AMENDED AND RESTATED
RIGHTS AGREEMENT
dated as of June 12, 1998
by and between
MEDIAONE GROUP, INC.
and
STATE STREET BANK AND TRUST COMPANY
as Rights Agent
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. Issuance of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . 8
4. Form of Right Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. Countersignature and Registration. . . . . . . . . . . . . . . . . . . . . . . 10
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. . . . . . . . . . . . 11
7. Exercise of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8. Cancellation and Destruction of Right Certificates . . . . . . . . . . . . . . 14
9. Reservation and Availability of Capital Stock. . . . . . . . . . . . . . . . . 15
10. Securities Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
11. Adjustment of Exercise Price, Number of Shares
Issuable upon Exercise of Rights or Number
of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12. Certificate of Adjusted Exercise Price or Number of Shares Issuable
upon Exercise of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
13. Consolidation, Merger, or Sale or Transfer of Assets or Earning Power. . . . . 24
14. Fractional Rights and Fractional Shares. . . . . . . . . . . . . . . . . . . . 27
15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16. Agreement of Right Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 28
17. Right Holder and Right Certificate Holder Not Deemed a Stockholder . . . . . . 29
18. Concerning the Rights Agent. . . . . . . . . . . . . . . . . . . . . . . . . . 29
19. Merger or Consolidation or Change of Name of Rights Agent. . . . . . . . . . . 30
20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
TABLE OF CONTENTS
(continued)
SECTION PAGE
------- ----
22. Issuance of New Right Certificates. . . . . . . . . . . . . . . . . . . . . . 34
23. Redemption of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
24. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
25. Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
26. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
27. Supplements and Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 39
28. Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
29. Determinations and Actions by the Board of Directors, etc . . . . . . . . . . 41
30. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
31. Benefits of This Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 41
32. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
33. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
34. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
35. Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
36. Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(ii)
TABLE OF EXHIBITS
Exhibit A -- Form of Right Certificate
(iii)
TABLE OF DEFINED TERMS
TERM DEFINED PAGE SECTION
------------ ---- -------
15% Ownership Date 7 1.(y)
15% Stockholder 7 1.(z)
Adjustment Shares 18 11.(a)(ii)
Affiliate 2 1.(a)
Agreement 1 Introduction
Associate 2 1.(a)
Beneficial Owner 2 1.(b)
Beneficially Own 2 1.(b)
Board of Directors 1 Recital
Business Day 3 1.(c)
Close of Business 3 1.(d)
Closing Price 3 1.(e)
Common Stock 4 1.(f)
Company 1, 25 Introduction,
13.(a)(iii)
Continuing Director 4 1.(g)
Current Market Price 5, 20 1.(h), 11.(d)
Distribution Date 5, 8 1.(i), 3.(a)
Effective Time 5 1.(j)
Exchange Act 5 1.(k)
Exchange Ratio 36 24.(a)
Exercise Price 5, 13 1.(l), 7.(c)
(iv)
TABLE OF DEFINED TERMS
(continued)
TERM DEFINED PAGE SECTION
------------ ---- -------
Expiration Date 5 1.(m)
NASDAQ 4 1.(e)
New U S WEST 1 Recital
Original Agreement 1 Recital
Person 6 1.(n)
Preferred Share 6 1.(o)
Preferred Share Equivalents 19 11.(b)
Redemption Date 6 1.(p)
Redemption Price 6, 35 1.(q), 23.(a)
Restated Certificate
of Incorporation 1 Recital
Right 2, 6 Recital, 1.(r)
Right Certificates 9 3.(c)
Rights Agent 1 Introduction
Rights Agreement 9 3.(d)
Section 11(a)(ii) Event 6, 17 1.(s), 11.(a)(ii)
Section 13(a) Event 6, 24 1.(t), 13.(a)
Securities Act 6 1.(u)
Separation Agreement 1 Recital
Subsidiary 6 1.(v)
Surviving Person 24 13.(a)
Trading Day 6 1.(w)
Unavailable Adjustment Shares 18 11.(a)(iii)
Voting Share 7 1.(x)
(v)
AMENDED AND RESTATED
RIGHTS AGREEMENT
This Amended and Restated Rights Agreement ("Agreement") is made
and entered into as of the 12th day of June, 1998 by and between MEDIAONE
GROUP, INC., a Delaware corporation (formerly U S WEST, Inc.) (the
"Company"), and STATE STREET BANK AND TRUST COMPANY (the "Rights Agent"), and
shall become effective as of the Effective Time (as defined herein).
WHEREAS, the Company and the Rights Agent are parties to a rights
agreement, dated as of April 7, 1989 (as amended on July 15, 1992 and on
October 31, 1995, the "Original Agreement") pursuant to which the Company
distributed Communication Rights and Media Rights (as defined in the Original
Agreement);
WHEREAS, pursuant to the Separation Agreement, dated as of June 5,
1998, (the "Separation Agreement") between the Company and USW-C, Inc., a
Delaware corporation and wholly owned subsidiary of the Company ("New U S
WEST"), among other things, (a) the Company shall redeem each share of
Communications Stock issued and outstanding immediately prior to the
Separation Time (as defined in the Separation Agreement), together with the
Communications Rights, for one share of New U S WEST Common Stock (as defined
in the Separation Agreement) and cancel each share of Communications Stock
held as treasury stock by the Company, (b) the Company shall distribute as a
dividend on each share of Media Stock (other than shares of Media Stock held
as treasury stock by the Company) certain shares of New U S WEST Common
Stock, and (c) from and after the Separation Time, all shares of
Communications Stock and all Communications Rights shall cease to exist and
each outstanding share of Media Stock shall remain outstanding and shall
thereafter represent one share of Common Stock, par value $.01 per share, of
the Company, with the terms set forth in the Restated Certificate of
Incorporation of the Company (as amended by the Charter Amendments (as
defined in the Separation Agreement)) (the "Restated Certificate of
Incorporation");
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has determined that, effective as of the Separation Time, the
Original Agreement shall be
amended and restated in its entirety as provided herein and that, from and
after the Separation Time, the Communication Rights will expire and will
cease to exist and each Media Right shall thereafter represent one right (a
"Right") which shall initially represent the right to purchase one
one-hundredth of a share of Series A Junior Participating Cumulative
Preferred Stock, par value $1.00 per share, of the Company having the rights,
powers and preferences set forth in the Restated Certificate of
Incorporation, upon the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual agreements set forth herein, the parties hereto hereby agree as
follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as
in effect on the date hereof.
(b) A Person shall be deemed the "Beneficial Owner" of and shall
be deemed to "Beneficially Own":
(i) any securities that such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly, for
purposes of Section 13(d) of the Exchange Act and Rule 13d-3 promulgated
under the Exchange Act, in each case as in effect on the date hereof;
(ii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right is
exercisable immediately, or only after the passage of time, compliance with
regulatory requirements, the fulfillment of a condition, or otherwise)
pursuant to any agreement, arrangement or understanding, or upon the
exercise of conversion rights, exchange rights, rights (other than the
Rights (as defined herein)), warrants or options, or otherwise, provided
that a Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own, securities tendered pursuant to a tender offer or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until
2
such tendered securities are accepted for purchase or exchange;
(iii) any securities that such Person or any such Person's
Affiliates or Associates has the right to vote, alone or in concert with
others, pursuant to any agreement, arrangement or understanding; PROVIDED,
HOWEVER, that a Person shall not be deemed the Beneficial Owner of, or to
Beneficially Own, any security if the agreement, arrangement or
understanding to vote such security (A) arises solely from a revocable
proxy given to such Person or any of such Person's Affiliates or Associates
in response to a public proxy solicitation made pursuant to and in
accordance with the applicable rules and regulations of the Exchange Act,
and (B) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report);
(iv) any securities that are Beneficially Owned, directly or
indirectly, by any other Person with which such Person or any of such
Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (other than
voting pursuant to a revocable proxy as described in the proviso to Section
1(b)(iii) hereof) or disposing of any securities of the Company; and
(v) on any day on or after the Distribution Date, all Rights
that prior to such date were represented by certificates for shares of
Common Stock that such Person Beneficially Owns on such day.
