the exercise of any Rights until such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
10. Preferred Stock Record Date. Each Person in whose name any
---------------------------
certificate for Preferred Stock (including any fraction of a share of Preferred
Stock) is issued upon the exercise of Rights shall for all purposes be deemed to
have become the holder of record of the shares of Preferred Stock 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 any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
Preferred Stock transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Preferred Stock
transfer books of the Company are open; and further provided, however, that if
delivery of shares of Preferred Stock is delayed pursuant to Section 9.3, such
Person shall be deemed to have become the record holder of such shares of
Preferred Stock only when such shares first become deliverable. Prior to the
exercise of the Right evidenced thereby, the holder of a Right Certificate shall
not be entitled to any rights of a shareholder of the Company with respect to
shares for which the Rights shall be exercisable, including, without limitation,
the right to vote, to receive dividends or other distributions or to exercise
any preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
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.
11.1
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11.1.1 In the event the Company shall at any time after the date of
this Agreement (a) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (b) subdivide the outstanding Preferred Stock, (c) combine
the outstanding Preferred Stock into a smaller number of shares or (d) issue any
shares of its capital stock in a reclassification of the Preferred Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11.1 and Section 7.5 hereof, the Exercise
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of a Right be less than the aggregate par value of the
shares of capital stock of the Company issuable upon exercise of a Right. If an
event occurs which would require an adjustment under both Section 11.1.1 and
Section 11.1.2 hereof, the adjustment provided for in this Section 11.1.1 shall
be in addition to, and shall be made prior to, any adjustment required pursuant
to Section 11.1.2 hereof.
11.1.2 Subject to the provisions of Section 24 hereof, in the event
any Person, alone or together with its Affiliates and Associates, shall become
an Acquiring Person (a "Section 11.1.2 Event"), then promptly following any such
occurrence, proper provision shall be made so that each holder of a Right,
except as provided in Section 7.5 hereof, shall thereafter have a right to
receive, upon exercise thereof at the then current Exercise Price in accordance
with the terms of this Agreement, such number of shares of Preferred Stock of
the Company as shall equal the result obtained by (a) multiplying the then
current Exercise Price by the then number of one one-thousandth of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Section 11.1.2 Event, whether or not such Right was then
exercisable, and dividing that product by (b) 50% of the Fair Market Value per
one one-thousandth of a share of the Preferred Stock (determined pursuant to
Section 11.4) on the date of the occurrence of a Section 11.1.2 Event (such
number of shares being referred to as the "Adjustment Shares").
11.1.3 In lieu of issuing any shares of Preferred Stock in accordance
with Section 11.1.2 hereof, the Company, acting by or pursuant to resolution of
the Board of Directors, may, and in the event that the number of shares of
Preferred Stock which are authorized by the Certificate but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights is not
sufficient to permit the exercise in full of the Rights in accordance with the
foregoing Section 11.1.2, the Company, acting by or pursuant to resolution of
the Board of Directors, shall: (a) determine the excess of (i) the Fair Market
Value of the Adjustment Shares issuable upon the exercise of a Right (the
"Current Value") over (ii) the Exercise Price attributable to each Right (such
excess being referred to as the "Spread") and (b) with respect to all or a
portion of each Right
-16-
(subject to Section 7.5 hereof), make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Exercise Price, (1) cash, (2)
a reduction in the Exercise Price, (3) Preferred Stock Equivalents which the
Board of Directors has deemed to have the same value as shares of Common Stock
of the Company, (4) debt securities of the Company, (5) other assets of the
Company or (6) any combination of the foregoing which, when added to any shares
of Preferred Stock issued upon such exercise, has an aggregate value equal to
the Current Value, where such aggregate value has been determined by the Board
of Directors based upon the advice of a nationally recognized investment banking
firm selected by the Board of Directors; provided, however, that if the Company
shall not have made adequate provision to deliver value pursuant to clause (b)
above within thirty (30) days following the later of (x) the first occurrence of
a Section 11.1.2 Event and (y) the date on which the Company's right of
redemption pursuant to Section 23.1 expires (the later of (x) and (y) being
referred to herein as the "Section 11.1.2 Trigger Date"), then the Company shall
be obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Exercise Price, shares of Preferred Stock (to the
extent available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board of Directors shall determine
in good faith that it is likely that sufficient additional shares of Preferred
Stock could be authorized for issuance upon exercise in full of the Rights, the
30-day period set forth above may be extended to the extent necessary, but not
more than ninety (90) days after the Section 11.1.2 Trigger Date, in order that
the Company may seek stockholder approval for the authorization of such
additional shares (such period, as it may be extended, being referred to herein
as the "Substitution Period"). To the extent that the Company determines that
some action need be taken pursuant to the first and/or second sentences of this
Section 11.1.3, the Company (1) shall provide, subject to Section 7.5 hereof,
that such action shall apply uniformly to all outstanding Rights and (2) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended and a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section 11.1.3, the value of the Preferred Stock shall be the Fair
Market Value (as determined pursuant to Section 11.4 hereof) per share of the
Preferred Stock on the Section 11.1.2 Trigger Date and the value of any
Preferred Stock Equivalent shall be deemed to have the same value as the
Preferred Stock on such date.
11.2 If the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within forty-five (45) calendar days after such record
date) to subscribe for or purchase Preferred Stock (or securities having the
same or more favorable rights, privileges and preferences as the shares of
Preferred Stock ("Preferred Stock Equivalents")) or securities convertible into
Preferred Stock or Preferred Stock Equivalents at a price per share of Preferred
Stock or per share of Preferred Stock Equivalents (or having a conversion price
per share, if a security convertible into Preferred Stock or Preferred Stock
Equivalents) less than the Fair Market Value (as determined pursuant to Section
11.4 hereof) per share of Preferred Stock on such record date, the Exercise
Price to be in effect after such record
-17-
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 shares of Preferred Stock outstanding on such record date, plus the
number of shares of Preferred Stock which the aggregate offering price of the
total number of shares of Preferred Stock and/or Preferred Stock Equivalents to
be offered (and the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such Fair Market Value and the
denominator of which shall be the number of shares of Preferred Stock
outstanding on such record date, plus the number of additional shares of
Preferred Stock and Preferred Stock Equivalents to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of a Right be less than the aggregate
par value of the shares of capital stock of the Company issuable upon exercise
of a Right. 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 the Fair Market Value thereof determined in accordance
with Section 11.4 hereof. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so
issued, the Exercise Price shall be adjusted to be the Exercise Price which
would then be in effect if such record date had not been fixed.
11.3 If the Company shall fix a record date for the making of a
distribution to all holders of Preferred Stock (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 periodic cash dividend out of the earnings or retained earnings
of the Company), assets (other than a dividend payable in Preferred Stock, but
including any dividend payable in stock other than Preferred Stock) or
convertible securities, subscription rights or warrants (excluding those
referred to in Section 11.2, the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the Fair Market Value (as determined pursuant to Section 11.4 hereof)
per one one-thousandth of a share of Preferred Stock on such record date, less
the Fair Market Value (as determined pursuant to Section 11.4 hereof) of the
portion of the cash, assets or evidences of indebtedness so to be distributed or
of such convertible securities, subscription rights or warrants applicable to
one one-thousandth of a share of Preferred Stock and the denominator of which
shall be the Fair Market Value (as determined pursuant to Section 11.4 hereof)
per one one-thousandth of a share of Preferred Stock; provided, however, that in
no event shall the consideration to be paid upon the exercise of a Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of a Right. Such adjustments shall be made successively
whenever such a record date is fixed; and in the event that such distribution is
not so made, the Exercise Price shall again be adjusted to be the Exercise Price
which would be in effect if such record date had not been fixed.