(c) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the States of New York or Colorado are
authorized or obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean 5:00 p.m.,
Massachusetts time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day, it shall mean 5:00 p.m., Massachusetts time, on the next
succeeding Business Day.
(e) "Closing Price" of a stock or other security on any day shall be
the last sale price, regular way, per share of such stock or unit of such other
security on such
3
day 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 such stock or other security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which such stock or other security
is listed or admitted to trading or, if such stock or other security is not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System
("NASDAQ") or such other system then in use or, if on any such date such
stock or other security is not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market
maker that makes a market in such stock or other security and that is
selected by the Board of Directors of the Company.
(f) "Common Stock" when used with reference to the Company shall
collectively mean the Common Stock, par value $.01 per share of the Company.
"Common Stock" when used with reference to any Person other than the Company
which shall be organized in corporate form shall mean the capital stock or
other equity security with the greatest per share voting power of such
Person. "Common Stock" when used with reference to any Person other than the
Company which shall not be organized in corporate form shall mean units of
beneficial interest which shall represent the right to participate in
profits, losses, deductions and credits of such Person and which shall be
entitled to exercise the greatest voting power per unit of such Person.
(g) "Continuing Director" shall mean any member of the Board of
Directors, while such person is a member of the Board of Directors, who is
not a 15% Stockholder, or an Affiliate or Associate of a 15% Stockholder, or
a representative or nominee of a 15% Stockholder or of any such Affiliate or
Associate, and who either (i) was a member of the Board of Directors prior to
the time that any Person became an 15% Stockholder or (ii) subsequently
became a member of the Board of Directors, and whose nomination for election
or election to the Board of Directors was recom-
4
mended or approved by a majority of the Continuing Directors then on the
Board of Directors.
(h) "Current Market Price" per share of a stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of such
stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question; PROVIDED,
HOWEVER, that if any event shall have caused the Closing Price on any Trading
Day during such 30-day period not to be fully comparable with the Closing Price
on the date in question (or, if no Closing Price is available on the date in
question, on the Trading Day immediately preceding the date in question), then
each such noncomparable Closing Price so used shall be appropriately adjusted by
the Board of Directors in order to make the Closing Price on each Trading Day
during the period used for the determination of the Current Market Price fully
comparable with the Closing Price on such date in question (or, if applicable,
the immediately preceding Trading Day); and PROVIDED FURTHER, HOWEVER, that if
such stock or other security is not publicly held or so listed or traded,
"Current Market Price" per share of such stock or unit of such other security
shall mean the fair value per share of such stock or unit of such other security
as determined in good faith by the Board of Directors of the Company based upon
such appraisals or valuation reports of such independent experts as the Board of
Directors shall in good faith determine appropriate, which determination shall
be described in a statement filed by the Company with the Rights Agent.
(i) "Distribution Date" shall have the meaning ascribed to it in
Section 3(a) hereof.
(j) "Effective Time" shall mean the Separation Time, as set forth in
the second recital of this Agreement.
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(l) "Exercise Price" shall have the meaning ascribed to it in Section
7(c) hereof.
(m) "Expiration Date" shall mean April 6, 1999.
5
(n) "Person" shall mean any individual, firm, partnership,
corporation, association, group (as such term is used in Rule 13d-5 promulgated
under the Exchange Act as in effect on the date hereof) or other entity, and
shall include any successor (by merger or otherwise) of such entity.
(o) "Preferred Share" shall mean a share of the Series A Junior
Participating Cumulative Preferred Stock, par value $1.00 per share, of the
Company, which shall have the rights, powers and preferences set forth in
Restated Certificate of Incorporation.
(p) "Redemption Date" shall mean the date of the action of the Board
of Directors of the Company directing the Company to redeem the Rights pursuant
to Section 23(a) hereof, or such time and date thereafter as the Board of
Directors may specify for redemption of the Rights.
(q) "Redemption Price" shall have the meaning ascribed to it in
Section 23(a) hereof.
(r) "Right" shall have the meaning set forth in the third recital of
this Agreement.
(s) "Section 11(a)(ii) Event" shall have the meaning ascribed to it
in Section 11(a)(ii) hereof.
(t) "Section 13(a) Event" shall have the meaning ascribed to it in
Section 13(a) hereof.
(u) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(v) "Subsidiary" of any Person shall mean any corporation or other
Person of which equity securities or equity interests representing a majority of
the voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
(w) "Trading Day" shall mean, as to any stock or other security, a
day on which the principal national securities exchange on which such stock or
other security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
6
(x) "Voting Share" shall mean (i) a share Common Stock of the Company
and (ii) any other share of capital stock of the Company entitled to vote
generally in the election of directors or entitled to vote together with the
shares of Common Stock in respect of any merger, consolidation, sale of all or
substantially all of the Company's assets, liquidation, dissolution or winding
up. Any reference in this Agreement to a percentage or portion of the
outstanding Voting Shares shall be deemed to be a reference to the percentage or
portion of the total votes entitled to be cast by the holders of the outstanding
Voting Shares.
(y) "15% Ownership Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or a 15% Stockholder containing the facts by virtue of which a Person
has become a 15% Stockholder.
(z) "15% Stockholder" shall mean any Person that, together with all
Affiliates and Associates of such Person, hereafter acquires Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares then outstanding and thereupon or thereafter
Beneficially Owns 15% or more of the Voting Shares of the Company then
outstanding; PROVIDED, HOWEVER, that the term "15% Stockholder" shall not
include: (i) the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of a Subsidiary of the Company, or any Person holding
Voting Shares for or pursuant to the terms of any such employee benefit plan; or
(ii) any Person if such Person would not otherwise be a 15% Stockholder but for
a reduction in the number of outstanding Voting Shares resulting from a stock
repurchase program or other similar plan of the Company or from a self-tender
offer of the Company, which plan or tender offer commenced on or after the date
hereof; PROVIDED, HOWEVER, that the term "15% Stockholder" shall include such
Person from and after the first date upon which (A) such Person, since the date
of the commencement of such plan or tender offer, shall have acquired Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares of the Company then outstanding and (B) such
Person, together with all Affiliates and Associates of such Person, shall
Beneficially Own 15% or more of the Voting Shares of the Company then
outstanding. In calculating the percentage of the outstanding Voting Shares
7
that are Beneficially Owned by a Person for purposes of this subsection (z),
Voting Shares that are Beneficially Owned by such Person shall be deemed
outstanding, and Voting Shares that are not Beneficially Owned by such Person
and that are subject to issuance upon the exercise or conversion of outstanding
conversion rights, rights (other than Rights), warrants or options shall not be
deemed outstanding. Any determination made by the Board of Directors of the
Company as to whether any Person is or is not a 15% Stockholder shall be
conclusive and binding upon all holders of Rights.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable, upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and in no event be
liable for, the acts or omissions of any such co-Rights Agent.
Section 3. ISSUANCE OF RIGHT CERTIFICATES.
(a) "Distribution Date" shall mean the date, after the date hereof,
that is the earlier of (i) the tenth Business Day (or such later date as may be
determined by action of the Board of Directors prior to such time as any Person
becomes a 15% Stockholder) following the date of the commencement of, or the
first public announcement of the intent of any Person (other than the Company,
any Subsidiary of the Company, any employee benefit plan of the Company or of
any Subsidiary of the Company, or any Person holding Common Stock for or
pursuant to the terms of any such employee benefit plan) to commence a tender
offer or exchange offer, the consummation of which would cause any Person to
become a 15% Stockholder, or (ii) the date of the first Section 11(a)(ii) Event.