11.4 For the purpose of this Agreement, the "Fair Market Value" of
any share of Preferred Stock, Common Stock or any other stock or any Right or
other security or any other property shall be determined as provided in this
Section 11.4.
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11.4.1 In the case of a publicly-traded stock or other security, the
Fair Market Value on any date shall be deemed to be the average of the daily
closing prices per share of such stock or per unit of such other security for
the 30 consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event that the
Fair Market Value per share of any share of stock is determined during a period
following the announcement by the issuer of such stock of (a) a dividend or
distribution on such stock payable in shares of such stock or securities
convertible into shares of such stock or (b) any subdivision, combination or
reclassification of such stock, and prior to the expiration of the 30 Trading
Day period after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the Fair Market Value shall be properly adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the securities are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such security is listed or admitted to trading; or, if not listed or
admitted to trading on any national securities exchange, the last sale price as
reported by Nasdaq for securities listed on the Nasdaq National Market or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices as reported by Nasdaq; or, if not listed or admitted to trading on
a national securities exchange or the Nasdaq National Market, the last quoted
price (or, if not so quoted, the average of the last quoted high bid and low
asked prices) in the over-the-counter market, as reported by Nasdaq or such
other system then in use; or, if on any such date no bids for such security are
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in such security
selected by the Board of Directors of the Company. If on any such date no market
maker is making a market in such security, the Fair Market Value of such
security on such date shall be determined reasonably and with utmost good faith
to the holders of the Rights by the Board of Directors of the Company, provided,
however, that if at the time of such determination there is an Acquiring Person,
the Fair Market Value of such security on such date shall be determined by a
nationally recognized investment banking firm selected by the Board of
Directors, which determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is
open for the transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a Business Day.
11.4.2 If a security is not publicly held or not so listed or traded,
"Fair Market Value" shall mean the fair value per share of stock or per other
unit of such security, determined reasonably and with utmost good faith to the
holders of the Rights by the Board of Directors of the Company, provided,
however, that if at the time of such determination there is an Acquiring Person,
the Fair Market Value of such security on such date shall be determined by a
nationally recognized investment banking firm
-19-
selected by the Board of Directors, which determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights; provided, however, that for the purposes of
making any adjustment provided for by Section 11.1.2 hereof, the Fair Market
Value of a share of Preferred Stock shall not be less than the product of the
then Fair Market Value of a share of Common Stock multiplied by the higher of
the then Dividend Multiple or Vote Multiple (as both of such terms are defined
in the Certificate of Designation attached as Exhibit A hereto) applicable to
the Preferred Stock and shall not exceed 105% of the product of the then Fair
Market Value of a share of Common Stock multiplied by the higher of the then
Dividend Multiple or Vote Multiple applicable to the Preferred Stock.
11.4.3 In the case of property other than securities, the Fair
Market Value thereof shall be determined reasonably and with utmost good faith
to the holders of Rights by the Board of Directors of the Company, provided,
however, that if at the time of such determination there is an Acquiring Person,
the Fair Market Value of such property on such date shall be determined by a
nationally recognized investment banking firm selected by the Board of
Directors, which determination shall be described in a statement filed with the
Rights Agent and shall be binding upon the Rights Agent and the holders of the
Rights.
11.5 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 the Exercise Price; provided, however,
that any adjustments which by reason of this Section 11.5 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 hundred-thousandth of a share of Common Stock of the
Company or ten-millionth of a share of Preferred Stock, as the case may be, or
to such other figure as the Board of Directors may deem appropriate.
Notwithstanding the first sentence of this Section 11.5, any adjustment required
by this Section 11 shall be made no later than the earlier of (i) three (3)
years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.
11.6 If as a result of any provision of Section 11.1 or Section 13.1
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Stock,
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
Preferred Stock contained in Sections 11.1 through 11.5, Sections 11.7 through
11.11, and Section 11.13, inclusive, and the provisions of Sections 7, 9, 10, 13
and 14 hereof with respect to the Preferred Stock shall apply on like terms to
any such other shares.
11.7 All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of one one-thousandths of a
share of Preferred Stock (or other securities or amount of cash or combination
thereof) purchasable from
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time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.
11.8 Unless the Company shall have exercised its election as provided
in Section 11.9, upon each adjustment of the Exercise Price as a result of the
calculations made in Sections 11.2 and 11.3, 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 one one-thousandth of a
share of Preferred Stock (calculated to the nearest one ten-millionth) as the
Board of Directors reasonably determines is appropriate to preserve the economic
value of the Rights, including, by way of example, that number obtained by (a)
multiplying (i) the number of one one-thousandths of a share of Preferred Stock
for which a Right may be exercisable immediately prior to this adjustment by
(ii) the Exercise Price in effect immediately prior to such adjustment of the
Exercise Price and (b) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.
11.9 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 shares of Preferred Stock purchasable upon the
exercise of a Right. Each of the Rights outstanding after the adjustment in the
number of Rights shall be exercisable for the number of one one-thousandths of a
share of Preferred Stock 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 hundred-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 ten (10) days later than the
date of the public announcement. If Right Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this Section 11.9, 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 14 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 holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and 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.
11.10 Irrespective of any adjustment or change in the Exercise Price
or the number of one one-thousandths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to
-21-
express the Exercise Price per share and the number of shares which were
expressed in the initial Right Certificates issued hereunder without prejudice
to any adjustment or change.
11.11 Before taking any action that would cause an adjustment reducing
the Exercise Price below the then stated value, if any, of the number of one
one-thousandths of a share of Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Preferred Stock at such adjusted
Exercise Price.
11.12 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 issuing to the holder of any Right exercised after such record date
the number of one one-thousandths of a share of Preferred Stock or other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the number of one one-thousandths of a share of Preferred Stock 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.
11.13 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 a majority of the Board of
Directors shall determine to be advisable in order that any consolidation or
subdivision of the Preferred Stock, issuance wholly for cash of any shares of
Preferred Stock at less than the Fair Market Value, issuance wholly for cash of
shares of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of Preferred Stock, stock dividends or issuance
of rights, options or warrants referred to hereinabove in this Section 11,
hereafter made by the Company to holders of its Preferred Stock, shall not be
taxable to such shareholders.