(b) Until the Distribution Date, (i) the Rights shall be represented
by certificates for shares of Common Stock, and not by separate certificates,
(ii) the record holder of the shares of Common Stock represented by each of such
certificates shall be the record holder of the Rights represented thereby, and
(iii) the Rights shall be transferable only in connection with the transfer of
the shares of Common Stock. Until the earliest of the Distribution Date, the
Redemption Date or the Expiration
8
Date, the surrender for transfer of such certificates for shares of Common
Stock shall also constitute the surrender for transfer of the Rights
represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send by first-class,
postage-prepaid mail to each record holder of shares of Common Stock, as of the
Close of Business on the Distribution Date, at the address of such holder shown
on the records of the Company, a certificate substantially in the form of
Exhibit A hereto (the "Right Certificates") representing one Right for each
share of Common Stock so held. Notwithstanding the foregoing, the Rights Agent
shall not send any Right Certificate to any 15% Stockholder or any of its
Affiliates or Associates or to any Person if the Rights held by such Person are
Beneficially Owned by a 15% Stockholder or any of its Affiliates or Associates.
From and after the Distribution Date, the Rights shall be represented solely by
such Right Certificates and may be transferred only by the transfer of such
Right Certificates, and the holders of such Right Certificates, as listed in the
records of the Company or any transfer agent or registrar for such Rights, shall
be the record holders of such Rights. Any determination made by a majority of
the Board of Directors of the Company as to whether any shares of Common Stock
are or were Beneficially Owned at any time by a 15% Stockholder or an Affiliate
or Associate of a 15% Stockholder shall be conclusive and binding upon all
holders of Rights.
(d) Rights shall be issued in respect of all shares of Common Stock
which are issued (whether originally issued or from the Company's treasury)
after the Effective Time but prior to the earliest of the Distribution Date, the
Redemption Date or the Expiration Date. Certificates representing such shares
of Common Stock shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also represents Rights that entitle the holder
hereof to certain rights as set forth in a Rights Agreement dated
as of April 7, 1989, as amended, by and between the Company and
State Street Bank and Trust Company, as Rights Agent (the "Rights
Agreement"), the terms and conditions of which are hereby
incorporated herein by reference and a copy of which is on file
at
9
the principal executive offices of the Company. Under certain
circumstances specified in the Rights Agreement, such Rights will
be represented by separate certificates and will no longer be
represented by this certificate. Under certain circumstances
specified in the Rights Agreement, Rights beneficially owned by
certain persons may become null and void. The Company will mail
to the record holder of this certificate a copy of the Rights
Agreement without charge promptly following receipt of a written
request therefor.
Certificates for all other shares of Common Stock shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:
This certificate does not represent any Right issued
pursuant to the terms of a Rights Agreement dated as of
April 7, 1989, as amended, by and between the Company and
State Street Bank and Trust Company, as Rights Agent.
Section 4. FORM OF RIGHT CERTIFICATES. The Right Certificates and
the form of assignment, including certificate, and the form of election to
purchase, including certificate, printed on the reverse thereof, when, as and if
issued, shall be substantially the same as Exhibit A hereto, and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange upon which the
Rights or the securities of the Company issuable upon exercise of the Rights may
from time to time be listed, or to conform to usage. Subject to Section 22
hereof, Right Certificates, whenever issued, that are issued in respect of
shares of Common Stock that were issued and outstanding as of the Close of
Business on the Distribution Date, shall be dated as of the Distribution Date.
10
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its Vice Chairman of the Board, its
President or any Vice President, either manually or by facsimile signature,
and may have affixed thereto the Company's seal or a facsimile thereof
attested by its Secretary or any Assistant Secretary, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned
by the Rights Agent and shall not be valid for any purpose unless so
countersigned; PROVIDED, HOWEVER, that the Company will use its best efforts
to obtain approvals of stock exchanges and any other approvals required for
use of a facsimile signature of the Rights Agent in lieu of a manual
signature and if such approvals are obtained the Right Certificates shall be
valid if countersigned by facsimile signature. 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 may
nevertheless be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the person who signed
such Right Certificates had not ceased to be such officer of the Company.
Any Right Certificate may be signed on behalf of the Company by any person
who at the actual date of such execution shall be a proper officer of the
Company to sign such Right Certificate, even though such person was not such
an officer at the date of the execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept at its principal offices books for registration and transfer of
the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of Right Certificates, the number of Rights
represented on its face by each Right Certificate and the date of each Right
Certificate.
Section 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof,
at any time after the Close of Business on the Distribution Date, and so long as
the Rights represented thereby remain outstanding, any one or more
11
Right Certificates may be transferred, split up, combined or exchanged for
one or more Right Certificates representing the same aggregate number of
Rights as the Right Certificates surrendered. Any registered holder desiring
to transfer, split up, combine or exchange one or more Right Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Right Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent with the form of assignment,
including certificate, on the reverse side thereof completed and duly
executed, with signature guaranteed. Thereupon, the Rights Agent shall
countersign and deliver to the person entitled thereto one or more Right
Certificates, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right
Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
such Right Certificate if mutilated, the Company shall issue and deliver to the
Rights Agent for delivery to the record holder of such Right Certificate a new
Right Certificate of like tenor in lieu of such lost, stolen, destroyed or
mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any Person
if such Right Certificate represents, or would represent when held by such
Person, Rights that had become or would become null and void pursuant to Section
7(d) hereof.
Section 7. EXERCISE OF RIGHTS.
(a) Until the Distribution Date, no Right may be exercised.
(b) Subject to Section 7(d) and 7(g) hereof and the other provisions
of this Agreement including Section 23(a), at any time after the Close of
Business on the Distribution Date and prior to the Close of Business on the
12
earlier of the Redemption Date or the Expiration Date, the registered holder of
any Right Certificate may exercise the Rights represented thereby in whole or in
part upon surrender of such Right Certificate, with the form of election to
purchase, including certificate, on the reverse side thereof completed and duly
executed, with signature guaranteed, to the Rights Agent at the office of the
Rights Agent in Boston, Massachusetts or the office of the Rights Agent's
service agent in Canton, Massachusetts, together with payment of the Exercise
Price for each Right exercised. Upon the exercise of an exercisable Right and
payment of the Exercise Price in accordance with the provisions of this
Agreement, the holder of such Right shall be entitled to receive, subject to
adjustment as provided herein, one one-hundredth of a Preferred Share.
(c) The exercise price for the exercise of each Right (the "Exercise
Price") shall initially be $80 and shall be payable in lawful money of the
United States of America in accordance with Section 7(f) hereof. The Exercise
Price and the number of Preferred Shares (or, following the occurrence of a
Section 11(a)(ii) Event or a Section 13(a) Event, Common Stock and/or other
securities) to be acquired upon exercise of a Right shall be subject to
adjustment from time to time as provided in Sections 11 and 13 hereof and the
other provisions of this Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event or a Section 13(a)
Event, any Rights that are or were Beneficially Owned by a 15% Stockholder or
any Affiliate or Associate of a 15% Stockholder at any time on or after the
Distribution Date shall be null and void, and any holder of such Rights (whether
or not such holder is a 15% Stockholder or an Affiliate or Associate of a 15%
Stockholder) shall thereafter have no right to exercise such Rights.