11.14 The Company covenants and agrees that it shall not, at any time
after the Distribution Date and so long as the Rights have not been redeemed
pursuant to Section 23 hereof or exchanged pursuant to Section 24 hereof, (a)
consolidate with (other than a Subsidiary of the Company in a transaction which
complies with the proviso at the end of this sentence), (b) merge with or into,
or (c) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries taken as a whole, to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with the proviso at the end of this sentence) if (i) at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments outstanding or agreements or arrangements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the
-22-
Rights, or (ii) prior to, simultaneously with or immediately after such
consolidation, merger or sale the shareholders of a Person who constitutes, or
would constitute, the "Principal Party" for the purposes of Section 13.1 hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates and Associates; provided, however, that this Section 11.14
shall not affect the ability of any Subsidiary of the Company to consolidate
with, merge with or into, or sell or transfer assets or earning power to, any
other Subsidiary of the Company. The Company further covenants and agrees that
after the Distribution Date it will not, except as permitted by Section 23 or
Section 27 hereof, take (or permit any Subsidiary to take) any action if at the
time such action is taken it is reasonably foreseeable that such action will
substantially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights.
11.15 Notwithstanding anything in this Agreement to the contrary, in
the event the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (a) declare or pay any dividend on the
outstanding Common Stock of the Company payable in shares of Common Stock of the
Company or (b) effect a subdivision, combination or consolidation of the
outstanding shares of Common Stock of the Company (by reclassification or
otherwise than by payment of dividends in shares of Common Stock of the Company)
into a greater or lesser number of shares of Common Stock of the Company, then
in any such case (i) the number of one one-thousandths of a share of Preferred
Stock purchasable after such event upon proper exercise of each Right shall be
determined by multiplying the number of one one-thousandths of a share of
Preferred Stock so purchasable immediately prior to such event by a fraction,
the numerator of which is the number of shares of Common Stock of the Company
outstanding immediately prior to such event and the denominator of which is the
number of shares of Common Stock of the Company outstanding immediately after
such event, and (ii) each share of Common Stock of the Company outstanding
immediately after such event shall have issued with respect to it that number of
Rights which each share of Common Stock of the Company outstanding immediately
prior to such event had issued with respect to it. The adjustments provided for
in this Section 11.15 shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
11.16 The exercise of Rights under Section 11.1.2 shall only result in
the loss of rights under Section 11.1.2 to the extent so exercised and shall not
otherwise affect the rights of holders of Right Certificates under this Rights
Agreement, including rights to purchase securities of the Principal Party
following a Section 13 Event which has occurred or may thereafter occur, as set
forth in Section 13 hereof. Upon exercise of a Right Certificate under Section
11.1.2, the Rights Agent shall return such Right Certificate duly marked to
indicate that such exercise has occurred.
12. Certificate of Adjusted Exercise Price or Number of Shares. Whenever
----------------------------------------------------------
an adjustment is made as provided in Section 11 or Section 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 Preferred Stock
and the Common Stock of the Company
-23-
a copy of such certificate and (c) mail a brief summary thereof to each holder
of a Right Certificate in accordance with Section 26 hereof. The Rights Agent
shall be fully protected in relying on any such certificate and on any
adjustment contained therein and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate.
13. Consolidation, Merger or Sale or Transfer of Assets.
---------------------------------------------------
13.1 In the event that, following the Stock Acquisition Date,
directly or indirectly, (a) the Company shall consolidate with, or merge with
and into, any other Person (other than a Subsidiary of the Company in a
transaction which is not prohibited by Section 11.14 hereof), and the Company
shall not be the continuing or surviving corporation of such consolidation or
merger, (b) any Person (other than a Subsidiary of the Company in a transaction
which is not prohibited by the proviso at the end of the first sentence of
Section 11.14 hereof) shall consolidate with the Company, or merge with and into
the Company and the Company shall be the continuing or surviving corporation of
such merger and, in connection with such merger, all or part of the shares of
Common Stock of the Company shall be changed into or exchanged for stock or
other securities of any other Person or cash or any other property, or (c) the
Company shall sell, mortgage or otherwise transfer (or one or more of its
Subsidiaries shall sell, mortgage or otherwise transfer), in one transaction or
a series of related transactions, assets or earning power aggregating 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any other Person or Persons (other than the Company or any
Subsidiary of the Company in one or more transactions, each of which is not
prohibited by the proviso at the end of the first sentence of Section 11.14
hereof), then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7.5 hereof, shall have
the right to receive, upon the exercise thereof at the then current Exercise
Price in accordance with the terms of this Agreement, such number of validly
authorized and issued, fully paid and nonassessable shares of freely tradeable
Common Stock of the Principal Party (as hereinafter defined in Section 13.2),
free and clear of rights of call or first refusal, liens, encumbrances, transfer
restrictions or other adverse claims, as shall be equal to the result obtained
by (x) multiplying the then current Exercise Price by the number of one one-
thousandths of a share of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event, and dividing
that product by (y) 50% of the Fair Market Value (determined pursuant to Section
11.4 hereof) per share of the Common Stock of such 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, by virtue of
such consolidation, merger, sale, mortgage or transfer, all the obligations and
duties of the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply to such Principal
Party; and (iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Common Stock
to permit exercise of all outstanding Rights in accordance with this Section
13.1 and the making of payments in cash and/or other securities in accordance
with Section 11.1.3 hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be
-24-
applicable, as nearly as reasonably may be, in relation to its shares of Common
Stock thereafter deliverable upon the exercise of the Rights.
13.2 "Principal Party" shall mean (a) in the case of any transaction
described in clause (a) or (b) of the first sentence of Section 13.1, the Person
that is the issuer of any securities into which shares of Common Stock of the
Company are converted in such merger or consolidation, or, if there is more than
one such issuer, the issuer of Common Stock that has the highest aggregate Fair
Market Value (determined pursuant to Section 11.4), and if no securities are so
issued, the Person that is the other party to the merger or consolidation, or,
if there is more than one such Person, the Person the Common Stock of which has
the highest aggregate Fair Market Value (determined pursuant to Section 11.4);
and (b) in the case of any transaction described in clause (c) of the first
sentence of Section 13.1, the Person that is the party receiving the greatest
portion of the assets or earning power transferred pursuant to such transaction
or transactions, or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power
transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot be
determined, whichever Person the Common Stock of which has the highest aggregate
Fair Market Value (determined pursuant to Section 11.4); provided, however, that
in any such case, (i) if the Common Stock of such Person is not at such time and
has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act ("Registered Common Stock") or such Person is not
a corporation, and such Person is a direct or indirect Subsidiary or Affiliate
of another Person who has Registered Common Stock outstanding, "Principal Party"
shall refer to such other Person; (ii) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is
a direct or indirect Subsidiary of another Person but is not a direct or
indirect Subsidiary of another Person which has Registered Common Stock
outstanding, "Principal Party" shall refer to the ultimate parent entity of such
first-mentioned Person; (iii) if the Common Stock of such Person is not
Registered Common Stock or such Person is not a corporation, and such Person is
directly or indirectly controlled by more than one Person, and one or more of
such other Persons has Registered Common Stock outstanding, "Principal Party"
shall refer to whichever of such other Persons is the issuer of the Registered
Common Stock having the highest aggregate Fair Market Value (determined pursuant
to Section 11.4); and (iv) if the Common Stock of such Person is not Registered
Common Stock or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and none of such other Persons
has Registered Common Stock outstanding, "Principal Party" shall refer to
whichever ultimate parent entity is the corporation having the greatest
stockholders' equity or, if no such ultimate parent entity is a corporation,
"Principal Party" shall refer to whichever ultimate parent entity is the entity
having the greatest net assets.
13.3 The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto (a) the Principal Party shall have a
sufficient number of authorized shares of its Common Stock, which have not been
issued or reserved for issuance, to permit the exercise in full of the Rights in
accordance with this Section 13, and (b) the Company and each Principal Party
and each other Person who may become a Principal Party as a result of such
consolidation, merger, sale or transfer shall have
-25-
executed and delivered to the Rights Agent a supplemental agreement providing
for the terms set forth in Sections 13.1 and 13.2 and further providing that, as
soon as practicable after the date of any consolidation, merger, sale or
transfer of assets mentioned in Section 13.1, the Principal Party at its own
expense will:
13.3.1 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, use its reasonable best efforts
to cause such registration statement to become effective as soon as practicable
after such filing and use its reasonable best efforts to cause such registration
statement to remain effective (with a prospectus that at all times meets the
requirements of the Securities Act) until the Expiration Date;
13.3.2 use its reasonable best efforts to qualify or register
the Rights and the securities purchasable upon exercise of the Rights under the
blue sky laws of such jurisdictions as may be necessary or appropriate;
13.3.3 use its reasonable best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility requirements
for quotation on Nasdaq; and
13.3.4 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.
13.4 In case the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (a) causing such Principal Party to issue (other than to holders of
Rights pursuant to this Section 13), in connection with, or as a consequence of,
the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current Fair Market
Value (determined pursuant to Section 11.4) or securities exercisable for, or
convertible into, Common Stock of such Principal Party at less than such Fair
Market Value, or (b) providing for any special payment, tax or similar
provisions in connection with the issuance of the Common Stock of such Principal
Party pursuant to the provisions of this Section 13, then, in such event, the
Company shall not consummate any such transaction unless prior thereto the
Company and such Principal Party shall have executed and delivered to the Rights
Agent a supplemental agreement providing that the provision in question of such
Principal Party shall have been cancelled, waived or amended, or that the
authorized securities shall be redeemed, so that the applicable provision will
have no effect in connection with, or as a consequence of, the consummation of
the proposed transaction. The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or other transfers.
13.5 In no event shall the Rights Agent have any liability in respect
of any such Principal Party transactions, including, without limitation, the
propriety thereof. The Rights Agent may rely and be fully protected in relying
upon a certificate of the
-26-
Company stating that the provisions of this Section 13 have been fulfilled.
Notwithstanding anything in this Agreement to the contrary, the prior written
consent of the Rights Agent must be obtained in connection with any supplemental
agreement which alters the rights or duties of the Rights Agent.
14. Fractional Rights and Fractional Shares.
---------------------------------------
14.1 The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11.15 hereof, or to
distribute Right Certificates which evidence fractional Rights. If the Company
elects not to issue such fractional Rights, the Company shall pay, in lieu of
such fractional Rights, 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 Fair Market Value of a whole Right, as
determined pursuant to Section 11.4 hereof.
14.2 The Company shall not be required to issue fractions of shares
of Preferred Stock (other than fractions which are integral multiples of one
one-thousandths of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-thousandths of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-thousandths of a share of Preferred Stock,
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 Fair Market Value of one one-thousandth of a share of Preferred
Stock. For purposes of this Section 14.2, the Fair Market Value of one one-
thousandth of a share of Preferred Stock shall be determined pursuant to Section
11.4 hereof for the Trading Day immediately prior to the date of such exercise.
14.3 The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
15. Rights of Action. All rights of action in respect of this Agreement,
----------------
other than rights of action vested in the Rights Agent pursuant to Sections 18
and 20 hereof, are vested in the respective registered holders of the Right
Certificates (or, prior to the Distribution Date, the registered holders of the
Common Stock of the Company); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Stock of the Company),
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 Stock of the
Company), may, in such registered holder's own behalf and for such registered
holder's own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his right to exercise the Right 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 shall be entitled to specific
performance of the obligations hereunder and injunctive relief
-27-
against actual or threatened violations of the obligations hereunder of any
Person subject to this Agreement. Holders of Rights shall be entitled to recover
the reasonable costs and expenses, including attorneys' fees, incurred by them
in any action to enforce the provisions of this Agreement.
16. Agreement of Right 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:
16.1 prior to the Distribution Date, each Right will be transferable
only simultaneously and together with the transfer of shares of Common Stock of
the Company;
16.2 after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer;
16.3 subject to Sections 6.1 and 7.6, the Company and the Rights
Agent may deem and treat the person in whose name a Right Certificate (or, prior
to the Distribution Date, the associated certificate representing Common Stock
of the Company) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Right Certificates or the associated certificate representing Common Stock of
the Company made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and, subject to the last sentence of Section 7.5, neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary; and
16.4 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 the 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 obligations; provided, however, that the Company must use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
17. Right Certificate Holder Not Deemed a Shareholder. 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 shares of Preferred Stock 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 shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
-28-
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 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.
18. Concerning the Rights Agent.
---------------------------
18.1 The Company agrees to pay to the Rights Agent such compensation
as shall be agreed to in writing between the Company and the Rights Agent 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 disbursements 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 gross negligence, 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
(whether asserted by the Company, a holder of Rights, or any other Person) of
liability arising therefrom, directly or indirectly. The provisions of this
Section 18.1 shall survive the expiration of the Rights and the termination of
this Agreement.
18.2 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 representing Common Stock of the Company, Preferred Stock, or
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it in good faith
and without negligence to be genuine and to be signed and executed by the proper
Person or Persons.
18.3 Notwithstanding anything in this Agreement to the contrary, in
no event shall the Rights Agent be liable for special, indirect, punitive 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
the loss or damage and regardless of the form of the action.
19. Merger or Consolidation or Change of Name of Rights.
---------------------------------------------------
19.1 Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
all or substantially all the corporate trust or shareholder services business of
the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such
-29-
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 that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.
19.2 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 that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right Certificates and in
this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and
----------------------
obligations expressly imposed by this Agreement, and no implied duties or
obligations shall be read into this Agreement against the Rights Agent upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:
20.1 The Rights Agent may consult with legal counsel selected by it
(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.
20.2 Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "Fair Market Value") 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 shall be herein specifically prescribed) may
be deemed to be conclusively proved and established by a certificate signed by a
person believed by the Rights Agent to be the Chairman of the Board of
Directors, a Vice Chairman of the Board of Directors, the President, a Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company and delivered to the Rights Agent. Any 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.
20.3 The Rights Agent shall be liable hereunder only for its own
gross negligence, or willful misconduct; provided, however, that the Rights
Agent shall not be liable for any indirect, special, consequential or punitive
damages.