(e) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
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(f) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase, including certificate, completed
and duly executed, with signature guaranteed, accompanied by payment of the
Exercise Price for each Right to be exercised and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof in cash, or by certified check
or cashier's check payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from the transfer agent of the Preferred
Shares (or make available, if the Rights Agent is the transfer agent)
certificates for the number of Preferred Shares to be purchased, and the Company
hereby irrevocably authorizes such transfer agent to comply with all such
requests, and/or, as provided in Section 14 hereof, requisition from the
depositary agent described therein depositary receipts representing such number
of one-hundredths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with such depositary agent) and the Company
hereby directs such depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional Preferred Shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates, depositary receipts or cash, cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such cash to
or upon the order of the registered holder of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register under the Securities Act and
any applicable securities law of any jurisdiction the Preferred Shares to be
issued pursuant to the exercise of the Rights; PROVIDED, HOWEVER, that nothing
contained in this Section 7 shall relieve the Company of its obligations under
Section 9(c) hereof.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for
14
cancellation or in canceled form, or, if surrendered to the Rights Agent,
shall be canceled by it, and no Right Certificates shall be issued in lieu
thereof except as expressly permitted by this Agreement. The Company shall
deliver to the Rights Agent for cancellation and retirement, and the Rights
Agent shall so cancel and retire, any other Right Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all canceled Right Certificates to the Company or shall,
at the written request of the Company, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company shall cause to be reserved and kept available out of
its authorized and unissued equity securities (or out of its authorized and
issued equity securities held in its treasury) the number of such equity
securities that will from time to time be sufficient to permit the exercise in
full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use its
best efforts, from and after such time as the Rights become exercisable, to
cause all such securities issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon exercise
of the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register such securities under the Securities Act and any
applicable securities laws and to keep such registration effective until the
earlier of the Redemption Date or the Expiration Date.
(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject to payment of
the Exercise Price), be duly and validly authorized and issued and fully paid
and nonassessable securities.
(e) The Company shall pay when due and payable any and all federal
and state transfer taxes and charges
15
that may be payable in respect of the issuance or delivery of the Right
Certificates or of any securities upon the exercise of Rights. The Company
shall not, however, be required to pay any transfer tax that may be payable
in respect of any transfer or delivery of a Right Certificate to a Person
other than, or the issuance or delivery of a certificate for securities in
respect of a name other than that of, the registered holder of the Right
Certificate representing Rights surrendered for exercise, or to issue or
deliver any certificate for securities upon the exercise of any Right until
any such tax shall have been paid (any such tax being payable by the holder
of such Right Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
(f) With respect to the Common Stock and/or other securities issuable
pursuant to Sections 11(a)(ii) and 11(a)(iii) hereof, the foregoing covenants
shall be applicable only upon and following the occurrence of a Section
11(a)(ii) Event.
Section 10. SECURITIES RECORD DATE. Each person in whose name any
certificate for securities of the Company is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
securities represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate representing 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 securities transfer books of the Company are closed, such person shall
be deemed to have become the record holder of such securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
securities transfer books of the Company are open.
Section 11. ADJUSTMENT OF EXERCISE PRICE, NUMBER OF SHARES ISSUABLE
UPON EXERCISE OF RIGHTS OR NUMBER OF RIGHTS. The Exercise Price, the number and
kind of securities that may be purchased upon exercise of a Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a)(i) In the event that the Company shall at any time after the
Effective Time and prior to the Close of Business on the earlier of the
Redemption Date or the Expiration Date (A) declare or pay any dividend on
the
16
Preferred Shares payable in Preferred Shares or Voting Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares into a smaller number of Preferred Shares, or (D) issue
Preferred Shares or Voting Shares in a reclassification of the Preferred
Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or
surviving corporation), then and in each such event, the number and kind
of Preferred Shares or other securities issuable upon the exercise of a
Right on such date shall be proportionately adjusted so that the holder
of any Right exercised on or after such date shall be entitled to
receive, upon the exercise thereof and payment of the Exercise Price,
the aggregate number and kind of Preferred Shares or other securities or
other property, as the case may be, that, if such Right had been
exercised immediately prior to such date and at a time when such Right
was exercisable and the transfer books of the Company were open, such
holder would have owned upon such exercise and would have been entitled
to receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs that would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.
(ii) In the event (a "Section 11(a)(ii) Event") that a 15%
Ownership Date shall have occurred and neither the Redemption Date nor the
Expiration Date shall have occurred prior to the Close of Business on the
tenth Business Day following such 15% Ownership Date, then, and upon each
such event, proper provision shall be made so that, except as provided in
Section 7(d) hereof, each holder of a Right shall thereafter have the right
to receive, upon the exercise thereof in accordance with the terms of this
Agreement and payment of the then current Exercise Price, such number of
shares of Common Stock as shall equal the result obtained by multiplying
the then current Exercise Price by the then number of one-hundredths of a
Preferred Share for which a Right was exercisable (or, if the Distribution
Date shall not have occurred prior to the date of such Section 11(a)(ii)
Event, the number of one-hundredths of a Preferred Share for which a Right
17
would have been exercisable if the Distribution Date had occurred on the
Business Day immediately preceding the date of such Section 11(a)(ii)
Event) immediately prior to such Section 11(a)(ii) Event, and dividing that
product by 50% of the Current Market Price (determined pursuant to Section
11(d) hereof) of a share of Common Stock on the date of occurrence of the
relevant Section 11(a)(ii) Event (such number of shares of Common Stock
being hereinafter referred to as the "Adjustment Shares"). Successive
adjustments shall be made pursuant to this paragraph each time a Section
11(a)(ii) Event occurs.
(iii) In the event that on the date of a Section 11(a)(ii) Event
the aggregate number of shares of Common Stock that are authorized by the
Company's Restated Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights
is less than the aggregate number of Adjustment Shares thereafter issuable
upon the exercise in full of the Rights, as the case may be, in accordance
with Section 11(a)(ii) hereof (the excess of such number of Adjustment
Shares over and above such number of shares of Common Stock being
hereinafter referred to as the "Unavailable Adjustment Shares"), the
Company shall substitute for the pro rata portion of the Unavailable
Adjustment Shares that would otherwise be issuable thereafter upon the
exercise of each Right, and payment of the Exercise Price, as applicable,
(A) cash, (B) other equity securities of the Company (including, without
limitation, shares of preferred stock of the Company or units of such
shares having the same value as one share of Common Stock, as applicable,
(C) debt securities of the Company, (D) other assets, or (E) any
combination of the foregoing, in each case having an aggregate value equal
to the aggregate value of the Unavailable Adjustment Shares, as applicable,
for which substitution is made. Subject to Section 7(d) hereof, in the
event that the Company takes any action pursuant to this Section
11(a)(iii), such action shall apply uniformly to all outstanding Rights.
(b) In the event that the Company shall, at any time after the
Effective Time and prior to the Close of Business on the earlier of the
Redemption Date or the Expiration Date, fix a record date prior to the earlier
of the Redemption Date or the Expiration Date for the issuance
18
of rights, options or warrants to all holders of Preferred Shares entitling
them initially to subscribe for or purchase Preferred Shares (or shares
having the same rights, privileges and preferences as Preferred Shares
("Preferred Share Equivalents")) or securities convertible into Preferred
Shares or Preferred Share Equivalents, at a price per Preferred Share or
Preferred Share Equivalent (or having a conversion price per share, if a
security convertible into Preferred Shares or Preferred Share Equivalents)
less than the Current Market Price per Preferred Share on such record date,
then 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 equal to the
sum of the number of Preferred Shares outstanding on such record date plus
the number of Preferred Shares that the aggregate offering price of the total
number of Preferred Shares and/or Preferred Share Equivalents to be so
offered (and/or the aggregate initial conversion price of the convertible
securities to be so offered) would purchase at such Current Market Price, and
the denominator of which shall be equal to the number of Preferred Shares
outstanding on such record date plus the number of additional Preferred
Shares and/or Preferred Share Equivalents to be offered for subscription or
purchase (or into which the convertible securities to be so offered are
initially convertible); PROVIDED, HOWEVER, that if such rights, options or
warrants are not exercisable immediately upon issuance but become exercisable
only upon the occurrence of a specified event or the passage of a specified
period of time, then the adjustment to the Exercise Price shall be made and
become effective only upon the occurrence of such event or such passage of
time, and such adjustment shall be made as if the record date for the
issuance of such rights, options or warrants had been the business day
immediately preceding the date upon which such rights, options or warrants
became exercisable. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment to the Exercise Price 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 that would then be in effect if such record date had
not been fixed.