-30-
20.4 The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
20.5 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 change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7.5 hereof) or any
adjustment required under the provisions of Sections 11, 13 or 23.3 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 the Rights Agent's actual receipt of a certificate describing any such
adjustment furnished in accordance with Section 12 hereof), nor shall it be
responsible for any determination by the Board of Directors of the Company of
the Fair Market Value of the Rights or Preferred Stock pursuant to the
provisions of Section 14 hereof; nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation of
any shares of Common Stock of the Company or Preferred Stock to be issued
pursuant to this Agreement or any Right Certificate or as to whether any shares
of Common Stock of the Company or Preferred Stock will, when so issued, be
validly authorized and issued, fully paid and nonassessable, nor shall the
Rights Agent be responsible for the legality of the terms hereof in its capacity
as an administrative agent.
20.6 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.
20.7 The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder and
certificates delivered pursuant to any provision hereof from any person believed
by the Rights Agent to be the Chairman of the Board of Directors, any Vice
Chairman of the Board of Directors, the President, a Vice President, the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer of
the Company, and is authorized to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance
-31-
with a proposal included in such application on or after the date specified in
such application (which date shall not be less than five (5) Business Days after
the date any officer of the Company actually receives such application, unless
any such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
20.8 The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the 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 the 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.
20.9 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.
20.10 No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
20.11 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 clause (1) or clause (2)
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
20.12 In addition to the foregoing, the Rights Agent shall be
protected and shall incur no liability for, or in respect of, any action taken
or omitted by it in connection with its administration of this Agreement if such
acts or omissions are in reliance upon (i) the proper execution of the
certification concerning beneficial ownership appended to the form of assignment
and the form of election to purchase attached hereto unless the Rights Agent
shall have actual knowledge that, as executed, such certification is untrue, or
(ii) the non-execution of such certification including, without limitation, any
refusal to honor any otherwise permissible assignment or election by reason of
such non-execution.
20.13 The Company agrees to give the Rights Agent prompt written
notice of any event or ownership which would prohibit the exercise or transfer
of the Right Certificates.
21. Change of Rights Agent. The Rights Agent or any successor Rights
----------------------
Agent may resign and be discharged from its duties under this Agreement upon
thirty (30) days'
-32-
notice in writing mailed to the Company by first class mail. The Company may
remove the Rights Agent or any successor Rights Agent (with or without cause)
upon thirty (30) days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be. If the Rights Agent shall resign or
be removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of thirty (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 incumbent Rights Agent or the registered
holder of any Right Certificate may apply, at the expense of the Company, to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be (a) a corporation organized and doing business under the laws of the
United States or of the State of New York (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the State of New York), in good standing, which is authorized
under such laws to exercise stock transfer or 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 of at least $100,000,000 or (b) an Affiliate of a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent, upon payment of its charges hereunder, 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 Stock of the
Company and the Preferred Stock, 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 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
22. 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 per share and the number or kind or class of shares of stock
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 shares of Common Stock of the Company following the
Distribution Date and prior to the redemption or expiration of the Rights, the
Company (a) shall, with respect to shares of Common Stock of the Company so
issued or sold pursuant to the exercise of stock options or under any employee
plan or arrangement, or upon the exercise, conversion or exchange of securities
hereafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Right
Certificates representing the
-33-
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 Certificate would be issued, and (ii) no such
Right Certificate shall be issued if, and to the extent that, appropriate
adjustments shall otherwise have been made in lieu of the issuance thereof.
23. Redemption.
----------
23.1 The Board of Directors of the Company may, at its option, redeem
all but not less than all of the then outstanding Rights at a redemption price
of $0.001 per Right, appropriately adjusted to reflect any dividend declared or
paid on the Common Stock of the Company in shares of Common Stock of the Company
or any subdivision or combination of the outstanding shares of Common Stock of
the Company or similar event occurring after the date of this Agreement (such
redemption price, as adjusted from time to time, being hereinafter referred to
as the "Redemption Price"). The Rights may be redeemed only until the earlier to
occur of (i) 5:00 P.M., New York, New York time, on the tenth calendar day after
the Stock Acquisition Date or (ii) the Final Expiration Date.
23.2 Immediately upon the action of the Board of Directors ordering
the redemption of the Rights, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of 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 addresses
as they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for the Common
Stock of the Company. 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. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or Section
24 hereof or in connection with the purchase of shares of Common Stock of the
Company prior to the Distribution Date.
23.3 The Company may, at its option, pay the Redemption Price in
cash, shares of Common Stock of the Company (based on the Fair Market Value of
the Common Stock of the Company as of the time of redemption) or any other form
of consideration deemed appropriate by the Board of Directors.
24. Exchange.
--------
24.1
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24.1.1 The Board of Directors of the Company may, at its option,
at any time on or after the Distribution Date, 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 7.5 hereof) for shares of
Common Stock of the Company at an exchange ratio of one share of Common Stock of
the Company per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Section 24.1.1 Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after any Person (other than an Exempt Person),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the Common Stock of the Company.
24.1.2 Notwithstanding the foregoing, the Board of Directors of
the Company may, at its option, at any time on or after the Distribution Date,
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
7.5 hereof) for shares of Common Stock of the Company at an exchange ratio
specified in the following sentence, as appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date of
this Agreement. Subject to the adjustment described in the foregoing sentence,
each Right may be exchanged for that number of shares of Common Stock of the
Company obtained by dividing the Spread (as defined in Section 11.1.3) by the
then Fair Market Value per one one-thousandth of a share of Preferred Stock on
the earlier of (a) the date on which any person becomes an Acquiring Person or
(b) the date on which a tender or exchange offer by any Person (other than an
Exempt Person) is first published or sent or given within the meaning of Rule
14d-4(a) of the Exchange Act or any successor rule, if upon consummation thereof
such Person would be the Beneficial Owner of 20% or more of the shares of Common
Stock of the Company then outstanding (such exchange ratio being referred to
herein as the "Section 24.1.2 Exchange Ratio").
Notwithstanding the foregoing, the Board of Directors shall not be
empowered to effect such exchange at any time after any Person (other than an
Exempt Person), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Stock of the Company.
24.2 Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock of the Company
equal to the number of such Rights held by such holder multiplied by the Section
24.1.1 Exchange Ratio or the Section 24.1.2 Exchange Ratio, as applicable. The
Company shall promptly give notice of any such exchange in accordance with
Section 26 hereof and shall promptly mail a notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
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
-35-
method by which the exchange of the shares of Common Stock of the Company for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become void pursuant
to the provisions of Section 7.5 hereof) held by each holder of Rights.
24.3 In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or Preferred Stock Equivalent, as such
term is defined in Section 11.2 hereof) for Common Stock of the Company
exchangeable for Rights, at the initial rate of one one-thousandth of a share of
Preferred Stock (or Preferred Stock Equivalent) for each share of Common Stock
of the Company, as appropriately adjusted to reflect adjustments in the voting
rights of the Preferred Stock pursuant to the terms thereof, so that the
fraction of a share of Preferred Stock delivered in lieu of each share of Common
Stock of the Company shall have the same voting rights as one share of Common
Stock of the Company.
24.4 In the event that there shall not be sufficient shares of Common
Stock of the Company or Preferred Stock (or Preferred Stock Equivalent) issued
but not outstanding or authorized but unissued to permit any exchange of Rights
as contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional shares of Common Stock
of the Company or Preferred Stock (or Preferred Stock Equivalent) for issuance
upon exchange of the Rights.