(c) In the event that the Company shall, at any time after the
Effective Time and prior to the Close of Business on the earlier of the
Redemption Date or the
19
Expiration Date, fix a record date for the making of a distribution to all
holders of the Preferred Shares (including any such distribution made in
connection with a consolidation or merger in which the Company is the
surviving corporation) of securities or assets (other than a distribution of
securities for which an adjustment is required under Section 11(a)(i) or (b)
hereof or a regular quarterly cash dividend), 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 equal to the excess of the Current Market Price
per Preferred Share on such record date over and above the fair market value
of the portion of the securities or assets to be so distributed with respect
to one Preferred Share, and the denominator of which shall be equal to such
Current Market Price per Preferred Share. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such
a distribution is not so made, the Exercise Price shall be adjusted to be the
Exercise Price that would then be in effect if such record date had not been
fixed.
(d) For the purpose of any computation under this Section 11, if the
Preferred Shares are not publicly held or so listed and traded, the "Current
Market Price" per Preferred Share shall be conclusively deemed to be an amount
equal to the product of 100 (as such number may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with respect
to the Common Stock occurring after the Effective Time) times the Current Market
Price of the Common Stock. If none of the shares of Common Stock are publicly
held or so listed and traded, the "Current Market Price" per Preferred Share
shall mean the fair value per share as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed by the Company with the Rights Agent and shall be conclusive for all
purposes.
(e) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Exercise
Price; PROVIDED, HOWEVER, that any adjustments that by reason of this Section
11(e) are not required to be made shall be cumulated and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a Share or
20
other share or one-millionth of a Preferred Share, as the case may be.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any securities of the Company other than Preferred Shares, the number of
such other securities 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 Preferred Shares contained in this
Section 11, and the other provisions of this Agreement with respect to Preferred
Shares shall apply on like terms to any such other securities.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i) below, upon each adjustment of the Exercise Price as a result
of the calculations made in Sections 11(b) and 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
represent the right to purchase, at the adjusted Exercise Price, that number of
one-hundredths of a Preferred Share (calculated to the nearest one-millionth of
a Preferred Share) obtained by multiplying (i) the number of one-hundredths of a
Preferred Share purchasable upon the exercise of one Right immediately prior to
such adjustment of the Exercise Price by (ii) the Exercise Price in effect
immediately prior to such adjustment, and dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment.
(i) The Company may elect, on or after the date of any adjustment of
the Exercise Price, to adjust the number of Rights instead of making any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such
21
adjustment. Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Exercise Price in effect immediately
prior to the adjustment of the Exercise Price by the Exercise Price in effect
immediately after such adjustment of the Exercise Price. The Company shall
make a public announcement of its election to adjust the number of Rights
pursuant to this Section 11(i), 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 separate Right Certificates have been issued, it
shall be at least 10 days after the date of such public announcement. If
separate Right Certificates have been issued, upon each adjustment of the
number of Rights pursuant to this Section 11(i), the Company shall, as
promptly as practicable, cause to be distributed to holders of record of
Right Certificates on such record date Right Certificates representing,
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, 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 such adjustment, and upon surrender thereof if required by the
Company, new Right Certificates representing all the Rights to which such
holders shall be entitled after such adjustment. Right Certificates to be so
distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Exercise Price) and shall be registered in the names of the holders of record
of Right Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Exercise Price or
the number of one-hundredths of a Preferred Share issuable upon the exercise of
one Right, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price per one one-hundredth of a Preferred Share and the
number of Preferred Shares issuable upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Exercise Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company
22
shall take any corporate action that may, on the advice or in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable one one-hundredths of a Preferred Share at
such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such record date
of the number of one-hundredths of a Preferred Share and other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of one-hundredths of a Preferred Share 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 representing such holder's right to receive such additional shares
upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding,
the Company shall be entitled to make such further adjustments in the number
of one-hundredths of a Preferred Share that may be purchased upon exercise of
one Right, and such further adjustments in the Exercise Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent
that it, in its sole discretion, shall determine to be advisable in order
that any (i) consolidation or subdivision of the Preferred Shares, (ii)
issuance wholly for cash of any Preferred Shares at less than the Current
Market Price thereof, (iii) issuance wholly for cash of Preferred Shares or
securities that by their terms are convertible into or exchangeable for
Preferred Shares, (iv) dividends on Preferred Shares payable in Preferred
Shares, or (v) issuance of rights, options or warrants referred to in Section
11(b) hereof, hereafter made by the Company to holders of its Preferred
Shares, shall not be taxable to such holders.
Section 12. CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF
SHARES ISSUABLE UPON EXERCISE OF RIGHTS. Whenever an adjustment is made as
provided in Section 11 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts
giving rise to such adjustment, (b) file with the
23
Rights Agent and with each transfer agent for the securities issuable upon
exercise of the Rights a copy of such certificate, and (c) mail a brief
summary thereof to each holder of Rights in accordance with Section 26
hereof. Notwithstanding the foregoing sentence, the failure of the Company
to make such certification or to give such notice shall not affect the
validity or the force and effect of such adjustment. Any adjustment to be
made pursuant to Sections 11 or 13 hereof shall be effective as of the date
of the event giving rise to such adjustment.
Section 13. CONSOLIDATION, MERGER, OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event (a "Section 13(a) Event") that, at any time on or
after the 15% Ownership Date and prior to the earlier of the Redemption Date or
the Expiration Date, (x) the Company shall, directly or indirectly, consolidate
with or merge with and into any other Person (other than any employee benefit
plan of the Company, or any Person holding shares of Common Stock for or
pursuant to the terms of any such employee benefit plan) and the Company shall
not be the continuing or surviving corporation in such consolidation or merger,
(y) any Person (other than any employee benefit plan of the Company, or any
Person holding shares of Common Stock for or pursuant to the terms of any such
employee benefit plan) shall, directly or indirectly, consolidate with or merge
with and into the Company and the Company shall be the continuing or surviving
corporation in such merger and, in connection with such merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any Person or cash or any other property, or (z) the Company
and/or any one or more of its Subsidiaries shall, directly or indirectly, sell
or otherwise transfer, in one or more transactions (other than transactions in
the ordinary course of business), assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person or Persons other than the Company or one or more of its
wholly owned Subsidiaries (such Persons, together with the Persons described in
clauses (x) and (y) above shall be collectively referred to in this Section 13
as the "Surviving Person"), then, and in each such case, proper provision shall
be made so that:
(i) except as provided in Section 7(d) hereof, (x) each holder
of a Right shall thereafter have the right to receive, upon the exercise
thereof in
24
accordance with the terms of this Agreement and payment of the then
current Exercise Price, such number of validly authorized and issued,
fully paid and nonassessable shares of Common Stock of the Surviving
Person as shall be equal to a fraction, the numerator of which is the
product of the then current Exercise Price multiplied by the number of
one-hundredths of a Preferred Share purchasable upon the exercise of one
Right immediately prior to the first Section 13(a) Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first Section 13(a)
Event, the product of the number of one-hundredths of a Preferred Share
purchasable upon the exercise of a Right (or, if the Distribution Date
shall not have occurred prior to the date of such Section 11(a)(ii)
Event, the number of one-hundredths of a Preferred Share that would have
been so purchasable if the Distribution Date had occurred on the
Business Day immediately preceding the date of such Section 11(a)(ii)
Event) immediately prior to such Section 11(a)(ii) Event, multiplied by
the Exercise Price in effect immediately prior to such Section 11(a)(ii)
Event), and the denominator of which is 50% of the Current Market Price
per share of Common Stock of the Surviving Person on the date of
consummation of such Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable for and
shall assume, by virtue of such consolidation, merger, sale 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
the Surviving Person; and
(iv) the Surviving Person shall take such steps (including, but
not limited to, the reservation of a sufficient number of its shares of
Common Stock in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to ensure that the provisions hereof shall
thereafter be applicable to its shares of Common Stock thereafter
deliverable upon the exercise of Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is the
sale or transfer in one or more transactions of assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
25
its Subsidiaries (taken as a whole), but less than 100% thereof, then each
Person acquiring all or a portion thereof shall assume the obligations of the
Company as to a fraction of each of the Rights equal to the fraction of the
assets of the Company and its Subsidiaries (taken as a whole) acquired by
such Person, and the obligations of the Company as to the remaining fraction
of each of the Rights shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless
prior thereto the Company and the Surviving Person shall have executed and
delivered to the Rights Agent a supplemental agreement confirming that such
Surviving Person shall, upon consummation of such Section 13(a) Event, assume
this Agreement in accordance with Section 13 hereof, that all rights of first
refusal or preemptive rights in respect of the issuance of shares of Common
Stock of such Surviving Person upon exercise of outstanding Rights have been
waived and that such Section 13(a) Event shall not result in a default by
such Surviving Person under this Agreement, and further providing that, as
soon as practicable after the date of consummation of such Section 13(a)
Event, such Surviving Person shall:
(i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities purchasable
upon exercise of the Rights on an appropriate form, use its best efforts
to cause such registration statement to become effective as soon as
practicable after such filing, use its best efforts to cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the
Expiration Date, and similarly comply with all applicable state
securities laws;
(ii) use its best efforts to list (or continue the listing of)
the Rights and the shares of Common Stock of the Surviving Person
purchasable upon exercise of the Rights on a national securities
exchange, or use its best efforts to cause the Rights and such shares of
Common Stock to meet the eligibility requirements for quotation on
NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with the
requirements for
26
registration on Form 10 (or any successor form) under the Exchange Act.
(d) In the event that at any time after the occurrence of a
Section 11(a)(ii) Event some or all of the Rights shall not have been
exercised pursuant to Section 11 hereof prior to the date of a Section 13(a)
Event, such Rights shall thereafter be exercisable only in the manner
described in Section 13(a) hereof (without taking into account any prior
adjustment required by Section 11(a)). In the event that a Section 11(a)(ii)
Event occurs on or after the date of a Section 13(a) Event, Rights shall not
be exercisable pursuant to Section 11 hereof but shall instead be exercisable
pursuant to, and only pursuant to, this Section 13.
(e) The provisions of this Section 13 shall apply to each
successive merger, consolidation, sale or other transfer constituting a
Section 13(a) Event.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates that represent fractional Rights. If the
Company shall determine not to issue such fractional Rights, the Company
shall pay to the registered holders of the Right Certificates with respect to
which such fractional Rights would otherwise be issuable, at the time such
Rights are exercised as provided herein, an amount in cash equal to the same
fraction of the Current Market Price of a whole Right. For the purposes of
this Section 14(a), the Current Market Price of a whole Right shall be the
Closing Price per Right for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of shares
of Common Stock or Preferred Shares (other than fractions that are integral
multiples of one one-hundredth of a Preferred Share) upon exercise of Rights,
or to distribute certificates that represent fractional shares of Common
Stock or Preferred Shares (other than fractions that are integral multiples
of one one-hundredth of a Preferred Share). Fractions of Preferred Shares in
integral multiples of one one-hundredth of a Preferred Share may, at the
election of the Company, be represented by depositary receipts, pursuant to
an appropriate agreement
27
between the Company and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
beneficial owners of Preferred Shares. If the Company shall determine not to
issue fractional shares of Common Stock or Preferred Shares (or depositary
receipts in lieu of Preferred Shares), the Company shall pay to the
registered holders of Right Certificates with respect to which such
fractional shares of Common Stock or Preferred Shares would otherwise be
issuable, at the time such Rights are exercised as provided herein, an amount
in cash equal to the same fraction of the Current Market Price of a whole
share of Common Stock or Preferred Share, as the case may be. For purposes
of this Section 14(b), the Current Market Price of a whole share of Common
Stock or Preferred Share shall be the Closing Price per share for the Trading
Day immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right,
expressly waives such holder's right to receive any fractional Rights or any
fractional shares of Common Stock or Preferred Shares upon exercise of such
Right, except as permitted by this Section 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Right Certificates and certificates for shares of Common Stock representing
Rights, and any registered holder of any Right Certificate and of such
certificate for shares of Common Stock, without the consent of the Rights
Agent or of the holder of any other Right Certificate or any other
certificate for shares of Common Stock may, on such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, such holder's right to exercise the Rights represented by such
Right Certificate or by such certificate for shares of Common Stock in the
manner provided in such 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, and injunctive relief against actual or threatened
violations, of the obligations of any Person under this Agreement.
28
Section 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 every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be
represented by certificates for shares of Common Stock registered in the name
of the holders of such shares of Common Stock (which certificates for shares
of Common Stock shall also constitute certificates for Rights), and each such
Right shall be transferable only in connection with the transfer of such
shares of Common Stock;
(b) after the Distribution Date, the Right Certificates shall only
be transferable on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person
in whose name the Right Certificate is registered as the absolute owner
thereof and of the Rights represented thereby (notwithstanding any notations
of ownership or writing on the Right Certificate by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.
Section 17. RIGHT HOLDER AND RIGHT CERTIFICATE HOLDER NOT DEEMED A
STOCKHOLDER. No holder, as such, of any Right or Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose the holder
of the securities of the Company that may at any time be issuable upon 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 or Right Certificate, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, to give or withhold
consent to any corporate action, to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or
to receive dividends or subscription rights, or otherwise, in each case until
such Right or the Rights represented by such Right Certificate shall have
been exercised in accordance with the provisions hereof.
29
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent as compensation
for all services rendered by it hereunder reasonable and customary fees and
expenses. 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, bad faith or willful misconduct on the part of the Rights
Agent, for anything done or omitted by the Rights Agent in connection with
the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Agreement in reliance upon any
Right Certificate or certificate for the Preferred Shares or shares of Common
Stock or for other securities of the Company, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice,
direction, consent, certificate, statement, or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
verified or acknowledged, by the proper person or persons, or otherwise upon
the advice of its counsel as set forth in Section 20 hereof.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT.
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights
Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the corporate trust or stock transfer 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. If, at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of
the Right Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver
30
such Right Certificates so countersigned; and if 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 Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
such Right Certificates, and in this Agreement.
(b) If 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 the Right Certificates so countersigned; and if 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 such Right Certificates and in this
Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance of the Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the advice or opinion of such counsel
shall constitute 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 advice or opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any one of the Chairman of
the Board, the President, any Vice President, the Treasurer or the Secretary
of the Company and delivered to the Rights Agent; and such certificate shall
constitute 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.
31
(c) The Rights Agent shall be liable hereunder to the Company and
any other Person only for its own gross negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement, or in the
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.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery
hereof (except the due authorization, execution and delivery 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 null and void pursuant to Section 7(d) or any adjustment in
the terms of the Rights including the manner, method or amount thereof)
provided for in Sections 7, 11, 13 and 23 hereof, or the ascertaining of the
existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights represented by Right Certificates
after actual notice that such change or adjustment is required); nor shall it
by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any Preferred Shares or shares of Common
Stock or other securities to be issued pursuant to this Agreement or any
Right Certificate, or as to whether any Preferred Shares or shares of Common
Stock or other securities will, when issued, be validly authorized and
issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may reasonably
be required by the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the
32
performance of its duties hereunder from any one of the Chairman of the
Board, the President, any Vice President, the Secretary, any Assistant
Secretary or the Treasurer of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and it shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were
not 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.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any
such act, default, neglect or misconduct, provided that reasonable care was
exercised in the selection and continued employment thereof.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under
this Agreement upon thirty (30) days' notice in writing mailed to the Company
and to each transfer agent of shares of Common Stock and Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer
agent of shares of Common Stock and Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise
become incapable of acting as such, 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
33
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 such holder's Right
Certificate for inspection by the Company), then the Company shall become the
Rights Agent and the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by
such a court, shall be a corporation organized and doing business under the
laws of the United States or of the State of New York (or of any other state
of the United States so long as such corporation is authorized to do business
as a banking institution in the State of New York, in good standing, having a
principal office in New York, that is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50,000,000. After its appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose of
this Agreement and so that the successor Rights Agent may appropriately act
as Rights Agent hereunder. 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 shares of Common Stock
and Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 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.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Right Certificates to the
contrary, the Company may, at its option, issue new Right Certificates in
such form as may be approved by the Board of Directors in order to reflect
any adjustment or change in the Exercise Price and the number or kind or
class of shares or other securities or
34
property purchasable upon exercise of the Rights in accordance with the
provisions of this Agreement.