24.5 The Company shall not be required to issue fractions of Common
Stock of the Company or to distribute certificates which evidence fractional
shares of Common Stock of the Company. If the Company elects not to issue such
fractional shares of Common Stock of the Company, the Company shall pay, in lieu
of such fractional shares of Common Stock of the Company, to the registered
holders of the Right Certificates with regard to which such fractional shares of
Common Stock of the Company would otherwise be issuable, an amount in cash equal
to the same fraction of the Fair Market Value of a whole share of Common Stock
of the Company. For the purposes of this Section 24.5, the Fair Market Value of
a whole share of Common Stock of the Company shall be the closing price of a
share of Common Stock of the Company (as determined pursuant to the second
sentence of Section 11.4.1 hereof) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.
25. Notice of Certain Events.
------------------------
25.1 In case the Company shall propose, at any time after the
Distribution Date, to (a) pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the holders of
Preferred Stock (other than a regular periodic cash dividend out of earnings or
retained earnings of the Company), (b) offer to the holders of Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other securities, rights
or options, (c) effect any reclassification of its Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock), (d) effect any consolidation or merger into or with, or to
effect any sale,
-36-
mortgage or other transfer (or to permit one or more of its Subsidiaries to
effect any sale, mortgage or other transfer), in one transaction or a series of
related transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other Person (other than
a Subsidiary of the Company in one or more transactions each of which is not
prohibited by the proviso at the end of the first sentence of Section 11.14
hereof), (e) effect the liquidation, dissolution or winding up of the Company,
or (f) declare or pay any dividend on the Common Stock of the Company payable in
Common Stock of the Company or to effect a subdivision, combination or
consolidation of the Common Stock of the Company (by reclassification or
otherwise than by payment of dividends in Common Stock of the Company) then in
each such case, the Company shall give to each holder of a Right Certificate and
to the Rights Agent, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Common Stock of the Company and/or
Preferred Stock, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (a) or (b) above at least
twenty (20) days prior to the record date for determining holders of the shares
of Preferred Stock for purposes of such action, and in the case of any such
other action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Common Stock of the Company and/or Preferred Stock, whichever shall be
the earlier; provided, however, no such notice shall be required pursuant to
this Section 25 as a result of any Subsidiary of the Company effecting a
consolidation or merger with or into, or effecting a sale or other transfer of
assets or earnings power to, any other Subsidiary of the Company in a manner not
inconsistent with the provisions of this Agreement.
25.2 In case any Section 11.1.2 Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to each
registered holder of a Right Certificate and to the Rights Agent, in accordance
with Section 26 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 11.1.2 hereof.
26. Notices. Notices or demands authorized by this Agreement to be given
-------
or made by the Rights Agent or by the holder of any Right Certificate to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, by facsimile transmission or by nationally recognized overnight
courier addressed (until another address is filed in writing with the Rights
Agent) as follows:
Xxxx.xxx Inc.
0 Xxxxxxxxxx Xxx Xxxxxx
Xxxxx 0000, Xxxxx 0
Xxxxxx Xxxxx Chanj Xx Xxxxxxxx
Xxxxxxx 000000
Xxxxxx'x Xxxxxxxx of China
Attention: President
-37-
with a copy to:
Goulston & Storrs, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Subject to the provisions of Section 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, by facsimile transmission or by
nationally-recognized overnight courier addressed (until another address is
filed in writing with the Company) as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx, 00X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Global Trust Services
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 (or, prior to
the Distribution Date, to the holder of any certificate representing shares of
Common Stock of the Company) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
27. 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 as the Company may deem necessary or
desirable without the approval of any holders of certificates representing
shares of Common Stock of the Company. From and after the Distribution Date, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holder of Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder, or
(iv) to change or supplement the provisions hereof in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Right Certificates (other than an Acquiring Person
or any Affiliate or Associate of an Acquiring Person); provided, however, that
from and after the Distribution Date this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed at such time as the Rights
are not then redeemable or (B) any other time period unless such lengthening is
for the purpose of protecting, enhancing or clarifying the rights of, and the
benefits to, the holders of Rights (other than an Acquiring Person or any
Affiliate or Associate of an Acquiring Person). Upon the delivery of such
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
27, the Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of
-38-
the holders of Common Stock of the Company. Notwithstanding any other provision
hereof, the Rights Agent's consent must be obtained regarding any amendment or
supplement pursuant to this Section 27 which alters the Rights Agent's rights or
duties.
28. Successors. All the covenants and provisions of this Agreement by or
----------
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
29. Determinations and Actions by the Board of Directors. For all purposes
----------------------------------------------------
of this Agreement, any calculation of the number of shares of Common Stock of
the Company outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of the Company of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Rules under the
Exchange Act as in effect on the date hereof. 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 (a) interpret the provisions of this Agreement and (b) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (ii) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith shall (i) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (ii) not subject any
member of the Board of Directors to any liability to the holders of the Rights
or to any other person.
30. Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock of the Company) any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock of the Company).
31. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; 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 the Agreement would adversely affect the purpose or effect of the
Agreement, the right of redemption set forth in Section 23 hereof shall be
reinstated and shall not expire
-39-
until the Close of Business on the tenth day following the date of such
determination by the Board of Directors.
32. Governing Law. This Agreement, each Right and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts to be made and to
be performed entirely within such state, provided, however, that the rights and
obligations of the Rights Agent shall be governed by and construed in accordance
with the laws of the State of New York. The parties hereto hereby waive the
right to a jury trial in any action arising out of this Agreement. Any dispute
arising out of this Agreement shall be litigated in the borough of Manhattan,
New York City, New York, and the parties hereby submit to the jurisdiction of
such courts and acknowledge that such courts are a convenient forum.
33. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
34. Descriptive Headings. Descriptive headings of the several Sections of
--------------------
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
[SIGNATURE PAGE FOLLOWS]
-40-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
XXXX.XXX INC.
By: /s/ Xxxxx Xxxxxxxxx
-------------------
Name: Xxxxx Xxxxxxxxx
Title: Senior Vice President
and Chief Financial Officer
THE BANK OF NEW YORK, as Rights Agent
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
-41-
EXHIBIT A
---------
FORM OF
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
OF
XXXX.XXX INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
XXXX.XXX INC. (the "Company"), a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "DGCL"), DOES HEREBY
CERTIFY:
That the following resolution was duly adopted by the Board of Directors of
the Company, pursuant to the authority conferred upon the Board of Directors by
Article IV, Section B of the Company's Sixth Amended and Restated Certificate of
Incorporation and the provisions of Section 151 of the DGCL, my unanimous
written consent of the Board of Directors as of July 19, 2001:
RESOLVED: That the Board of Directors hereby designates 200,000 shares of the
Company's Preferred Stock, $.001 par value, as Series A Junior
Participating Cumulative Preferred Stock with the designations,
powers, preferences, and relative, participating, optional or other
rights, and the qualifications, limitations or restrictions thereof,
set forth on Exhibit 1 hereto.
---------
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
to be executed by [_________________], its [___________].
XXXX.XXX INC.
By:________________________________
Name:
Title:
-1-
EXHIBIT 1
---------
DESIGNATIONS, POWERS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS THEREOF,
OF
SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
OF
XXXX.XXX INC.