Section 23. REDEMPTION OF RIGHTS.
(a) The Company may, at its option, but only by the vote of a
majority of the Board of Directors, redeem all but not less than all of the
then outstanding Rights, at any time prior to the Close of Business on the
earlier of (i) the tenth day following the 15% Ownership Date (subject to
extension by the Company as provided in Section 26 hereof) or (ii) the
Expiration Date, at a redemption price of $.005 per Right, subject to
adjustments as provided in subsection (c) below (the "Redemption Price").
Notwithstanding anything contained in this Agreement to the contrary, the
Rights shall not be exercisable pursuant to Section 11(a)(ii) prior to the
expiration of the Company's right of redemption hereunder.
(b) Without any further action and without any notice, the right
to exercise the Rights will terminate effective at the time so designated by
action of the Board of Directors ordering the redemption of the Rights and
the only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 days after the effective time of the action of
the Board of Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the holders of the then outstanding
Rights by mailing such notice 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. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each notice of
redemption will state the method by which the payment of the Redemption Price
will be made. At the option of the Board of Directors, the Redemption Price
may be paid in cash to each Rights holder or by the issuance of shares (and,
at the Company's election pursuant to Section 14(b) hereof, cash or
depositary receipts in lieu of fractions of shares other than fractions which
are integral multiples of one one-hundredth (1/100) of a share) of Preferred
Stock or Common Stock having a Fair Market Value equal to such cash payment.
(c) In the event the Company shall at any time after the date of
this Rights Agreement (A) pay any dividend on Common Stock in shares of
Common Stock, (B) subdivide or
35
split the outstanding shares of Common Stock into a greater number of shares,
or (C) combine or consolidate the outstanding shares of Common Stock into a
smaller number of shares or effect a reverse split of the outstanding shares
of Common Stock, then, and in each such event, the Redemption Price shall be
appropriately adjusted to reflect the foregoing.
Section 24. EXCHANGE.
(a) The Board of Directors may, at its option, at any time after any
Person becomes a 15% Stockholder, 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(d) hereof) for Common Stock at an
exchange ratio of one share of Common Stock per Right, appropriately adjusted to
reflect any stock split, stock divided or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors of the
Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Stock for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of fifty
percent (50%) or more of the Common Stock then outstanding.
(b) 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 equal
to the number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the 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 exchange will state the
method by which the exchange of the Common
36
Stock for Rights will be effected and, in the event of any partial exchange,
the number of Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 7(d) hereof) held by each
holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or Preferred Share Equivalent, as such
term is defined in paragraph (b) of Section 11 hereof) for Common Stock
exchangeable for Rights, at the initial rate of one one-hundredths of a share of
Preferred Stock (or Preferred Share Equivalent) for each share of Common Stock,
as appropriately adjusted to reflect stock splits, stock dividends or other
similar transactions effected after the date hereof.
(d) In the event that there shall not be sufficient Common Stock
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 for issuance upon exchange of the Rights.
(e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, there shall be
paid to the registered holders of the Right Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the current market price of a whole share of
Common Stock. For the purposes of this subsection (e), the current market price
of a whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In the event that the Company shall propose (i) to declare or pay
any dividend payable on or make any distribution with respect to its Common
Stock or Preferred Shares (other than a regular quarterly cash dividend), (ii)
to offer to the holders of its Common Stock or Preferred Shares options, rights
or warrants to subscribe for or to
37
purchase any additional shares thereof or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of
its Common Stock or Preferred Shares (other than a reclassification involving
only the subdivision of outstanding shares), (iv) to effect any consolidation
or merger with or into, or to effect any sale or other transfer (or to permit
one or more of its Subsidiaries to effect any sale or other transfer), in one
or more transactions, of more than fifty percent (50%) of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then and in each such case, the Company shall give
to each holder of a Right Certificate, in accordance with Section 26 hereof,
a notice of such proposed action that shall specify the record date for the
purpose of such dividend or distribution, or the date upon 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 record of the Common Stock or Preferred Shares, if
any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Common
Stock or Preferred Shares for purposes of such action and, in the case of any
such other action, at least twenty (20) days prior to the date of the taking
of such proposed action or the date of participation therein by the holders
of the shares of Common Stock or Preferred Shares, whichever date shall be
the earlier. The failure to give the notice required by this Section 25 or
any defect therein shall not affect the legality or validity of the action
taken by the Company or the vote upon any such action.
(b) Upon the occurrence of each Section 11(a)(ii) Event and each
Section 13(a) Event, the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, specifying the event and the
consequences of the event to holders of Rights under Sections 11 and 13 hereof.
Section 26. NOTICES. Notices or demands authorized by this Agreement
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until
38
another address is filed in writing with the Rights Agent) as follows:
MEDIAONE GROUP, INC.
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel and Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) to the principal office of the Rights
Agent as follows:
STATE STREET BANK AND TRUST COMPANY
c/o Boston EquiServe Limited Partnership
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. SUPPLEMENTS AND AMENDMENTS. For as long as the Rights
are then redeemable and except as provided in the last sentence of this Section
27, the Company may in its sole and absolute discretion, and the Rights Agent
shall if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of the Rights. At any time when
the Rights are not then redeemable and except as provided in the last sentence
of this Section 27, the Company may, and the Rights Agent shall if the Company
so directs, supplement or amend this Rights Agreement without the approval of
any holders of Right Certificates (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 or (iii) to change or supplement the provisions
hereunder in any manner which the Company may deem necessary or desirable,
provided that no such supplement or amendment pursuant to this clause (iii)
shall materially adversely affect the interest of the holders of Right
Certificates.
39
Upon the delivery of a certificate from an appropriate officer of the Company
which states that the proposed supplement or amendment is in compliance with
the terms of this Section 27, the Rights Agent shall execute such supplement
or amendment. This Agreement may be amended or supplemented at any time with
the approval of a majority of the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Stock).
Notwithstanding anything contained in this Rights Agreement to the contrary,
no supplement or amendment shall be made which changes the Redemption Price
or the Final Expiration Date and supplements or amendments may be made after
the time that any Person becomes a 15% Stockholder only if at the time of the
action of the Board of Directors approving such supplement or amendment there
are then in office not less than two Continuing Directors and such supplement
or amendment is approved by a majority of the Continuing Directors then in
office.
Section 28. CERTAIN COVENANTS. Subject to Section 27 and the other
provisions of this Agreement:
(a) no adjustment to the Exercise Price, the number of Preferred
Shares or shares of Common Stock or other securities (or fractions of a share of
any of them), as the case may be, for which a Right is exercisable or the number
of Rights outstanding shall be made or be effective if such adjustment would
have the effect of reducing or limiting the benefits that the holders of Rights
would have had absent such adjustment, including, without limitation, the
benefits under Sections 7, 11 and 13 hereof, unless the terms of this Agreement
are amended so as to preserve such benefits; and
(b) from and after the earlier of the date of the first Section
11(a)(ii) Event or the date of the first Section 13(a) Event and prior to the
earlier of the Redemption Date or the Expiration Date, the Company shall not (i)
issue or sell, or permit any Subsidiary to issue or sell, to a 15% Stockholder
or a Surviving Person, or any Affiliate or Associate of a 15% Stockholder or a
Surviving Person, or any Person holding Voting Shares of the Company that are
Beneficially Owned by a 15% Stockholder or a Surviving Person, (A) any rights,
options, warrants or convertible securities on terms similar to, or that
materially adversely affect the value of, the Rights or (B) Preferred Shares,
shares of Common Stock or shares of any other class of capital stock, if such
sale is intended to or
40
would materially adversely affect the value of the Rights, or (ii) take any
action that is intended to or would materially adversely affect the value of
the Rights.