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Cumulative Preferred Stock," $.001
par value, (hereinafter called "Series A Preferred Stock"), and the number of
shares initially constituting such series shall be 200,000. Such number of
shares may be increased or decreased by resolution of the Board of Directors and
by the filing of a certificate pursuant to the provisions of the General
Corporation Law of the State of Delaware stating that such increase or reduction
has been so authorized; provided, however, that no decrease shall reduce the
number of shares of Series A Preferred Stock to a number less than that of the
shares then outstanding plus the number of shares of Series A Preferred Stock
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation.
Section 2. Dividends and Distributions.
(A) (i) Subject to the rights of the holders of any shares of any
series of preferred stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of shares of Common Stock
and of any other junior stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series A Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $1.00 or (b) subject to the provisions for
adjustment hereinafter set forth, 1,000 times the aggregate per share amount of
all cash dividends, and 1,000 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the shares of
Common Stock since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock. The
multiple of cash and non-cash dividends declared on the shares of Common Stock
to which holders of the Series A Preferred Stock are entitled, which shall be
1,000 initially but
-1-
which shall be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Dividend Multiple." In the event the Corporation
shall at any time after July 23, 2001 (the "Rights Declaration Date") (i)
declare or pay any dividend on the shares of Common Stock payable in shares of
Common Stock, or (ii) effect a subdivision or combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the Dividend Multiple
thereafter applicable to the determination of the amount of dividends which
holders of shares of Series A Preferred Stock shall be entitled to receive shall
be the Dividend Multiple applicable immediately prior to such event multiplied
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(ii) Notwithstanding anything else contained in this paragraph
(A), the Corporation shall, out of funds legally available for that purpose,
declare a dividend or distribution on the Series A Preferred Stock as provided
in this paragraph (A) immediately after it declares a dividend or distribution
on the shares of Common Stock (other than a dividend payable in shares of Common
Stock); provided that, in the event no dividend or distribution shall have been
declared on the shares of Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Series A Preferred Stock shall nevertheless
be payable on such subsequent Quarterly Dividend Payment Date.
(B) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series A Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix
in accordance with applicable law a record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive payment of a dividend
or distribution declared thereon, which record date shall be not more than such
number of days prior to the date fixed for the payment thereof as may be allowed
by applicable law.
Section 3. Voting Rights. In addition to any other voting rights required
by law, the holders of shares of Series A Preferred Stock shall have the
following voting rights:
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(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
The number of votes which a holder of a share of Series A Preferred Stock is
entitled to cast, which shall initially be 1,000 but which may be adjusted from
time to time as hereinafter provided, is hereinafter referred to as the "Vote
Multiple." In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on shares of Common Stock
payable in shares of Common Stock, or (ii) effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
Vote Multiple thereafter applicable to the determination of the number of votes
per share to which holders of shares of Series A Preferred Stock shall be
entitled shall be the Vote Multiple immediately prior to such event multiplied
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock and
the holders of shares of any other capital stock of this Corporation having
general voting rights, shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on any
shares of Series A Preferred Stock shall be in arrears in an amount equal to at
least two full quarter dividends (whether or not declared and whether or not
consecutive), the holders of record of the outstanding shares of Series A
Preferred Stock shall have the exclusive right, voting separately as a single
class, to elect two directors of the Corporation at a special meeting of
stockholders of the Corporation or at the Corporation's next annual meeting of
stockholders, and at each subsequent annual meeting of stockholders, as provided
below. At elections for such directors, each Series A Preferred Share shall
entitle the holder thereof to 1,000 votes in such elections.
(ii) Upon the vesting of such right of the holders of shares of
Series A Preferred Stock, the maximum authorized number of members of the Board
of Directors shall automatically be increased by two and the two vacancies so
created shall be filled by vote of the holders of the outstanding shares of
Series A Preferred Stock as hereinafter set forth. A special meeting of the
stockholders of the Corporation then entitled to vote shall be called by the
Chairman of the Board of Directors or the President or the Secretary of the
Corporation, if requested in writing by the holders of record of not less than
10% of the shares of Series A Preferred Stock then outstanding. At such special
meeting, or, if no such special meeting shall have been called, then at the next
annual meeting of stockholders of the Corporation, the holders of the shares of
Series A Preferred Stock shall elect, voting as above provided, two directors of
the Corporation to
-3-
fill the aforesaid vacancies created by the automatic increase in the number of
members of the Board of Directors. At any and all such meetings for such
election, the holders of a majority of the outstanding shares of Series A
Preferred Stock shall be necessary to constitute a quorum for such election,
whether present in person or proxy, and such two directors shall be elected by
the vote of at least a majority of the shares of Series A Preferred Stock held
by such stockholders present or represented at the meeting. Any director elected
by holders of shares of Series A Preferred Stock pursuant to this Section may be
removed at any annual or special meeting, by vote of a majority of the
stockholders voting as a class who elected such director, with or without cause.
In case any vacancy shall occur among the directors elected by the holders of
shares of Series A Preferred Stock pursuant to this Section, such vacancy may be
filled by the remaining director so elected, or his successor then in office,
and the director so elected to fill such vacancy shall serve until the next
meeting of stockholders for the election of directors. After the holders of
shares of Series A Preferred Stock shall have exercised their right to elect
directors in any default period and during the continuance of such period, the
number of directors shall not be further increased or decreased except by vote
of the holders of shares of Series A Preferred Stock as herein provided or
pursuant to the rights of any equity securities ranking senior to or pari passu
with the Series A Preferred Stock.
(iii) The right of the holders of shares of Series A Preferred
Stock, voting separately as a class, to elect two members of the Board of
Directors of the Corporation as aforesaid shall continue until, and only until,
such time as all arrears in dividends (whether or not declared) on the Series A
Preferred Stock shall have been paid or declared and set apart for payment, at
which time such right shall terminate, except as herein or by law expressly
provided subject to revesting in the event of each and every subsequent default
of the character above-mentioned. Upon any termination of the right of the
holders of the Series A Preferred Stock as a class to vote for directors as
herein provided, the term of office of all directors then in office elected by
the holders of shares of Series A Preferred Stock pursuant to this Section shall
terminate immediately. Whenever the term of office of the directors elected by
the holders of shares of Series A Preferred Stock pursuant to this Section shall
terminate and the special voting powers vested in the holders of the Series A
Preferred Stock pursuant to this Section shall have expired, the maximum number
of members of this Board of Directors of the Corporation shall be such number as
may be provided for in the By-laws of the Corporation, irrespective of any
increase made pursuant to the provisions of this Section.
(D) Except as otherwise required by applicable law or as set forth
herein, holders of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are entitled
to vote with holders of shares of Common Stock as set forth herein) for taking
any corporate action.
Section 4. Certain Restrictions.