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC. The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all 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 (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors in good faith shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights and all other parties, and
(y) not subject the Board of Directors to any liability to the holders of the
Rights.
Section 30. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 31. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent, the registered holders of the Right Certificates (other than those
representing Rights that have become null and void) and the certificates for
shares of Common Stock representing Rights (other than those Rights that have
become null and void) any legal or equitable right, remedy or claim under this
Agreement, and this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent, such registered holders of Right Certificates and
such certificates for shares of Common Stock representing Rights.
Section 32. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
41
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
Section 33. GOVERNING LAW. This Agreement 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 made and
performed entirely within such state.
Section 34. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original and all such counterparts shall together constitute but
one and the same instrument.
Section 35. DESCRIPTIVE HEADINGS. Descriptive headings of the
several sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
Section 36. EFFECTIVENESS. This Agreement shall become effective at
the Separation Time. In the event the Separation does not occur or become
effective for any reason, this Agreement shall be deemed null and void.
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
Attest: MEDIAONE GROUP, INC.
By By
----------------------- -----------------------
Name: Name:
Title: Title:
Attest: STATE STREET BANK AND
TRUST COMPANY
By By
----------------------- -----------------------
Name: Name:
Title: Title:
EXHIBIT A
FORM OF
RIGHT CERTIFICATE
Certificate No. CR-____ _____ Rights
NOT EXERCISABLE AFTER APRIL 6, 1999 OR EARLIER IF REDEEMED. THE
RIGHTS ARE SUBJECT TO REDEMPTION AT $.005 PER RIGHT ON THE TERMS
SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES
SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY
CERTAIN PERSONS OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID.
Right Certificate
MEDIAONE GROUP, INC.
This certifies that _____________________________, or registered
assigns, is the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the terms and conditions
of the Amended and Restated Rights Agreement (the "Rights Agreement") dated
as of June 12, 1998 by and between MEDIAONE GROUP, INC., a Delaware
corporation (the "Company"), and STATE STREET BANK AND TRUST COMPANY (the
"Rights Agent"), to purchase from the Company at any time prior to five
o'clock (5:00) p.m., Massachusetts time, on the earlier of the Redemption
Date (as such term is defined in the Rights Agreement) or April 6, 1999, at
the office or agency of the Rights Agent in Boston, Massachusetts or Canton,
Massachusetts, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid and nonassessable share of Series A Junior
Participating Cumulative Preferred Stock, par value $1.00 per share, of the
Company (a "Preferred Share") or, in certain circumstances, other securities
or other property, at a purchase price of $80 per one one-hundredth of a
Preferred Share (the "Exercise Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase, including
Certificate, on the reverse side hereof completed and duly executed, with
signature guaranteed.
The number of Rights represented by this Right Certificate and the
Exercise Price set forth above are the number of Rights and the Exercise
Price as of ________ __, 1998, based upon the Preferred Shares as constituted
on such
A-1
date. As provided in the Rights Agreement, the Exercise Price and the number of
Preferred Shares or other securities or other property that may be purchased
upon the exercise of the Rights represented by this Right Certificate are
subject to modification and adjustment upon the occurrence of certain events.
The Rights Agreement contains a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights
Agent, the Company and the holders of Right Certificates. This Right
Certificate is subject to all the terms and conditions of the Rights
Agreement, which terms and conditions are hereby incorporated herein by
reference and made a part hereof. Copies of the Rights Agreement are on file
at the principal executive offices of the Company and the above-mentioned
offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates,
upon presentation and surrender at the above-mentioned offices of the Rights
Agent, with the Form of Assignment, including Certificate, on the reverse
side hereof completed and duly executed, with signature guaranteed, may be
exchanged for another Right Certificate or Right Certificates of like tenor
and date representing Rights entitling the holder thereof to purchase a like
aggregate number of Preferred Shares or, in certain circumstances, other
securities or other property, as the Rights represented by the Right
Certificate or Right Certificates surrendered shall have entitled such holder
to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive, upon the surrender hereof with the Form
of Election to Purchase, including Certificate, on the reverse side hereof
completed and duly executed, with signature guaranteed, another Right
Certificate or Right Certificates for the number of whole Rights not
exercised. Subject to the provisions of the Rights Agreement, the Rights
represented by this Right Certificate may be redeemed by the Company, at its
option, at a redemption price of $.005 per Right.
No fractional securities shall be issued upon the exercise of any
Right or Rights represented hereby (other than fractions of Preferred Shares
that are integral multiples of one one-hundredth of a Preferred Share, that may,
at the option of the Company, be represented by depositary receipts), but in
lieu thereof, a cash payment shall be made, as provided in the Rights Agreement.
A-2
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 the
Preferred Shares or other securities of the Company that may at any time be
issuable on the exercise hereof, nor shall anything contained 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, until the
Right or Rights represented by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the
Company and its corporate seal.
Dated as of ___________, 199_.
Attest: MEDIAONE GROUP, INC.
By By
---------------------- ----------------------
Name: Name:
Title: Title:
Countersigned:
STATE STREET BANK AND TRUST
COMPANY
By By
---------------------- ----------------------
Name: Name:
Title: Title:
A-3
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------,
(Name, address and social security or other
identifying number of transferee)
________________________________ (___________) of the Rights represented by this
Right Certificate, together with all right, title and interest in and to said
Rights, and hereby irrevocably constitutes and appoints attorney to transfer
said Rights on the books of MEDIAONE GROUP, INC., with full power of
substitution.
Dated: __________________, 199_
-------------------------
(Signature)
Signature Guaranteed:
CERTIFICATE
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 15% Stockholder or an
Affiliate or Associate of a 15% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated: _________________, 199_
----------------------------
(Signature)
Signature Guaranteed:
A-4
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, 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, and must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by a 15% Stockholder or an Affiliate or
Associate of a 15% Stockholder (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
A-5
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Right Certificate)
To MEDIAONE GROUP, INC.:
The undersigned hereby irrevocably elects to exercise
______________________________________ (________) of the Rights represented by
this Right Certificate to purchase the following:
(Check one of the following boxes)
/ / the Preferred Shares or other securities or property issuable upon the
exercise of said number of Rights pursuant to Section 7(c) of the Rights
Agreement.
/ / the shares of Common Stock, par value $0.01 per share, of the Company, or
other securities or property issuable upon the exercise of said number of
Rights pursuant to Section 11(a)(ii) of the Rights Agreement.
/ / the securities issuable upon the exercise of said number of Rights pursuant
to Section 14(a) of the Rights Agreement.
The undersigned hereby requests that any such property and a
certificate for any such securities be issued in the name of and delivered to:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of Rights
shall not be all the Rights represented by this Right Certificate, a new Right
Certificate for the remaining balance of such Rights be issued in the name of
and delivered to:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(Name, address and social security or other
identifying number of issuee)
Dated: _____________, 199_
----------------------------
(Signature)
Signature Guaranteed:
A-6
CERTIFICATE
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 15% Stockholder or an
Affiliate or Associate of a 15% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated: __________________, 199_
--------------------------
(Signature)
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, 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, and must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by a 15% Stockholder or an Affiliate or
Associate of a 15% Stockholder (as such capitalized terms are defined in the
Rights Agreement), and not issue any property or certificate for securities upon
the exercise of this Right Certificate or issue any new Right Certificate for
any remaining balance of unexercised Rights represented by this Right
Certificate.
A-7