(A) Whenever dividends or distributions payable on the Series A
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
shares of Series A Preferred Stock outstanding shall have been paid in full, the
Corporation shall not: (i)
-4-
declare or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series A Preferred Stock; (ii) declare or pay dividends on or make any
other distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled; (iii) except as permitted in subsection 4(A)(iv) below, redeem,
purchase or otherwise acquire for consideration shares of any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series A
Preferred Stock; or (iv) purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of any stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under subsection (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock and may be reissued as part of a new series of preferred stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made (a) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (1) $1,000.00 per share or
(2) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share
-5-
to holders of shares of Common Stock, or (b) to the holders of stock ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all other such parity stock in proportion to the
total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Corporation shall at
any time after the Rights Declaration Date (i) declare or pay any dividend on
shares of Common Stock payable in shares of Common Stock, or (ii) effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
clause (a) of this paragraph shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Neither the consolidation of nor merging of the Corporation with or into
any other corporation or corporations, nor the sale or other transfer of all or
substantially all of the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
this Section 6.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged,
plus accrued and unpaid dividends, if any, payable with respect to the Series A
Preferred Stock. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare or pay any dividend on shares of Common Stock
payable in shares of Common Stock, or (ii) effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
Section 8. Redemption. The shares of Series A Preferred Stock shall not be
redeemable; provided, however, that the foregoing shall not limit the ability of
the
-6-
Corporation to purchase or otherwise deal in such shares to the extent otherwise
permitted hereby and by law.
Section 9. Ranking. Unless otherwise provided in the Certificate of
Incorporation or a Certificate of Designation relating to a subsequently-
designated series of preferred stock of the Corporation, the Series A Preferred
Stock shall rank junior to any other series of the Corporation's preferred stock
subsequently issued, as to the payment of dividends and the distribution of
assets on liquidation, dissolution or winding up and shall rank senior to the
Common Stock.
Section 10. Amendment. The Certificate of Incorporation and this
Certificate of Designation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of two-thirds or more of the outstanding shares of Series A
Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Shares of Series A Preferred Stock may be
issued in whole shares or in any fraction of a share that is one one-thousandth
(1/1,000) of a share or any integral multiple of such fraction, which shall
entitle the holder, in proportion to such holder's fractional shares, to
exercise voting rights, receive dividends, participate in distributions and to
have the benefit of all other rights of holders of shares of Series A Preferred
Stock. In lieu of fractional shares, the Corporation may elect to make a cash
payment as provided in the Rights Agreement for fractions of a share other than
one one-thousandth (1/1,000) of a share or any integral multiple thereof.
-7-
EXHIBIT B
---------
FORM OF RIGHT CERTIFICATE
Certificate No. R- [Number] Rights
---------------
NOT EXERCISABLE AFTER July 25, 2011 OR EARLIER IF NOTICE OF REDEMPTION IS GIVEN.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF XXXX.XXX INC., AT $0.001
PER RIGHT ON THE TERMS SET FORTH IN THE SHAREHOLDER RIGHTS AGREEMENT BETWEEN
XXXX.XXX INC. AND THE BANK OF NEW YORK, AS RIGHTS AGENT, DATED AS OF JULY 25,
2001 (THE "RIGHTS AGREEMENT"). UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN SECTION
7.5 OF THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND VOID.
XXXX.XXX INC.
RIGHT CERTIFICATE
-----------------
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
Shareholder Rights Agreement dated as of July 25, 2001 (the "Rights Agreement")
between XXXX.XXX INC. (the "Company") and THE BANK OF NEW YORK, a New York
banking corporation, as Rights Agent (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to the close of business on July 25, 2011 at the
office or offices of the Rights Agent designated for such purpose, or its
successors as Rights Agent, one one-thousandth of a fully paid, non-assessable
share of Series A Junior Participating Cumulative Preferred Stock (the
"Preferred Stock") of the Company, at a purchase price of $100 per one one-
thousandth of a share (the "Exercise Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase and the related
Certificate 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 July 25, 2001 based on the shares of
Preferred Stock as constituted at such date.
Upon the occurrence of a Section 11.1.2 Event (as such term is defined in
the Rights Agreement), if the Rights evidenced by this Right Certificate are
beneficially owned by (a) an Acquiring Person, an Adverse Person or an Affiliate
or Associate of any such Person (as such terms are defined in the Rights
Agreement), (b) a transferee of any such Acquiring Person or an Associate or
Affiliate of any such Acquiring Person or (c) under certain circumstances
specified in the Rights Agreement, a transferee of a
-8-
Person who, after such transfer, became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from and after
the occurrence of such Section 11.1.2 Event.
As provided in the Rights Agreement, the Exercise Price and the number of
shares of Preferred Stock 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, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal office of the
Company and the designated office of the Rights Agent and are also available
upon written request to the Company or the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Right Certificate or Certificates of like
tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of shares of Preferred Stock as the Rights evidenced by the
Right Certificate or 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
Certificates for the number of whole Rights not exercised. If this Right
Certificate shall be exercised in whole or in part pursuant to Section 11.1.2 of
the Rights Agreement, the holder shall be entitled to receive this Right
Certificate duly marked to indicate that such exercise has occurred as set forth
in the Rights Agreement.
Under certain circumstances, subject to the provisions of the Rights
Agreement, the Board of Directors of the Company at its option may exchange all
or any part of the Rights evidenced by this Certificate for shares of the
Company's Common Stock or Preferred Stock at an exchange ratio (subject to
adjustment) of one share of Common Stock or one one-thousandth of a share of
Preferred Stock per Right.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Board of Directors of the Company at its
option at a redemption price of $0.001 per Right (payable in cash, Common Stock
or other consideration deemed appropriate by the Board of Directors).
The Company is not obligated to issue fractional shares of stock upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral
-9-
multiples of one one-thousandth of a share of Preferred Stock, which may, at the
election of the Company, be evidenced by depositary receipts). If the Company
elects not to issue such fractional shares, in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock, Common Stock or 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 an authorized signatory of the Rights
Agent.
-10-
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Corporate Seal
XXXX.XXX INC. COUNTERSIGNED:
THE BANK OF NEW YORK
By:_________________________
Name:
Title: By:_________________________
Authorized Signatory
Attest: Date of countersignature:_________
____________________________
Name:
Title:
-11-
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 ___________________________________ as
Attorney, to transfer the within Right Certificate on the books of the within-
named Company, with full power of substitution.
Dated:
Signature:___________________________
Printed name:________________________
Signature Guaranteed:
-12-
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Right Certificate ___are ___are not being
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned ___did ___did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated:
Signature:________________________
Printed name:_____________________
-13-
NOTICE
The signature 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.
-14-
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right Certificate.)
To XXXX.XXX INC.
The undersigned hereby irrevocably elects to exercise _____________ Rights
represented by this Right Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
_________________________:
Please insert social security or other identifying taxpayer number:
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate or if the Rights are being exercised pursuant to Section
11.1.2 of the Rights Agreement, 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 taxpayer number:
Please insert social security or other identifying taxpayer number:
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
(Please print name and address)
Signature:___________________________
Signature Guaranteed:
-15-
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 any such Person (as such terms are defined in the
Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned ___did ___did not directly or indirectly acquire the Rights
evidenced by this Right Certificate from any Person who is, was or became an
Acquiring Person or an Affiliate or Associate of any such Person.
Dated:
Signature:________________________
Printed name:_____________________
-16-
NOTICE
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
-17-
